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What is a Hard Insurance Market


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I don't think a lot of agent here actually understand what is happening.

A hard insurance market is a period in the insurance industry where premiums increase, coverage terms are restricted, and capacity for most types of insurance decreases. This occurs when there is a shortage of insurance coverage, and insurers are no longer willing to take on new risks or offer coverage at affordable rates. The hard market can be caused by various factors, including:

  • Falling investment returns for insurers
  • Increases in frequency or severity of losses
  • Regulatory intervention deemed to be against the interests of insurers
  • Growing volatility of construction costs
During a hard market, insurance companies may:

  • Increase premiums
  • Restrict coverage terms
  • Reduce capacity for new business
  • Be more selective in the risks they take on
  • Focus on re-evaluating their existing books of business and re-underwriting terms
In a hard market, it is essential for businesses and individuals to carefully review their insurance coverage and consider the following strategies:

  • Review and adjust their insurance policies to ensure they have adequate coverage
  • Shop around for the best rates and coverage options
  • Consider alternative insurance products or markets
  • Develop a risk management plan to mitigate potential losses
  • Avoid underinsurance, as policyholders may suffer a shortfall in pay-out on an otherwise valid claim at a time they can least afford it.