Beware the hard insurance market

The insurance marketplace works in cycles, varying between levels of soft and hard markets.

Unfortunately, the insurance sector has entered a ‘hard market’ for the first time in nearly 20 years. This could be the first time that many companies have experienced these conditions.

What is a hard market?

The signs have been coming for the past year or two with insurers demonstrating a lack of appetite for writing cases, but now we are most certainly trading in a hard market. This means that most insurers are looking for premium increases, imposing stricter terms or declining risks.

Quotation turnaround times have been impacted significantly with risks needing further consideration. With premiums increasing insurers are seeing far more cases in an attempt to secure improved terms or, where the existing markets are declining, to quote at renewal.

What has caused the hard market?

It’s caused by multiple factors such as large catastrophes (storms Ciara and Dennis, Grenfell Tower) and low savings returns. Coronavirus certainly hasn’t helped, but this list isn’t exhaustive.

If an insurer’s profitability is driven down then it tends to lead to a hard market.

What should I do?

Do not panic, but start the process early and look to engage with an experienced alternative broker. But not too many, as this will prove counterproductive, commonly known as ‘flooding the market’.

Engaging with an experienced broker with a larger emphasis on risk management can help make your ‘risk’ more attractive to an insurer.

Here at Spencer Hayes Group we are both. Our staff have decades of experience, and can also assist with risk management programmes; anything from Health & Safety to Business Continuity Planning.

  • To read this feature in full and access further Lancashire business news, advice and analysis subscribe to Lancashire Business View magazine or join the LBV Hub from just £2.50 per month. Click here to subscribe now.

Enjoyed this? Read more from Marc Kirker, Spencer Hayes Group

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