Underwriting Cycle

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Underwriting Cycle

The business cycle in the insurance sector. In the underwriting cycle, insurers compete with each other for clients, resulting in falling premiums and low underwriting standards. Insurers therefore write more policies than they can reasonably risk, which results in higher underwriting standards and premiums. Eventually, insurers write too few premiums to sustain and the cycle begins again.
References in periodicals archive ?
It directly results in what are known as underwriting cycles.
The ability to have a more accurate sense of the ultimate cost of risk will allow insurers to price with greater discrimination, which should encourage company management to rein in underwriting risks before losses get out of control, leading to what the report calls "shallow underwriting cycles.
The underwriting cycles for specialty insurance products are currently in a difficult market phase, resulting in higher underwriting profits for insurers.
Since 1950, there have been six or seven such underwriting cycles, lasting between 6 and 7 years on average in the United States (see Venezian, 1985; Cummins and Outreville, 1987).
Swift says the full impact on workers' comp will likely take two full underwriting cycles to flesh out.
We find that when there are high levels of capacity, underwriting profits follow a damped oscillatory AR(1) process and there are no underwriting cycles.
The study, which reviewed underwriting cycles from 1926, found that insurance cycles were more volatile than general business cycles.
Management has been very successful in managing through underwriting cycles and has the expertise and resources to take advantage of underwriting opportunities as they present themselves.
A Study of Why Underwriting Cycles Occur, Insurance Management Services, Conning and Company.
Prospective insurance entrants from the West should be interested in the timing and causes of underwriting cycles that are specific to Asia before they invest in the Asian insurance markets.
Taking a break from tossing around theories, equations and statistics during the recent meeting of the American Risk and Insurance Association (ARIA) in Orlando, FL, insurance academics met in plenary sessions to focus on underwriting cycles and insurer solvency.
However, the fluctuations of hard and soft underwriting cycles may be a thing of the past as traditional reinsurance providers now compete with non-traditional sources of portfolio risk transfer, such as insurance-linked securities and "alternative" investors such as pension, hedge or sovereign funds.