Chapter 4 - The Insurance Cycle Flashcards
1
Q
When does equilibrium occur?
A
When supply = demand
2
Q
What tools are available to manage supply and demand?
A
- historic information
- current information
- competitive pricing
- exclusivity of product
3
Q
Will price change effect necessities or luxuries more?
A
Necessities
4
Q
What is price elasticity of demand?
A
How much does demand fall if you increase the price
5
Q
Explain insurance cycle
A
- new insurers enter market increasing capacity
- prices forced down and more supply than demand, aggressive pricing takes place
- losses made or just lower profits, so insurers leave market
- prices are high and higher profits as more demand than supply (repeat)
6
Q
How might legal or political influence effect insurance cyle?
A
- law might change to extend liabilities insured now responsible for
- ability to write business in certain parts of the world may change
7
Q
What might effect the insurance cycle?
A
- major events (like COVID and 9/11)
- legal and political influences
