Mass lapse reinsurance is a risk management tool used by insurers to protect against the financial impact of a mass lapse on their portfolio. In this paper, we explore the heightened lapse risk in recent years and provide an overview of typical features of mass lapse reinsurance transactions. We then offer thoughts on a consultation paper from European Insurance and Occupational Pensions Authority (EIOPA). Our report’s main sections include:
- An introduction to Solvency II lapse risk
- Heightened lapse risk in Europe
- Overview of mass lapse reinsurance
- Impact on required capital
- EIOPA’s publications on reinsurance arrangements
- Steps for successful implementation