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Frederik J. Mostert ORCID logo, Jan Hendrik Mostert ORCID logo, Liezel Essel


The short-term insurance industry is a cyclical type of business due to the impact of the continuous market cycle. This cycle has a growth phase, soft market phase, hard market phase and a break-even phase. The objective of the research paper focuses on the improvement of financial decision-making
when executives of the short-term insurance industry are managing their business during the various phases of the continuous market cycle. Both a literature study and an empirical survey were necessary to achieve the research objective. The empirical survey included the contributions of the top nine commercial and corporate short-term insurers in South Africa. They represented more than 77% of the total gross written premiums in 2009 and can thus be considered as the leaders of the short-term insurance industry in this country. The conclusions of the study should be valuable to other developing countries with emerging market economies as South Africa is also classified as such. The study focused on the various factors which may cause the continuous market cycle, the problem areas which the executives experience concerning the continuous market cycle, and how often various factors are adjusted by the short-term insurers to account for changes in the continuous market cycle.

Keywords: Business Cycle, Competition, Continuous Market Cycle, Foreign Exchange Rates, Interest Rates, Investment Income, Phases, Reinsurance, Short-Term Insurers, Solvency

How to cite this paper: Essel, L., Mostert, F.J., & Mostert, J.H. (2012). The continuous market cycle of the short term insurance industry. Risk Governance and Control: Financial Markets & Institutions, 2(1), 22-29.