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The Property/Liability Insurance Cycle: A Comparison of Alternative Models


  • Seungmook Choi

    (Department of Finance, University of Nevada)

  • Don Hardigree

    (Department of Finance, University of Nevada)

  • Paul D. Thistle

    () (Department of Finance, University of Nevada,)


The objective of this paper is to compare alternative models of insurance pricing as theories of the property-liability underwriting cycle. The existing literature has focused on comparing two models, the financial pricing and capacity constraint models. However, these are not the only relevant models. We show that six alternative models imply the same general form of the pricing equation. We apply the model to data on stock property-liability insurers for the period 1935–1997. We find that the actuarial model and the capacity constraint hypothesis are the only theoretical models that are consistent with the data.

Suggested Citation

  • Seungmook Choi & Don Hardigree & Paul D. Thistle, 2002. "The Property/Liability Insurance Cycle: A Comparison of Alternative Models," Southern Economic Journal, Southern Economic Association, vol. 68(3), pages 530-548, January.
  • Handle: RePEc:sej:ancoec:v:68:3:y:2002:p:530-548

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    References listed on IDEAS

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    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Jang, Bong-Gyu & Kim, Kyeong Tae, 2015. "Optimal reinsurance and asset allocation under regime switching," Journal of Banking & Finance, Elsevier, vol. 56(C), pages 37-47.
    2. Dionne, Georges & Harrington, Scott, 2017. "Insurance and Insurance Markets," Working Papers 17-2, HEC Montreal, Canada Research Chair in Risk Management.
    3. repec:ipg:wpaper:2014-047 is not listed on IDEAS
    4. Ning Wang & Yiling Deng, 2016. "Market responses to loss shocks and insurers' post-catastrophe performance in the US property-casualty insurance market," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 11(3), pages 231-246.
    5. Catherine Bruneau & Nadia Sghaier, 2014. "Cyclicity in the French Property," Working Papers 2014-47, Department of Research, Ipag Business School.
    6. repec:bla:jrinsu:v:83:y:2016:i:4:p:849-876 is not listed on IDEAS
    7. Heni Boubaker & Nadia Sghaier, 2014. "How Do the Interest Rate and the Inflation Rate Affect the Non-Life Insurance Premiums ?," Working Papers 2014-282, Department of Research, Ipag Business School.

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