A logistic regression approach to estimating customer profit loss due to lapses in insurance

Montserrat Guillén (), Ana María Pérez-Marín () and Montserrat Guillén ()
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Montserrat Guillén: Departament d'Econometria, Estadística i Economia Espanyola. RFA-IREA. University of Barcelona. Spain
Ana María Pérez-Marín: Departament d'Econometria, Estadística i Economia Espanyola. RFA-IREA. University of Barcelona. Spain
Montserrat Guillén: Departament d'Econometria, Estadística i Economia Espanyola. RFA-IREA. University of Barcelona. Spain
Authors registered in the RePEc Author Service: Montserrat Guillen

No XREAP2011-13, Working Papers from Xarxa de Referència en Economia Aplicada (XREAP)

Abstract: This article focuses on business risk management in the insurance industry. A methodology for estimating the profit loss caused by each customer in the portfolio due to policy cancellation is proposed. Using data from a European insurance company, customer behaviour over time is analyzed in order to estimate the probability of policy cancelation and the resulting potential profit loss due to cancellation. Customers may have up to two different lines of business contracts: motor insurance and other diverse insurance (such as, home contents, life or accident insurance). Implications for understanding customer cancellation behaviour as the core of business risk management are outlined.

Keywords: Policy cancellation; customer loyalty; profit loss; customer behavior. (search for similar items in EconPapers)
Pages: 40 pages
Date: 2011-10, Revised 2011-10
New Economics Papers: this item is included in nep-cis, nep-ias, nep-mkt and nep-rmg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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http://www.xreap.cat/RePEc/xrp/pdf/XREAP2011-13.pdf First version, 2011 (application/pdf)
http://www.xreap.cat/RePEc/xrp/pdf/XREAP2011-13.pdf Revised version, 2011 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:xrp:wpaper:xreap2011-13

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