External Impacts on the Property-Liability Insurance Cycle

Abstract

Traditionally, underwriting performance is considered to be a function of industry specific institutions.Using quarterly data from 1974 to 1990, we provide evidence of a long-run linkage between general economic conditions reflected in the gross domestic product, the short-term interest rate, and the level of inflation and underwriting performance.Although we find that general economic fluctuations and the fluctuations in property-liability industry underwriting results are tied together in the long-run, the impact of the general economic fluctuations seem to have little impact on short-run fluctuations in the industry.