Template-Type: ReDIF-Article 1.0

Author-Name: Laszlo Szepesvary
Author-Workplace-Name: Magyar Posta Eletbiztosito Zrt
Author-Email: szepesvary.laszlo@mpb.hu


Title: Effect of the Yield Level, the Inflation Environment and the Pandemic on the Lapse Rates of Life Insurances

Abstract: This study examines the lapse rates of certain life insurances in relation to various
economic and non-economic events, analysing empirical insurance data, in search
of answers to the questions of what impact the changed yield and inflation
environments and lockdowns due to Covid-19 had on the cancellation of contracts,
and how sensitive policyholders are to changes in yields in the case of certain
investment-type insurances. In addition to the conclusions drawn on the basis of
time series data, further statistical analyses (such as Granger causality testing,
contract classification with k-means clustering) contribute to a more complete
picture. The effect of certain changes in the interest rate level on lapses can be
detected in the case of the single premium investment-type insurance under review
(especially for the higher premium classes). No similar behaviour is typical of the
current premium insurances under review, and so far it has also not been possible
to detect any significant relationship with lapses in connection with inflation or the
lockdowns due to Covid-19.

Classification-JEL: G22, C32, C58, E43
Keywords: life insurance, lapse rate, yield environment, inflation, Covid-19, time series analysis
Pages: 44-72
Volume: 21
Issue: 3
Year: 2022
File-URL: https://en-hitelintezetiszemle.mnb.hu/letoltes/fer-21-3-st2-szepesvary.pdf
File-Format: Application/pdf
Handle: RePEc:mnb:finrev:v:21:y:2022:i:3:p:44-72