In other settings, high lapse rates
have been shown to cause losses due to unpaid acquisition costs (e.
Kushnir (2000), Lapse Rate
, Moisture, Clouds and Thuderstorms, Department of Earth & Environmental Sciences, Columbia University [Online], available: http://eesc.
The interior pressure line (the interior lapse rate
"line") moves laterally--horizontally shifts to the left from Figure 2 to Figure 3.
Yet the reality is that while many industry trends, from low lapse rates
, to low interest rates, to claims patterns, were a surprise relative to what insurance companies expected ten to fifteen years ago, they are known facts today.
The true drivers of premium increases--or more accurately, why older blocks of long-term care insurance policies are generating such losses as cumulative premiums exceed cumulative claims--is that long-term care insurance has had surprisingly low lapse rates
, and it has been difficult for insurance companies to generate much investment return on their premiums collected in the current interest rate environment.
Interest in lapse rate
determinants has become more prominent in recent years as some financial service firms have applied securitization techniques to life insurance policies held by individuals.
Of these, the two most troublesome for LTCi carriers are interest and lapse rates
The geophysical parameters included in the parameterization are near-surface temperature, relative humidity, low-level vertical lapse rate
, surface skin temperature, and surface type (land or ocean).
single contract) rather than aggregate lapse rate
If we have both steep lapse rates
and significant moisture in the lower levels, instability is increased, creating very buoyant thermals, but also saturation is likely.
The prominence of secondary vortex recurrence, quite frequent these days, may seem unusual within cold air in circulation behind a departing vortex core, but the cold inflow is often unstable with a lapse rate
steeper than the standard 30 per thousand feet.
Craig Dunn the chief executive of AMP (ASX: AMP) has stated that the personal insurance market in Australia and New Zealand was very challenging because of a 10 year-high, industry-wide lapse rate