Hard Insurance Market

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Hard Insurance Market

A period of time during which insurance companies are able to assess high premiums and therefore achieve high profits. A hard insurance market may occur after a disaster, which enables insurers to tighten their underwriting standards and therefore write fewer policies on lower risk clients. This contributes to their profitability. However, it may be difficult to obtain insurance during a hard insurance market. It is considered a normal part of the business cycle of insurance. See also: Soft insurance market.
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Hard insurance markets naturally drive increased interest in alternative risk financing methods.
As was the case in the hard insurance markets of the 1970s and 1980s, associations and their members are experiencing the affect of the current hard insurance market as insurance companies respond to adverse market conditions.
To handle this hard insurance market, first be sure that you are dealing with a broker who specializes in association coverages, knows the market, and can tell you whether the rates and coverages yon are being offered are reasonable and suitable for your association.
Some insurers are reacting to the hard insurance market by making it more difficult for associations to get their claims covered or paid.
Except for health care practitioners and certain other such professional groups, association affinity insurance programs are doing surprisingly well in this hard insurance market. For most association programs, the relative size and stability of their groups have given associations greater leverage and negotiating power on behalf of their members.
United Educators Insurance, Chevy Chase, Maryland, is a particularly noteworthy example of a risk retention group that took advantage of the opportunities presented by a hard insurance market and has thrived.
Educational institutions, adds Abraham, are "better positioned to Weather the hard insurance market, as they are served by an insurance company that they own and that can provide critical insulation from the unpredictable fluctuations in the insurance marketplace." Of course, because NACUBO also gets its insurance from United Educators, the hard insurance market is not a problem.
I know, we have endured hard insurance markets before and we will, no doubt, experience them again in the future.
Higher rates and tighter underwriting standards are not the only fallout from hard insurance markets. Risk managers can expect more attention from their brokers, more attempts at cross selling, and more pressure to consolidate their risks with a single broker.