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Vol.13, No.3, August 2024. ISSN: 2217-8309 eISSN: 2217-8333
TEM Journal
TECHNOLOGY, EDUCATION, MANAGEMENT, INFORMATICS Association for Information Communication Technology Education and Science |
The Impact of Dynamic Surrender on Guarantees and Options in Life Insurance
Silvia Zelinová, Tatiana Šoltésová, Katarína Sakálová, Mária Kamenárová
© 2024 Tatiana Šoltésová, published by UIKTEN. This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License. (CC BY-NC-ND 4.0)
Citation Information: TEM Journal. Volume 13, Issue 3, Pages 2502-2511, ISSN 2217-8309, DOI: 10.18421/TEM133-76, August 2024.
Received: 24 March 2024. Revised: 16 July 2024.
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.
Keywords – Dynamic surrender, Solvency II, IFRS 17, financial options and guarantees. |
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