History of the Hard Market - Highpoint Insurance Group (2024)

FAQs

When did the insurance hard market begin? ›

They typically occur in response to major external events that increase the insurers' risk exposure and reduce their profitability. One of the earliest recorded instances of a hard insurance market occurred in the wake of the Great Fire of London in 1666.

Insurance has had a long history and its starting point can trace back to different times depending on the type of insurance. It has its origins in the Babylonian empire, Medieval guilds, the Great Fire of London, and maritime insurance.

On the other hand, a hard market, sometimes called a seller's market, is characterized by increased premium costs for insureds, stricter underwriting criteria, less capacity, restricted terms of coverage and less competition among insurance carriers for new business.

These conditions are known as a SOFT MARKET, or a buyer's market. A HARD MARKET, or a seller's market, is quite the opposite. With more losses and low returns on investments, the capital to fund transactions isn't as readily available and insurers are reluctant to take risks.

1752 The Philadelphia Contributionship for the Insurance of Houses from Loss by Fire, the oldest insurance carrier in continuous operation in the United States, was established. 1759 Presbyterian Ministers Fund, the first life insurance company in the United States, was founded.

The current hard market is expected to persist for several years, with pricing and conditions unlikely to soften soon. The industry continues to navigate the challenges posed by increased catastrophe activity and changing financial conditions.

Solomon Huebner's designation as the “father of insurance education” is undisputed. He taught the first course ever given in insurance, established the insurance department — and became the architect of the modern financial services industry.

Ancient Indian history has preserved the earliest traces of insurance in the form of marine trade loans and carriers' contracts.

Standalone insurance policies that were not tied to contracts or loans surfaced in Genoa in the 14th century. This is where the first documented insurance policy came from in 1347. In the following century, standalone maritime insurance was formed. With this type of insurance, premiums varied based on unique risks.

Life insurance is a very difficult product to sell. Simply getting your prospect to acknowledge and discuss the fact they are going to die is a hard first step. When and if you clear that hurdle, your next task is creating urgency so they buy right away.

Is P&C in a hard market? ›

This atypical hard market is driven by a 'quadruple threat' that features persistent economic and social inflation causing unexpectedly high losses, increased weather-related claims, scarce and costly reinsurance, and low interest rates over the past many years affecting investment income, which is crucial for P&C ...

Warren Buffett described the insurance business as particularly enticing. “It's so much fun because you get the money at the start, you know, and then you find out whether you've done something stupid later on,” he quipped.

A soft insurance market which means rates are flat or decreasing, and insurance coverages are readily available. By contrast, during hard market conditions rates are consistently rising, and coverage is more difficult to find.

While the hard market may continue through 2024, experts predict it will soften in 2025. Reinsurance may also increase by the end of the year, leading to softer market conditions in 2025.

The property/casualty (P/C) insurance industry cycle is characterized by periods of soft market conditions, in which premium rates are stable or falling and insurance is readily available, and by periods of hard market conditions, where rates rise, coverage may be more difficult to find and insurers' profits increase.

ACA health exchanges were fully certified and operational by January 1, 2014, under federal law. Enrollment in the marketplaces started on October 1, 2013, and continued for six months.

During 2008 insurers recorded unrealized capital losses totaling $52.9 billion in addition to $19.8 billion in realized capital losses and $21.2 billion in underwriting losses.