What Policy Features Determine Life Insurance Lapse? An Analysis of the German Market

30 Pages Posted: 17 May 2014

See all articles by Martin Eling

Martin Eling

University of St. Gallen - Institute of Insurance Economics; University of Saint Gallen - School of Finance (SoF)

Dieter Kiesenbauer

University of Ulm

Date Written: June 2014

Abstract

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.

Suggested Citation

Eling, Martin and Kiesenbauer, Dieter, What Policy Features Determine Life Insurance Lapse? An Analysis of the German Market (June 2014). Journal of Risk and Insurance, Vol. 81, Issue 2, pp. 241-269, 2014. Available at SSRN: https://ssrn.com/abstract=2438126 or http://dx.doi.org/10.1111/j.1539-6975.2012.01504.x

Martin Eling

University of St. Gallen - Institute of Insurance Economics ( email )

Kirchlistrasse 2
St. Gallen, 9010
Switzerland

University of Saint Gallen - School of Finance (SoF) ( email )

Unterer Graben 21
St.Gallen, CH-9000
Switzerland

Dieter Kiesenbauer

University of Ulm ( email )

Albert-Einstein-Alee 11
Ulm, D-89081
Germany

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