Actuarial applications of natural language processing using transformers: Case studies for using text features in an actuarial context

Abstract This paper demonstrates workflows to incorporate text data into actuarial classification and regression tasks. The main focus is on methods employing transformer-based models. A dataset of car accident descriptions with an average length of 400 words, available in English and German, and a dataset with short property insurance claims descriptions, are used to demonstrate these techniques. The case studies tackle challenges related to a multilingual setting and long input sequences. They also show ways to interpret model output and to assess and improve model performance, by fine-tuning the models to the domain of application or to a specific prediction task. Finally, the paper provides practical approaches to handle classification tasks in situations with no or only few labelled data. The results achieved by using the language-understanding skills of off-the-shelf natural language processing (NLP) models with only minimal pre-processing and fine-tuning clearly demonstrate the power of transfer learning for practical applications.