From an insurance buyer’s perspective, it can sometimes feel as if premium prices change on a whim. But the truth is that the insurance market is cyclical in nature, fluctuating between soft and hard markets:
- Soft markets—A soft market, which is sometimes called a buyer’s market, is characterized by stable premiums, broader terms of coverage, increased capacity, higher available limits and competition among insurance carriers for new business.
- Hard markets—A hard market, which is sometimes called a seller’s market, is characterized by increased premiums, diminished underwriting appetite and capacity, restricted coverage and less competition among insurance carriers for new business.