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  • Creekside Insurance Advisors Inc.

During a “hard market”, independent agencies are more important than ever

What is a hard market?

A hard market in insurance refers to a period when the insurance industry experiences challenging conditions that result in higher premiums, reduced capacity, stricter underwriting, and limited coverage options for policyholders. In a hard market, insurers face increased costs, losses, or other factors that make it more difficult and costly to provide insurance coverage. Here are the key characteristics of a hard market:


1. Rising Premiums: During a hard market, insurance premiums tend to increase significantly across various lines of insurance. Insurers raise rates to compensate for higher costs, increased claims, or a need to restore profitability.


2. Reduced Capacity: Insurers may reduce their willingness or ability to underwrite certain risks or lines of business during a hard market. They may limit the amount of coverage they offer or become more selective in the risks they choose to insure.


3. Stricter Underwriting Standards: Underwriting criteria become more stringent in a hard market. Insurers carefully assess risks and may impose stricter requirements, higher deductibles, or additional conditions to minimize their exposure to potential losses.


4. Limited Coverage Options: Policyholders may find fewer insurance options available to them during a hard market. Insurers may reduce coverage extensions, eliminate certain policy endorsements, or become more cautious in offering specialized or non-standard coverage.


5. Increased Loss Ratios: Insurers may experience higher loss ratios during a hard market, meaning that a larger portion of the premiums they collect goes towards claims and related expenses. This can be due to factors such as increased claim frequency, severity, or adverse market conditions.


6. Market Imbalances: In a hard market, there may be an imbalance between the demand for insurance coverage and the supply of available coverage. Insurers may become more selective in the risks they choose to underwrite, leading to a concentration of risks within the market.


7. Economic and Industry Factors: Several factors can contribute to a hard market, including natural disasters, catastrophic events, changes in regulations or legislation, economic downturns, low investment returns for insurers, or shifts in the overall insurance market cycle.


During a hard market, policyholders may face challenges in obtaining affordable coverage and may need to review their risk management strategies, explore alternative options.


What’s the advantage of working with an independent agency?

It’s a great advantage to use an independent agency during a hard market. Independent agents work with a variety of companies to get you the best coverage at the lowest premiums. At Creekside Insurance Advisors, Inc., we have access to well over 30 companies. That means choice. And choice to you can mean lower rates, less restrictive policies, and better coverage.

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