Underwriting cycle

[padasala]

The most often used general explnation for the hard underwriting cycle is when insurance is profitable and the premiums are really high.

Is the scenario where premiums are high and the premium rates being unprofitable also qualify for an uw cycle being hard?

For instance, after 9/11, reinsurers stopped writing terrorism covers and the premiums shot up immediately (an interesting tidbit here for actuaries is that GIC Re, the state owned indian reinsurer, was able to get into the US markets post 9/11 due to some reinsurers not underwriting their book).

In this scenario, would it be correct to say that the underwriting cycle went from soft to hard (because premiums increased)?

 

[Darren Michaels]

Yes one of the reasons for the underwriting cycle to go from being soft to hard is that premium rates have increased.

This can often be due to a "shock" event such as a large catastrophe event (in your case a human-made one).

However, under such a scenario after the increase you would hope that the business was now profitable as opposed to unprofitable (at the very least it should be less unprofitable than it was before!).