Chapter 4: The Insurance Cycle Flashcards
Define ‘impact of major events’
Define ‘legal and political influences’
Define ‘supply and demand’
The relationship between the price of teh commodity and the quantity traded
Define ‘equilibrium’
When the quantity supplied equals the quantity traded
Define ‘pricing’
How much is charged for one item
What tools can be used to manage supply and demand?
Historic information, current information, competitive pricing, and exclusivity of product
What factors do shops have little to no control over?
Competition in the local area, and if the data used for forecasting is accurate
Define ‘necessities versus luxuries’
Some things are necessary, others are not. Insurance is commonly seen as a necessity, due to legal requirements
Define ‘price elasticity of demand’
How much the demand for a certain product goes down when the price rises
What is undersupply?
Not enough supply to meet demand
What is oversupply?
Too much supply, not enough demand
Define ‘subscription market’
The London market has many insurers working in it and a number of them can share the same risks depending on appetite and capacity
What is a hard market?
Where there is an excess of demand over supply
What is a soft market?
Where there is an excess of supply over demand
