Who is Changing Health Insurance Coverage? Empirical Evidence on Policyholder Dynamics

31 Pages Posted: 23 May 2016

See all articles by Marcus Christian Christiansen

Marcus Christian Christiansen

Heriot-Watt University

Martin Eling

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

Jan‐Philipp Schmidt

University of Ulm - Institute of Insurance Science

Lorenz Zirkelbach

University of Ulm - Institute of Insurance Science

Date Written: June 2016

Abstract

Long‐term health insurance contracts provide policyholders with the option of lapsing coverage or switching to another tariff within the same insurance company. We empirically analyze policyholder behavior regarding contract commitment in a large data set of German private health insurance contracts. We show that short‐term as well as long‐term premium development, along with premium adjustment frequency, affect lapse and tariff switch rates. Moreover, the sales channel has a strong impact on switching behavior, indicating that policyholder choice is not fully independent of sales representatives. Our results are important for risk assessment and risk management of portfolios of health insurance contracts and provide better understanding of the dynamics of policyholder behavior in health insurance.

Suggested Citation

Christiansen, Marcus Christian and Eling, Martin and Schmidt, Jan‐Philipp and Zirkelbach, Lorenz, Who is Changing Health Insurance Coverage? Empirical Evidence on Policyholder Dynamics (June 2016). Journal of Risk and Insurance, Vol. 83, Issue 2, pp. 269-300, 2016. Available at SSRN: https://ssrn.com/abstract=2782662 or http://dx.doi.org/10.1111/jori.12053

Marcus Christian Christiansen (Contact Author)

Heriot-Watt University ( email )

Riccarton
Edinburgh EH14 4AS, Scotland EH14 1AS
United Kingdom

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

Jan‐Philipp Schmidt

University of Ulm - Institute of Insurance Science

Ulm, 89081
Germany

Lorenz Zirkelbach

University of Ulm - Institute of Insurance Science

Ulm, 89081
Germany

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