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Research on Lapse in Life Insurance – What Has Been Done and What Needs to Be Done?

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  • Eling, Martin

    ()

  • Kochanski, Michael

    ()

Abstract

The intention of this paper is to review research on lapse in life insurance and to outline potential new areas of research in this field. We consider theoretical lapse rate models as well as empirical research on life insurance lapse and provide a classification of these two streams of research. More than 50 theoretical and empirical papers from this important field of research are reviewed. Challenges for lapse rate modeling, lapse risk mitigation techniques, and possible trends in future lapse behavior are discussed. The risks arising from lapse are of high economic importance. As such, lapsation is of interest not only to academics, but is also highly relevant for the industry, regulators, and policymakers.

Suggested Citation

  • Eling, Martin & Kochanski, Michael, 2012. "Research on Lapse in Life Insurance – What Has Been Done and What Needs to Be Done?," Working Papers on Finance 1224, University of St. Gallen, School of Finance.
  • Handle: RePEc:usg:sfwpfi:2012:24
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    File URL: http://ux-tauri.unisg.ch/RePEc/usg/sfwpfi/WPF-1224.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. F. Borel-Mathurin & P.-E. Darpeix & Q. Guibert & S. Loisel, 2015. "Main determinants of profit sharing policy in the French life insurance industry," Débats économiques et financiers 17, Banque de France.
    2. repec:bla:jrinsu:v:84:y:2017:i:2:p:661-690 is not listed on IDEAS
    3. Frédéric Sart, 2016. "On the hedging of liabilities with an endogenous profit sharing mechanism," Post-Print hal-01574949, HAL.
    4. Feodoria, Mark & Förstemann, Till, 2015. "Lethal lapses: How a positive interest rate shock might stress German life insurers," Discussion Papers 12/2015, Deutsche Bundesbank.
    5. repec:bla:jrinsu:v:83:y:2016:i:4:p:979-1006 is not listed on IDEAS
    6. repec:hal:wpaper:halshs-01165475 is not listed on IDEAS
    7. Berdin, Elia & Gründl, Helmut & Kubitza, Christian, 2017. "Rising interest rates, lapse risk, and the stability of life insurers," ICIR Working Paper Series 29/17, Goethe University Frankfurt, International Center for Insurance Regulation (ICIR).
    8. Gemmo, Irina & Götz, Martin, 2016. "Life insurance and demographic change: An empirical analysis of surrender decisions based on panel data," ICIR Working Paper Series 24/16, Goethe University Frankfurt, International Center for Insurance Regulation (ICIR).

    More about this item

    Keywords

    Lapse; Surrender; Lapse Modeling; Life Insurance.;

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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