Insurers love to trumpet their persistency - how their loyal customers stick with them through thick and thin. The flip-side of this is lapse risk, when customers close their policies early. In the case of variable annuities (VAs), this can involve a guaranteed return the fund itself has not achieved - and therefore a loss.
During the financial crisis, with interest rates dropping and fund values taking large hits, the incentive to lapse was strong and some insurers experienced large outflows, du
The week on Risk.net, July 14–20, 2017Receive this by email