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What Is A Hard Insurance Market? And 4 Steps To Soften The Blow

How to soften the blow of a ‘hard insurance market’

We’re passionate about our industry. As a result, we frequently find ourselves in conversations about that state of the insurance market. Inevitably, we often need to explain industry-specific ‘jargon’. On several recent occasions, I’ve explained ‘hard market’ and how to ‘soften the blow’. Below, I summarize what it is and how to counteract it (hint – use a broker). Then should you find yourself explaining it to your mate down the pub/clients/kids/granny/dog (and anyone else that will listen), we can help you soften that blow too – see the below ‘hard insurance industry’ infographic! (Click Here To Download)

What is a ‘hard insurance market?

OK, so within the field of Insurance, a ‘hard market’ is a period  when premiums increase and availability of cover decreases.

Why does this happen?

Well, there are several reasons a market can harden, here are a few key reasons

  • Increased frequency or severity of claims losses

Insurers must raise premiums when their costs of reinsurance rise.

  • Regulatory impacts

New regulations can affect rating increases or scale-down activity

  • Insurers falling investment

This puts pressure on the insurers’ ability to supplement or subsidise underwriting returns

Recognise any of the following? Here’s some key characteristics of a ‘hard market’…

  • Higher premiums
  • Less desire for growth, (less growth = fewer products = less choice) 
  • Less favourable renewal terms (i.e. increased price, excesses, cover restrictions etc)
  • Wider exclusions and narrower policy wordings 
  • Stricter underwriting (which can cause  difficulty getting favourable terms)
  • Lower policy limits

Still with me? OK…let’s strategise…

How to soften the blow…

  • Utilise the brokers ‘bulk buyer’ power to secure a better deal
  • Shop around to ensure you’ve weighed up all options 
  • During a hard market (when often, claims can become harder to win) speak to your broker and utilise their knowledge. 
  • Risk management – by becoming better at avoiding risk you will find it’s easier to get cover and at a better price, eg: review your alarms, health & safety programmes, physical security, staff training etc.

Who can help?

I thought you’d never ask! Contact us to discuss how to soften the blow in a hard insurance market. We promise we’ll be more attentive than your dog! 

Oh – and should you need to explain ‘a hard insurance market’ to ‘Joe Bloggs’, here’s that handy infographic! (Click Here To Download)

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