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Health NSLT Lapse Risk

AdvancedRequires external valuation

Calculate the Discontinued Policies and Future Contracts After Stress instantly.

%
%

Exposed Policy Count

6 000

×

Discontinuance Rate

40.0%

=

Discontinued Policies

2 400

Future Contracts Covered by Reinsurance

1 200

×

Future Contract Stress Multiplier

60.0%

=

Future Contracts After Stress

720

Health NSLT Lapse Policy Shock Impact

Shock charge
Retained value
ModuleShockPre-shockPost-shockCharge
Exposed Policies-40%6 0003 6002 400
Future Contracts Covered by Reinsurance-40%1 200720480
1Step 1

Future Contract Stress Multiplier

Future Contract Stress Multiplier=100−Future Contract Decrease Rate\textit{Future Contract Stress Multiplier} = 100 - \textit{Future Contract Decrease Rate}
2Step 2

Discontinued Policies

Discontinued Policies=Exposed Policy Count×Discontinuance Rate\textit{Discontinued Policies} = \textit{Exposed Policy Count} \times \textit{Discontinuance Rate}
3Step 3

Future Contract Reduction Count

Future Contract Reduction Count=Future Contracts Covered by Reinsurance×Future Contract Decrease Rate\textit{Future Contract Reduction Count} = \textit{Future Contracts Covered by Reinsurance} \times \textit{Future Contract Decrease Rate}
4Step 4

Future Contracts After Stress

Future Contracts After Stress=max⁡(0,Future Contracts Covered by Reinsurance×Future Contract Stress Multiplier)\textit{Future Contracts After Stress} = \max(0, \textit{Future Contracts Covered by Reinsurance} \times \textit{Future Contract Stress Multiplier})

Understand the Health NSLT Lapse Risk

Overview

Article 150 defines the Health NSLT Lapse Risk stress specification for obligations managed using non-life techniques.[1]

Input Terms

  • Exposed Policy Count: Representative number of policies or obligations in scope for the discontinuance stress.[1]
  • Future Contracts Covered by Reinsurance: Future insurance or reinsurance contracts used in technical provisions where reinsurance contracts cover business that will be written in the future.[1]
  • Grouped Policy Count: Number of policies in the Article 96a grouping population on the simplification sheet.[1]
  • Policies in Adverse Discontinuance Groups: Policies in groups where discontinuance would increase technical provisions without the risk margin.[1]

Technical Rationale

Article 150 adapts non-life lapse mechanics to NSLT health obligations because the risk is sudden discontinuance of contracts managed with non-life techniques.[1] The policy count identifies the population whose discontinuance is adverse, while the future-contract reduction captures the technical-provisions effect where reinsurance covers business still to be written.

The grouped-policy branch supports the Article 96a simplification without replacing the valuation-model loss measurement. The basic-own-funds impact depends on contract economics, reinsurance, and technical-provisions valuation.

Important Notes

  • This page specifies the stress, not the final standalone Health NSLT Lapse Risk SCR.
  • Article 150(3) requires the stressed discontinuance to use, for each policy, the discontinuance type that most negatively affects basic own funds. This may include cancellation, non-renewal, lapse for non-payment, partial cancellation, cover reduction, suspension, restriction, paid-up treatment, non-forfeiture provisions, other discontinuity options, or not exercising continuity options where those rights exist.
  • The Article 96a grouped-policy simplification identifies the scoped policy population; it does not produce prepared Health NSLT lapse capital for Article 145 aggregation.

Sources

  1. Delegated Regulation (EU) 2015/35 - Art. 150 (NSLT health lapse risk sub-module) - EIOPA

Default values are illustrative sample inputs for navigation, training, and QA. Replace them with controlled data before using the result in capital analysis, governance, or reporting decisions.