What characterizes the "insurance cycle"?

The "insurance cycle" is best characterized by the fluctuating pattern of premiums, underwriting profitability, and availability in the insurance market over time. This cycle typically involves periods of hard markets, where premiums increase and coverage becomes more restricted, followed by soft markets, where premiums decrease and coverage becomes more readily available. Various economic factors, such as changes in risk assessment, competition, and claims experience, directly influence this cycle, creating a dynamic that insurers must navigate.

This concept captures the essence of how the insurance market evolves and reacts to a variety of influences, including external economic conditions and the internal financial health of insurance companies. Understanding this cyclical nature is essential for insurance professionals, as it impacts pricing strategies, risk management, and overall business planning in the industry.