Underwriting Cycles: A Synthesis and Further Directions

Underwriting cycles are associated with a mystique that few topics in the area of risk and insurance share. Many explanations and theories have focused on underwriting cycles, but little research exists to discern the relative importance of these theories in explaining insurance pricing and profitability. This research provides an intuitive review of the existing literature on underwriting cycles in the context of a demand and supply model. Specific, unaddressed issues about underwriting cycles are raised in the literature reviewed.