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Effect of Insurance Policy Tenure on Premium Revenue Stability

Abstract

Insurance policy tenure refers to the length of time an insurance policy remains active with an insurer and represents an important aspect of policyholder retention and portfolio management. The duration of insurance policies can influence the consistency of premium collections, policy renewal patterns, administrative costs, and the predictability of an insurer’s revenue. Understanding the relationship between policy tenure and premium revenue stability is therefore important for insurers seeking to maintain sustainable revenue streams and effective portfolio performance. The study examines the effect of insurance policy tenure on premium revenue stability. It will assess how differences in the duration of insurance policies influence the consistency and predictability of premium income generated by insurance companies. The study will consider short-, medium-, and long-tenure policies and examine their contribution to changes in premium revenue over time. The study will focus on factors such as policy duration, renewal frequency, policy lapse rates, cancellation patterns, premium payment frequency, and premium income. Statistical techniques including descriptive statistics, correlation analysis, regression analysis, and trend analysis will be used to examine the relationship between policy tenure and premium revenue stability. These techniques will help determine whether longer policy tenure is associated with more consistent premium revenue. A quantitative research approach will be adopted for the study. Historical insurance portfolio and premium revenue data will be collected and analysed over a specified period. Descriptive statistics will be used to summarize policy tenure and premium revenue patterns, while correlation and regression techniques will be applied to determine the extent to which policy tenure influences premium revenue stability. Appropriate statistical tests will be used to assess the significance of the relationship. The study is expected to reveal that policy tenure may have a significant influence on premium revenue stability. Longer policy tenure may be associated with more consistent premium collections due to higher renewal and persistency levels, while shorter policy tenure may produce greater revenue fluctuations because of frequent cancellations, lapses, and changes in policyholders’ participation. The findings may also show differences in the contribution of policy tenure across insurance product categories. The findings are expected to be useful to insurance companies, actuaries, underwriters, financial managers, and insurance portfolio managers. Understanding the effect of policy tenure on revenue stability may assist insurers in developing effective policy retention strategies, improving premium income forecasting, strengthening portfolio management, and reducing revenue volatility. The study may also provide useful information for designing insurance products that encourage longer-term policy participation. The study concludes that insurance policy tenure can provide important information for understanding the stability and predictability of premium revenue. It is therefore recommended that insurance companies closely monitor policy duration and renewal patterns while developing strategies that encourage policy persistence. Effective management of policy tenure may improve premium revenue stability, strengthen financial planning, and support the long-term sustainability of insurance operations.

Keywords: Insurance Policy Tenure, Premium Revenue, Revenue Stability, Policy Duration, Policy Persistency, Policy Renewal, Premium Income, Policy Lapse, Policy Cancellation, Insurance Portfolio, Premium Revenue Stability, Actuarial Analysis, Insurance Revenue, Policyholder Retention, Insurance Business.