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Actuably

Life Mass-Lapse Stress

AdvancedRequires external valuation

Calculate the Total Discontinued Policies instantly.

%
%
%

Pension-Type Adverse Policies

4,000

×

Discontinuance Rate

70.0%

=

Discontinued Policies

2,800

Other Adverse Policies

6,000

×

Discontinuance Rate

40.0%

=

Discontinued Policies

2,400

Future Contracts Used in TP

1,000

×

1 - Future Contract Decrease Rate

60.0%

=

Future Contracts After Stress

600

Life Mass-Lapse Shock Impact

Shock charge
Retained value
ModuleShockPre-shockPost-shockCharge
70% Bucket Policies-70%4 0001 2002 800
40% Bucket Policies-40%6 0003 6002 400
Future Contracts-40%1 000600400
1Step 1

70% Bucket Discontinued Policies

70% Bucket Discontinued Policies=70% Bucket Policy Count×70%\mathrm{70\%\ Bucket\ Discontinued\ Policies}=\mathrm{70\%\ Bucket\ Policy\ Count}\times70\%
2Step 2

40% Bucket Discontinued Policies

40% Bucket Discontinued Policies=40% Bucket Policy Count×40%\mathrm{40\%\ Bucket\ Discontinued\ Policies}=\mathrm{40\%\ Bucket\ Policy\ Count}\times40\%
3Step 3

Total Discontinued Policies

Total Discontinued Policies=70% Bucket Discontinued Policies+40% Bucket Discontinued Policies\mathrm{Total\ Discontinued\ Policies}=\mathrm{70\%\ Bucket\ Discontinued\ Policies}+\mathrm{40\%\ Bucket\ Discontinued\ Policies}
4Step 4

Future Contracts After Stress

Future Contracts After Stress=Future Contracts×(1−40%)\mathrm{Future\ Contracts\ After\ Stress}=\mathrm{Future\ Contracts}\times(1-40\%)

Understand the Life Mass-Lapse Stress

Overview

Article 142 defines the mass-lapse stress through separate discontinuance populations and a future-contract decrease.[1]

Input Terms

  • 70% Bucket Policy Count: Policies in the Article 142(6)(a) population after the required product, policyholder, beneficiary, and adverse-discontinuance selection.[1]
  • 40% Bucket Policy Count: Other policies where discontinuance is adverse after the Article 142(6)(b) population has been selected.[1]
  • Future Contracts Used in TP: Future insurance or reinsurance contracts used in technical provisions where reinsurance contracts cover business that will be written in the future.[1]

Technical Rationale

Article 142(6) treats mass lapse as a discontinuity event rather than a gradual change in policyholder behaviour.[1] The separate 70% and 40% buckets reflect different legal populations, so combining them only after the scoped counts are prepared keeps the adverse-discontinuance evidence visible.

The future-contract decrease exists because technical provisions may include reinsurance contracts covering business still to be written. This page keeps the Article 142 count stress separate from the valuation-model loss.

Important Notes

  • This page is a count-based stress calculator. It does not convert the stressed counts into capital.
  • Input counts must already reflect the Article 142(6) scope, adverse-discontinuance test, uniform-application requirement, and per-policy worst discontinuance type.
  • Future contracts that are not relevant are represented by a zero future-contract count.

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.