Insurers turn to reinsurers for lapse risk cover

Assessing risk made difficult by behavioural influences

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Lapse risk is notoriously hard to predict because so many variables influence how policyholders behave, and also because they often behave irrationally. But Solvency II is forcing insurers to pay attention to the danger of policyholders surrendering their policies en masse. And the consequence has been an increasing interest in farming out the risk to the reinsurance market.

"We have seen an increased focus from clients wanting to come and chat about lapse risks specifically," says Nardeep Sangh