We investigate the drivers of lapses in life insurance contracts of a large Italian insurance company. We consider both traditional (with profit or participating) and unit-linked policies. We develop two different types of analyses. First of all, we investigate the determinants of lapse decisions by policyholders looking at microdata on each contract and some macroeconomic variables. Then, through a panel study, we investigate the role of macroeconomic variables on lapses at the regional level. We observe that policy features affecting lapses of the two types of contracts are quite different. Only for the contracts stipulated few years before, we find weak evidence supporting the Interest Rate Hypothesis, i.e. a positive correlation between interest and lapse rates. Instead, there is some positive evidence that lapse rates are positively related to personal financial/economic difficulties (emergency fund hypothesis).

Barucci, E., Colozza, T., Marazzina, D., Rroji, E. (2020). The determinants of lapse rates in the Italian life insurance market. EUROPEAN ACTUARIAL JOURNAL, 10(1), 149-178 [10.1007/s13385-020-00227-0].

The determinants of lapse rates in the Italian life insurance market

Rroji, Edit
Ultimo
2020

Abstract

We investigate the drivers of lapses in life insurance contracts of a large Italian insurance company. We consider both traditional (with profit or participating) and unit-linked policies. We develop two different types of analyses. First of all, we investigate the determinants of lapse decisions by policyholders looking at microdata on each contract and some macroeconomic variables. Then, through a panel study, we investigate the role of macroeconomic variables on lapses at the regional level. We observe that policy features affecting lapses of the two types of contracts are quite different. Only for the contracts stipulated few years before, we find weak evidence supporting the Interest Rate Hypothesis, i.e. a positive correlation between interest and lapse rates. Instead, there is some positive evidence that lapse rates are positively related to personal financial/economic difficulties (emergency fund hypothesis).
Articolo in rivista - Articolo scientifico
Dynamic panel; Generalized linear models; Lapses; Survival analysis;
English
2020
10
1
149
178
reserved
Barucci, E., Colozza, T., Marazzina, D., Rroji, E. (2020). The determinants of lapse rates in the Italian life insurance market. EUROPEAN ACTUARIAL JOURNAL, 10(1), 149-178 [10.1007/s13385-020-00227-0].
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10281/276308
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