Literature review - Underwriting Impact of insurers product...

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Underwriting Impact of insurers’ product variety on performance across underwriting cycles Literature review In a research article by B. Elango (2009), two specific questions were addressed for guiding this study. First, what relationship exists between product variety and performance during the underwriting cycle? And secondly how does underwriting cycle affect insurers’ performance. The underwriting cycle is characterized by hard markets and soft markets, in which insurer’s performance tends to, vary according (Cummins and Outreville, 1987 etal). During soft market conditions, insurance companies vigorously compete for market share, premium rates are usually stable or falling, and insurance firms are less profitable. Following the soft market there comes the downward cycle or the hard market, in which competition is less intense, rates tend to rise, and insurance profits tend to rise (Niehaus and Terry, 1993). The focus of the investigation was on the linkage between product variety and performance of property/casualty insurers during the underwriting cycle. By using real option theory it was hypothesized that, insurers with greater product variety seem to outperform insurers with fewer lines in both up and down cycles, since insurers with
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This note was uploaded on 02/26/2012 for the course ECON 101 taught by Professor Adam during the Three '11 term at University of Technology, Sydney.

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Literature review - Underwriting Impact of insurers product...

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