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The customer, the insurer and the market

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  • Christophe Dutang

    (LSAF - Laboratoire de Sciences Actuarielle et Financière - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon)

Abstract

Price elasticity studies analyze how customers react to price changes. In this paper, we focus on their effect on the renewal of non-life insurance contracts. Every year insurers face the recurring question of adjusting premiums. Where is the trade off between increasing premium to favour higher projected profit margins and decreasing premiums to obtain a greater market share? Regression models are used to explore the triangular relationship of the customer, the insurer and the market. We conclude that the latter cannot be ignored if we want to get reliable lapse predictions. Furthermore, we also investigate empirical evidence of adverse selection and study its potential impact on lapse decisions.

Suggested Citation

  • Christophe Dutang, 2012. "The customer, the insurer and the market," Post-Print hal-01616152, HAL.
    • Handle: RePEc:hal:journl:hal-01616152
    Note: View the original document on HAL open archive server: https://hal.science/hal-01616152v1
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    References listed on IDEAS

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    Cited by:

    1. Himchan Jeong & Guojun Gan & Emiliano A. Valdez, 2018. "Association Rules for Understanding Policyholder Lapses," Risks, MDPI, vol. 6(3), pages 1-18, July.

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