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  • Andy Adams

Hard Rain Gonna Fall . . .

Chances are if you have renewed your insurance in the last six months, to explain the premium increases you were seeing, your broker used the term "hard market." This is insurance lingo for price increases. It refers to the fact that the insurance market is less competitive which means carriers are demanding higher premiums for the same or even less coverage. In a "soft" market, carriers are chasing insureds willing to be more flexible about pricing and coverage.

Some markets have been "hard" for awhile. The marketplace for auto insurance has been a hard market for several years as insurers are still trying to find the premium price point that will make it profitable for them to insures automobiles.

COVID-19 has hit insurers in two ways according to Insurance Business:

The outbreak has created a double whammy for insurers, with combined customer claims predicted to exceed US$100 billion and the volatile financial markets hitting reserves hard.
The industry had already seen a marked rise in insurance and reinsurance prices even before the pandemic struck, partly as a result of years of relatively expensive natural catastrophes and compensation payments.
“There was a snowball rolling down the hill and coronavirus has added to that as it gathers momentum,” said Jon Turner, head of insurance broker Gallagher UK’s specialty business, in an interview with the Financial Times.

Further in the article, they predict that Directors and Officers ("D&O") premiums could double over fears of COVID-19 lawsuits arising from how businesses conduct and respond to the pandemic.

A hard market is as good as time as any to sing the blues . . .

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