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What Policy Features Determine Life Insurance Lapse? An Analysis of the German Market
Author(s) -
Eling Martin,
Kiesenbauer Dieter
Publication year - 2014
Publication title -
journal of risk and insurance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.055
H-Index - 63
eISSN - 1539-6975
pISSN - 0022-4367
DOI - 10.1111/j.1539-6975.2012.01504.x
Subject(s) - actuarial science , german , life insurance , product (mathematics) , value (mathematics) , property insurance , economics , business , cover (algebra) , insurance policy , general insurance , geography , statistics , engineering , mechanical engineering , geometry , mathematics , archaeology
With the largest data set ever used for this purpose (covering more than 1 million contracts), we analyze the impact of product and policyholder characteristics on lapse in the life insurance market. The data are provided by a German life insurer and cover two periods of market turmoil that we incorporate into our proportional hazards and generalized linear models. The results show that product characteristics such as product type or contract age and policyholder characteristics such as age or gender are important drivers for lapse rates. Our findings improve the understanding of lapse drivers and might be used by insurance managers and regulators for value‐ and risk‐based management.