How to soften the blow of a ‘hard market’
We’re passionate about our industry. As a result, we frequently find ourselves in conversations about the 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 the 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
- Ian Searle has examined hard and soft markets in greater detail here: https://www.cii.co.uk/media/10123019/i11_syllabus_2020.pdf
Recognise any of the following?
Here are 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…
4 ways 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)
