The cycle challenge

As the insurance industry is arguably approaching the next soft market, Chris Waites examines the key factors that have historically influenced the insurance cycle and what steps insurers should take to limit the impact of future cycles

General insurance is a notoriously cyclical business. Present rates are high and insurers are currently earning attractive returns on capital.

This is in sharp contrast to the final few years of the last millennium, which saw one of the longest-lived soft markets in living memory, characterised by competitive pricing and very attractive terms available to policyholders.

The term 'cycle' is commonly used to include movements in loss ratios, prices, profitability, coverage terms or availability of