Modelling Insurance Attrition Using Survival Analysis – A Case Study Of Ghana

Abstract

Life insurance operations immensely contributes to the economic growth and development of a nation while also serving as an alternative form of internal fund mobilization for developing economies. This notwithstanding, life insurance companies tend to face challenges. One of these challenges they face is insurance attrition. This condition arises when insurance policies are terminated by the insurer as a result of discontinuation of premium payment after a specified period of time called the grace period, and also by the policy holder. Many factor(s) contribute to insurance attrition. The study focused on the length of survival time to attrition and the covariates that are likely to influence attrition. Randomly selected data was used in the study. Data was provided by an insurance company in Ghana for the period May 2018 to April 2021. The study employed Kaplan-Meier estimators, log-rant test and Cox regression model for the analysis of data. The study revealed the survival time of a new client is 16 weeks after subscribing on to policy. It also revealed assuming a three year period, attrition will occur after 15 weeks of being in force. The study concludes that marital status, product type, base rate change, deduction source are the factors that influence insurance attrition in Ghana.