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Bulletin n°32 / vol. 16 / Juillet 2016 - Décembre 2016 Le BFA sur internet
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Empirical Analysis of Surrender Dynamics in Taiwan Life Insurance Companies

HWANG Y.


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In this paper, we analyze the main determinants of surrender dynamics in Taiwan life insurance companies. The observation period is between 1999 and 2009. We consider macroeconomic variables and company-specific variables, and apply OLS regression models to identify the vital determinants of surrender rate. The numerical results show that company age, business line and home ownership ratio are the most significant variables. The company-specific variables show that a higher reputation and a larger company size result in lower surrender rates, which suggests that life insurers should maintain their reputation to increase the confidence of policyholders. Furthermore, life insurers have to manage the surrender risk according to their line of business.