lazarus Dias - Persistency track record of Life Insurance companies at 61st Month

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Persistency track record of Life Insurance companies at 61st Month

Published: Aug 3rd, 2023 05:05 pmBy lazarus Dias

Persistency is the measure of the ability of an insurance company to retain its policyholders over a specific period of time.

The persistency rate is the percentage of policies that are renewed or remain in force on 61st month (5 Years).

Persistency is important for insurance companies for several reasons:

A higher persistency rate means policyholders are retained resulting in a steady stream of premiums and a more predictable revenue stream.

A higher persistency rate means that the company can avoid acquisition costs, resulting in lower expenses and higher profits.

A higher persistency rate shows a better ability to manage risk as it has a better understanding of the demographics and risk profile of its existing policyholders.

A high persistency rate can enhance the reputation of the insurance company, as it shows the ability to provide satisfactory service to meet the needs of its clients

•Persistency is the measure of the ability of an insurance company to retain its policyholders over a specific period of time.

•The persistency rate is the percentage of policies that are renewed or remain in force on the 61st month (5 Years).

•

Persistency is important for insurance companies for several reasons:

1. A higher persistency rate means policyholders are retained resulting in a steady stream of premiums and a more predictable revenue stream.

2. A higher persistency rate means that the company can avoid acquisition costs, resulting in low expenses and higher profits.

3. A higher persistency rate shows better ability to manage risk as it has a better understanding of the demographics and risk profile of its existing policyholders.

4. A high persistency rate can enhance the reputation of the insurance company, as it shows the ability to provide satisfactory service to meet the needs of its clients

5. A higher Persistency also shows that the sales are being done properly and there is no mis-selling.

A higher Persistency also shows that the sales are being done properly and there is no mis-selling.

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