Rising interest rates expose continental insurers to lapse risk

Rising interest rates expose continental insurers to lapse risk


A lack of penalties for lapsing contracts in some European markets leaves some continental insurers dangerously exposed to the Argentinean scenario of a sudden rise in short-term interest rates, with potential net losses of up to 21% of shareholder equity in the most extreme scenarios, according to rating agency Moody's.

A report by Moody's Investor Service, Interest Rate Risk for Life Insurers, says a sudden rise in short-term interest rates as experienced in Argentina earlier in the decade

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The future of life insurance

As the world constantly evolves and changes, so too does the life insurance industry, which is preparing for a multitude of challenges, particularly in three areas: interest rates, regulatory mandates and technology (software, underwriting tools and…

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