A Survival Analysis of the Surrender of Life Insurance Policies of Life Insurance Companies in Ghana
Cox-Snell residualsAbstract
In recent years, life insurance companies in Ghana have had to grapple with the challenge of policy surrenders, as the rate keeps increasing to unprecedented levels by the day, in spite of the increasing education and awareness to boost the insurance penetration rate, which is currently below two per cent (2%). The factors having significant effects on surrender of life policies, however, are company specific. This study was therefore conducted to estimate the prospect of a life policyholder surrendering, and to identify the factors having significant effects on this surrender in the life insurance companies. With regards to these study objectives, secondary data was obtained from the SIC Life from the period of 1st January, 1998 to 31st December 2016, constituting a data size of 73642 policyholders. The Kaplan-Meier estimates were computed for these data points to identify what time period experienced most surrender after which a Cox-Proportional Hazard(Cox-ph) was fitted to the data. Results indicated that at 5% level of significance, gender, income level, customer’s dissatisfaction with services provided, need for emergency fund, interest rate arbitrage and subscription onto new policies proved to have significant effect on policy surrender.
