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Life Lapse-Up Stress

AdvancedRequires external valuation

Calculate the Stressed Lapse Rate instantly.

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Current Lapse Rate

12.0%

×

Lapse Stress Multiplier

150.0%

=

Stressed Lapse Rate

18.0%

Life Lapse-Up Lapse Rate Shock Impact

Shock increase
Base value
ModuleShockPre-shockPost-shockCharge
Lapse Rate+50%12,0 %18,0 %6,0 %
1Step 1

Stressed Lapse Rate

Stressed Lapse Rate=min(100%,Current Lapse Rate×(1+Lapse Rate Increase))\mathrm{Stressed\ Lapse\ Rate}=\min\left(100\%,\mathrm{Current\ Lapse\ Rate}\times(1+\mathrm{Lapse\ Rate\ Increase})\right)

Understand the Life Lapse-Up Stress

Overview

Article 142 defines the permanent lapse-up stress for policyholder-behaviour risk where higher lapses are adverse.[1]

Input Terms

  • Current Lapse Rate: Representative pre-stress lapse rate for the portfolio slice being tested.[1]

Technical Rationale

Article 142 treats policyholder behaviour as a source of asymmetric risk because higher lapses can remove future profitable premiums, surrender deductions, or expected margins.[1] The upward lapse scenario is relevant only where accelerated discontinuance worsens the undertaking's basic own funds.

The capped stressed assumption keeps the rate within a valid probability range. The lapse-up direction remains separate because Article 142 requires the adverse policyholder-behaviour scenario to be identified after valuation-model loss measurement.

Important Notes

  • This is a stress-specification page, not a basic-own-funds loss bridge.
  • Final lapse risk uses the largest prepared loss across lapse-up, lapse-down, and mass-lapse scenarios.
  • Valuation scope is limited to relevant policyholder options and portfolio slices where the lapse-up scenario is adverse; this page does not validate that scope.

Sources

  1. Delegated Regulation (EU) 2015/35 - Art. 142 (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.