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Who is Changing Health Insurance Coverage? Empirical Evidence on Policyholder Dynamics


  • Marcus C. Christiansen,

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    • Marcus C. Christiansen, Jan-Philipp Schmidt, and Lorenz Zirkelbach are at the Institute of Insurance Science, University of Ulm, 89069 Ulm, Germany. Christiansen can be contacted via e-mail: Martin Eling is at the Institute of Insurance Economics, University of St. Gallen, 9010 St. Gallen, Switzerland. We thank Sandra Blome, An Chen, Lukas Hahn, Christian Kraus, Andreas Reuß, Joan T. Schmit, Hans-Joachim Zwiesler, and the participants of the 39th Annual Seminar of the European Group of Risk and Insurance Economists for very helpful questions and comments.
  • Martin Eling,

  • Jan-Philipp Schmidt,

  • Lorenz Zirkelbach


Long-term health insurance contracts provide policyholders with the option of lapsing coverage or switching to another tariff within the same insurance company. We empirically analyze policyholder behavior regarding contract commitment in a large data set of German private health insurance contracts. We show that short-term as well as long-term premium development, along with premium adjustment frequency, affect lapse and tariff switch rates. Moreover, the sales channel has a strong impact on switching behavior, indicating that policyholder choice is not fully independent of sales representatives. Our results are important for risk assessment and risk management of portfolios of health insurance contracts and provide better understanding of the dynamics of policyholder behavior in health insurance.