The Test and Calculation of the Underwriting Cycle in Property-Liability Insurance of China

The supply and demand of insurance interact with each other. Generally speaking, the result of this interaction is the appearance of underwriting cycle with cyclical fluctuation of insurance premium and the supply and demand of insurance as its main characteristic. Based on the ratios of premiums-to- claims data, the research of this paper sets up a recession model to test the existence of the underwriting cycle in property-liability insurance of China and calculate its length. We found that, first, the underwriting cycle does not follow second order auto regression process. Second, according to the result, the length of underwriting cycle in property-liability insurance of China is 1.83 year. It plays an important role for the development of insurance of china to study internationally the actual situation of the underwriting cycle and take corresponding measures to stabilize and mitigate the cyclical fluctuation of insurance supply and demand.