Chinese Property Insurance Market Underwriting Cycle Empirical Research

Insurance, as a stabilizer and the national economy booster, in Chinese rapid economic development and social progress environment, is playing an increasingly important role, the concept of underwriting cycle was firstly proposed in America, used it to describe the insurance industry fluctuations trend, this trend will appear at all levels in the insurance industry, reflected in the premium income, profitability, product supply, rates, etc. Exploration for underwriting cycle have important meanings, just like providing a reference for policy-made, and providing a theoretical basis for the company’s operating.On the basis of previous research efforts, this article selects the method and statistical indicators suitable for the empirical testing of the underwriting cycle. Choosing time series methods, CF filtering method and the method of spectral analysis to verify the existence of the underwriting cycle or not, and the use of vector autoregressive model and the impulse response function analyze the reliability of the economic cycle hypothesis or not, collect more than140monthly data from1999to the present from the insurance industry and the overall economic environment, from both qualitative and quantitative interpretation of our current underwriting cycle phenomenon.Specifically speaking, this article is divided into five parts, the first one is introduction, introduces the topics’the background and significance of the paper, mission and structure of the arrangements, and writing difficulties, possible innovation and the inadequacies of this article. The second part is divided into theory and literature review, describes the underwriting cycle theory, what is the underwriting cycle and the underwriting cycle’s the origin and development, as well as major reasons for the existence of underwriting cycles and so on. On the basis of large scale of articles, arrange the domestic and foreign researches about underwriting cycle, including empirical testing and analysis. Collect classic methods and research results they are all very representative in this field. Try my best to describe the research achievements objectively, completely and representatively. The third part is the empirical part of the underwriting cycle, firstly, from the perspective of time series analysis, autocorrelation and partial autocorrelation diagram shows the existence of underwriting cycles, provide the feasible basis for the next study; Following task is using CF filter method, from the perspective of empirical research the existence of underwriting cycles or not, and the detection of a cycle of length and each complete cycle period; and use another analysis method----spectral analysis method to validate the conclusions of the CF filter, striking similarity between the two results proves the existence of Chinese property insurance market generally3-4years’underwriting cycle. The major task in part4is analyzing how the economic series affect underwriting cycle, basis on the former research hypothesis, use VAR and impulse response graph to explain. And the final part is conclusions and suggestions.The article may have innovation lies in the full use of econometric methods, using monthly insurance and economic data should be more convincing, the defect is unable to collect data before1999, which is due to the constraints of statistical work.This article s research results show that there are3to4years underwriting cycle exists in Chinese property insurance industry, economic elements play very important role in explaining the underwriting cycle cause.