Commitment and Lapse Behavior in Long-Term Insurance: A Case Study
AbstractThis paper presents a case study of a portfolio of individual long-term insurance contracts sold by a Spanish mutual company. We describe the risk levels, the rating structure and the implied cross-subsidies on a portfolio of policies providing health, life and long-term care insurance. We show evidence of reclassification risk through the history of disability spells. We also analyze the lapse behavior and seek to provide a rationale for the portfolio's dynamics. Lastly, we draw conclusions regarding the design of such contracts.
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Bibliographic InfoPaper provided by HAL in its series Post-Print with number hal-00374303.
Date of creation: 2011
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Publication status: Published, The Journal of Risk and Insurance, 2011, 78, 4, 983-1002
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Commitment; reclassification risk; long-term insurance.;
Other versions of this item:
- Jean Pinquet & Montserrat Guillén & Mercedes Ayuso, 2011. "Commitment and Lapse Behavior in Long‐Term Insurance: A Case Study," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 78(4), pages 983-1002, December.
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