In business intelligence, data classification is "the construction of some kind of a method for making judgments for a continuing sequence of cases, where each new case must be assigned to one of pre-defined classes.
It can be used in e.g. direct marketing, insurance fraud detection or medical diagnosis.
An algorithm, called the classifier, is then used on the categories, creating a descriptive model for each.
[2] According to Golfarelli and Rizzi, these are the measures of effectiveness of the classifier:[2] Typical examples of input for data classification could be variables such as demographics, lifestyle information, or economical behaviour.
This could be of special importance to insurance or banking companies, where fraud detection is extremely relevant.