The Satellite Insurance Market and Underwriting Cycles

This research analyses whether underwriting cycles are present in an important but often overlooked line of insurance, satellite insurance. Unlike previous underwriting cycle studies, this study uses rates-on-line and capacity devoted to satellite insurance as well as loss ratios to determine the applicability of cycles. The sample period encompasses virtually the entire history of the satellite insurance industry, 1968–2010. The results indicate that cycles are present in the minimum and average rates-on-line and in capacity, but not the loss ratio. Regression analysis is carried out on the rate-on-line and capacity variables, and the regression results support the rational expectations/institutional intervention hypothesis and the capacity constraint (capital shock) hypothesis.