A common question in our industry is: why did my insurance rates increase if nothing changed? There are many factors when it comes to insurance premiums but in 2023 we are seeing higher increases than normal. The main reason? A hard market.
What is a hard market in insurance?
As of 2023, the insurance industry is in a hard market. A hard market in insurance refers to a period of time when insurance is difficult to obtain, coverage is limited, and premiums are higher than normal. This is typically caused by a combination of factors such as increased demand for insurance, limited availability of insurance products, and decreased competition among insurance providers. During a hard market, insurance companies may be more selective in underwriting policies and may impose stricter underwriting criteria. Insurance hard markets also occur as a result of imbalances in supply and demand in the insurance industry.
What is causing the hard market in insurance?
- Increased demand for insurance: During a hard market, demand for insurance may increase due to natural disasters, increased economic activity, or increased public awareness of potential risks.
- Limited availability of insurance products: Insurance companies may limit the availability of insurance products due to increased claims, rising costs, or changes in regulations.
- Decreased competition among insurance providers: During a hard market, some insurance companies may choose to exit the market or reduce their exposure to certain risks. This can lead to decreased competition and higher premiums.
- Economic conditions: Economic conditions, such as inflation, interest rates, and economic growth, can also play a role in the formation of a hard market.
- Increase in reinsurance costs: Reinsurance carriers are insurance companies that provide insurance to other insurance companies. Learn more about how reinsurance impacts your premium here.
Overall, a hard market in insurance is a reflection of a dynamic and complex industry that is constantly adapting to changes in market conditions and consumer needs. Having a strong partner like your agent at Troxell will help you navigate these situations and find solutions to help with rising costs.
Contact Troxell today to discuss your insurance.
This blog was written by:
Ryan Augustine, CRM, CIC, CLCS, CAWC
RYAN AUGUSTINE IS AN ACCOUNT EXECUTIVE AT TROXELL. HE WORKS BOTH ON PERSONAL LINES AND COMMERCIAL LINES TO HELP NEW AND EXISTING CLIENTS. RYAN WORKS HARD TO KEEP HIS CLIENTS EDUCATED ON TRENDS, COVERAGE, AND CHANGES IN THE INSURANCE INDUSTRY.