The Impact of Dynamic Surrender on Guarantees and Options in Life Insurance
The Impact of Dynamic Surrender on Guarantees and Options in Life Insurance
Author(s): Silvia Zelinová, Tatiana Šoltésová, Katarína Sakálová, Mária KamenárováSubject(s): Family and social welfare, Welfare services
Published by: UIKTEN - Association for Information Communication Technology Education and Science
Keywords: Dynamic surrender; Solvency II; IFRS 17; financial options and guarantees
Summary/Abstract: Early termination of an insurance contract (surrender) and sharing of the investment return are the two basic option features of traditional insurance products, such as term insurance and endowment insurance. Managing the process of insurance policies surrenders leads us to research the dynamic of surrender. All the examples use the methods for calculating the technical provisions and the profit set out in Solvency II and the international financial reporting standard IFRS 17, valid since 2023. The paper also presents examples of the valuation of surrender value options in the case of dynamic policyholder behaviour. The Monte Carlo approach through the use of stochastic models places a value on investment sharing and surrenders value options. Using a dynamic policyholder surrender behaviour technique leads to a more significant impact on the profit.
Journal: TEM Journal
- Issue Year: 13/2024
- Issue No: 3
- Page Range: 2502-2511
- Page Count: 10
- Language: English
