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Market cycles

Market-wide fluctuations in the prevailing level of insurance and reinsurance premiums. A soft market (i.e., a period of increased competition, depressed premiums, and excess capacity) is followed by a hard market—a period of rising premiums and decreased capacity. Traditionally, each period has a causative effect on the other. For example, in a hard market, insurers’ earnings are greater than during a soft market. Large earnings have the effect of increasing capacity. More capacity means more supply. When supply equals or exceeds demand, premiums go down, competition heats up, and earnings begin to shrink. Once earnings shrink to the point where the amount of capacity is reduced, the market hardens up, and the cycle starts all over again.

Market overt

The rule, that a person who bought goods in ‘market overt’ (an open market) acquired a good title even if the goods were stolen, has been abolished by the Sale of Goods (Amendment) Act 1994. The so-called ‘thieves charter’ prejudiced the real owners of the goods and frustrated the subrogation rights of theft insurers.

Market Pools for Liability Insurance

Market pools formed by a consortium of insurers are not very common in liability insurance except perhaps in extra-hazardous risks e.g., demolition contracts. However, public liability insurance for nuclear reactor operations is available on a pooling basis, from the “British Insurance (Atomic Energy) Committee comprising the insurance companies and Lloyd’s underwriters.

Market price

Amount paid or value considered in the open market at which a security or stock can be bought or sold.
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The price actually paid or the price considered to be obtainable in the open market under the conditions currently existing.

Market Risk

A risk experience by those who invest in securities which is the risk of possible loss of investment since there are no guarantees associated with such investments.
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Chance of loss or gain according to changes in demand or supply in a market place, typically the market for an organization’s output. In markets for money and securities, however, both the interest rate risk and investment risk are, broadly speaking, market risks.
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The risk of possible loss of the money one has invested. This risk exists with any investment, because no investment is guaranteed.

Market segment

Phrase that refers to the section, part, or portion of a specific class or type of potentially enrolled consumer for selling an insurance contract (e.g., groups under 100 employees or self-funded groups).