What is Lapse Rate?
Lapse Rate The percentage of insurance policies that are allowed to expire or are not renewed by policyholders within a specified period.
Source: CFA Institute, IFRS Foundation, FASB (GAAP), Basel III Framework
How is “Lapse Rate” Used in Practice?
A high lapse rate can undermine the insurer’s profitability and impact actuarial projections for future business.
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Who Needs to Know This Term?
- Financial Analysts
- Bankers
- Traders
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What is Lapse Rate?
The percentage of insurance policies that are allowed to expire or are not renewed by policyholders within a specified period.
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