Exposure and Rate Increases Offer Growth Opportunities in Hard Market

Talking to Clients About Current Conditions Is a Value Add for Agents

EVERETT, MASS. — The property-casualty (P-C) insurance market has been firming for several years, but unlike traditional hard markets of the past, insurers have not pulled back capacity significantly, according to a panel of industry experts who spoke at the SAN Group annual business meeting and conference.

Panelists discussed the characteristics of hard markets and how independent agents can bring greater value, manage risk and retain accounts in today’s market. Generally, the insurance industry defines a hard market as an upswing in the market cycle that is characterized by premiums increasing and capacity for most lines of business tightening. Hard markets are driven by several factors, including a decrease in insurer investment income, increases in the frequency and severity of losses and a generally unfavorable regulatory environment.

Apart from significant capacity limitations, the current market meets most of those requirements, including increased regulatory scrutiny on carriers’ rating models, according to Carl Canales, senior vice president and field executive, Northeast region, Liberty Mutual and Safeco Insurance. “Here in the Northeast region, I’m not sure that you’re seeing a significant pullback in capacity from your carriers. I think that’s primarily because the industry went into the pandemic in a position of strength [and] emerged from it in a position of strength. At the end of 2021, the industry held nearly $1 trillion of capital in just the United States P-C [market]. That shows you this isn’t a firming of the market based on a lack of capacity — it really is driven by an unprecedented increase in loss cost and trends.”