Survival analysis in insurance attrition

Abstract

Insurance or customer attrition is a situation where a policyholder stops paying the insurance premium which will cause their policy to be terminated. There are several factors that contribute to customer attrition which are core customer status, address changes, a premium increase and competitive effect. Customer attrition give large effect to the company profit and market share. Basically, insurance can be classified into life insurance and non-life insurance. This study focusses on customer attrition cases occur in life insurance policy where the main target is to determine the policyholder profile that are likely to terminate their life insurance policy. The data use for this study is provided by insurance agent in Malaysia consist of policyholder profile from year 2012 until 2015. For data analysis purpose, this study applies kaplan-meier estimators, log-rank test and Cox model. This study concludes that the marital status is the only covariate that influences the customer attrition while age, gender and salary have no effect on customer attrition cases.