26.6 Assembling the Components

Underwriting Cycle Components

Figure 26.3: Underwriting Cycle Components

  • Economic factors and capital both affect the supply and demand curves

  • Level of price and losses affect the supply curve (but possibly with delay)

  • Capital is impacted directly by premium and losses and specifically profitability

Output of this model is an equilibrium price

The behavioral model can be used to simulate a distn of this price

  • Should be validated against historical experience