Hard Insurance Market: Why and What to Expect

Wednesday, 22 May 2024 07:22

Hard Insurance Market: Why and What to Expect Featured

Written by Oklahoma Insurance Commissioner Glen Mulready
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Early American poet Anne Bradstreet once wrote, “If we had no winter, the spring would not be so pleasant: if we did not sometimes taste of adversity, prosperity would not be so welcome.” This quote applies to almost every aspect of life, including insurance markets. Unfortunately, we’re experiencing a winter, or the effects of a hard insurance market. However, just like with winter, fairer weather will eventually return. Let’s look at what a hard market means, what’s happened historically, and what the next few years will look like.

What is a hard market?

A hard insurance market is a period marked by rising rates and coverage becoming more difficult to obtain, in contrast to a soft market, where conditions are favorable to stable or falling prices and plenty of coverage options. Multiple factors influence market conditions, including the economy, the number of natural disasters across the country, and regulatory pressures, to name a few. Often, it takes years before we see the effects of these types of events, which is what is happening right now. The economic impacts of the COVID-19 pandemic are still being felt, including inflation and high interest rates, and we’ve seen an increasing number of natural disasters over the past few years, all culminating in the current market conditions.

Have there been hard markets before?

Hard markets are a part of the property and casualty insurance cycle – meaning this is not the first time we’ve been here. According to the Insurance Information Institute (III), during the last three hard markets, inflation-adjusted net premiums written grew 7.7% annually (1975 to 1978), 10.0% (1984 to 1987) and 6.3% (2001 to 2004). When markets toughen, insurance companies raise rates to remain financially solvent, or able to pay claims. However, competition creates pressure for insurers to offer lower rates. This, along with reduced economic challenges and periods of fewer claims, helps to bring those rates down and soften the market.

What can we expect over the next few years?

Hard markets do stabilize, and prices remain flat or come down. Because of severe weather events and other impacts on the insurance industry, the road to a softer market won’t be an easy one traveled overnight. We may see the current market for the next few years, at least. It will take time for the insurance industry to react to any positive changes occurring right now. What’s important is that consumers have plenty of options when it comes to insurance and that the market remains robust.

The insurance industry is marked by periods of hard and soft markets. One thing that will remain constant, though, is the Oklahoma Insurance Department’s dedication to the people of our state. Consumers can find helpful resources about insurance and what they can do to weather the hard market on our website at oid.ok.gov. If you have questions about your insurance coverage or need to file a complaint, you can reach us at 800-522-0071.



The Oklahoma Insurance Department, an agency of the State of Oklahoma, is responsible for the education and protection of the insurance-buying public and for oversight of the insurance industry in the state.


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