While the rollout of a Covid-19 vaccine and the slow return to normality in 2021 has buoyed society & the market, there will still be challenges as the economy recovers from the deepest recession in modern history.
In the insurance sector, many expect this economic background to fuel an already hardening market. Over the coming months, you might hear insurers refer to the challenges presented by a ‘hardening market’, but what does that mean and how might that impact your business?
Insurers operate in a cyclical market that runs from ‘soft’ to ‘hard’. Soft markets are characterised by lower premium rates, better levels of coverage, flexibility of terms, good investment returns, more availability and stiffer competition among insurers. All these factors present favourable procurement conditions for business owners. In contrast, in a hard market there is less desire for growth, insurers lose their appetite, competition reduces, premiums increase, and terms and conditions of coverage are more restrictive. This environment is challenging to (re)insurers, brokers and business owners alike and something we are experienced at handling. This is fuelled by an estimated £74bn of claims from Covid-19, the recession, and insurers experiencing larger claims, whether it’s due to an increase in fraud or more claims being lodged.
Does this interest you? Read the other articles in our summer newsletter in the link below.