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13 February 2020

What are “Hard” and “Soft” market conditions?

What are “Hard” and “Soft” market conditions?

A “Hard” insurance market is generally characterised by good demand for insurance coverage and a reduced supply. Insurers impose strict underwriting standards and issue a limited number of policies or reduce the level of capacity (limits or sums insured) they are prepared to offer. Premiums are higher, and insurers are disinclined to negotiate reductions in terms.

A “Soft” insurance market is the opposite of a hard one. When the market is soft many insurers are competing for business and premiums are generally lower. Insurers relax their underwriting standards, offer more capacity and coverage is widely available.  Underwriters are generally more flexible and willing to negotiate coverage terms. Insurers often widen their policy wordings and include additional “free” cover benefits.

Some businesses where the market options are more restricted due to their sector or type of processes or historic loss records could see substantial cost increases this year. In contrast, more low risk business sectors may escape the worst of the price correction.

To find out more about the potential impact for your business and how to mitigate the worst of the affects, speak with the Vista Team.


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