fbpx

2020 Hard Market Trend Report: The Insurance Pendulum

TREND REPORT

THE INSURANCE PENDULUM:
WHAT'S A HARD MARKET?

Image of the title page of the hard market white paper

TREND REPORT

THE INSURANCE PENDULUM: WHAT'S A HARD MARKET?

Image of the title page of the hard market white paper

Why are insurance rates up? How long will it last? And what does it mean for your business?

Why are insurance rates up? How long will it last? And what does it mean for your business?

OVERVIEW

What is in this Trend Report?

Insurance pricing has been on the rise for a while now, with widespread premium hikes across all types of insurance. After years of stable or even decreasing premiums and ever broadening coverage, commercial insurance companies have had to react to a profit crunch.

This “hardening” of the market, with lower risk tolerance, higher rates and tighter acceptance criteria, has not occurred in over a decade. Canadian businesses are struggling to navigate this unfamiliar environment.

In this report, discover:

1. How the insurance industry defines a hard market;

2. Which factors create a hard market;

3. What does the future look like in the insurance industry, particularly after the pandemic;

4. What are the implications for your commercial insurance;

5. What you can do to successfully navigate the hard market.

OVERVIEW

What is in this Trend Report?

Insurance pricing has been on the rise for a while now, with widespread premium hikes across all types of insurance. After years of stable or even decreasing premiums and ever broadening coverage, commercial insurance companies have had to react to a profit crunch.

This “hardening” of the market, with lower risk tolerance, higher rates and tighter acceptance criteria, has not occurred in over a decade. Canadian businesses are struggling to navigate this unfamiliar environment.

In this report, discover:

1. How the insurance industry defines a hard market;

2. Which factors create a hard market;

3. What does the future look like in the insurance industry, particularly after the pandemic;

4. What are the implications for your commercial insurance;

5. What you can do to successfully navigate the hard market.

01

How does insurance work?
Click to Expand

First Things First: How Does Insurance Work?

Insurance transfers financial risk away from individuals into a community risk pool. Insurance buyers contribute to the pool by paying a premium. When a loss occurs, the insurance company dips into the pool to pay for that loss. The contributions of many fund the losses of a few.

But insurance is a business like any other. That means companies have to be profitable in order to stay in business and pay claims. How does the industry characterize the situation when, like today, it’s close to or operating at a loss?

02

The insurance market is hardening

The Insurance Market Is “hardening” — Today.

Insurance companies are paying out more money than they can get back in premiums and investments. As a result, insurers are more cautious about what risks they can take on. They’re pulling back on coverage, lowering limits, and raising premiums. This is known as a “HARD MARKET.”

And until the insurance industry starts making money again—fewer claims, lower payouts, higher returns—rates will keep climbing upwards.

03

What is causing the Hard Market?

What’s Causing The Hard Market?

  1. Claims are rising in frequency and severity with higher payouts all-around.
  2. Years of premium reductions, and heavy losses, are making companies unprofitable.
  3. Various financial crises, along with the pandemic, have virtually eliminated interest gains from stocks and bonds.

04

Why are insurance claims increasing?

Why Are Claims Increasing?

SOCIAL TRENDS are a key factor. In an increasingly litigious society, companies are being held accountable more than ever. The result? $10.2B spent on commercial property and liability losses in 2018.

CLIMATE CHANGE is another reason. Record-breaking numbers of catastrophic weather events nationwide have led to extensive property and auto damage.

05

What does the hard market mean for you?

What Does The Hard Market Mean For You?

After a few tough years, the Canadian insurance industry is operating at or near a loss across all lines. With billions of dollars in losses, the industry first started to experience a hard market in 2019 and it continued into the first quarter of 2020. These conditions will, no doubt, persist with the outbreak of COVID-19.

Even the most prepared insurance buyers will have to adapt. Businesses can expect to face: higher premiums, reduced coverage, stricter underwriting criteria, and fewer options to choose from.

06

What can you to reduce your premiums in a hard market?

So what can you do?

Partner with a broker you trust—a broker with a background in your industry, who will keep you up-to-date on market trends, and guide you to the coverage you need. Connect with your broker to gauge how the hard market will affect your business.

Brokers—like PROLINK—are knowledgeable advisors who will advocate for you when you need it most. For more advice, speak to a representative today.

01

How does insurance work?

First Things First: How Does Insurance Work?

Insurance transfers financial risk away from individuals into a community risk pool. Insurance buyers contribute to the pool by paying a premium. When a loss occurs, the insurance company dips into the pool to pay for that loss. The contributions of many fund the losses of a few.

But insurance is a business like any other. That means companies have to be profitable in order to stay in business and pay claims. How does the industry characterize the situation when, like today, it’s close to or operating at a loss?

02

The insurance market is hardening

The Insurance Market Is “hardening” — Today.

Insurance companies are paying out more money than they can get back in premiums and investments. As a result, insurers are more cautious about what risks they can take on. They’re pulling back on coverage, lowering limits, and raising premiums. This is known as a “HARD MARKET.”

And until the insurance industry starts making money again—fewer claims, lower payouts, higher returns—rates will keep climbing upwards.

03

What is causing the Hard Market?

What’s Causing The Hard Market?

  1. Claims are rising in frequency and severity with higher payouts all-around.
  2. Years of premium reductions, and heavy losses, are making companies unprofitable.
  3. Various financial crises, along with the pandemic, have virtually eliminated interest gains from stocks and bonds.

04

Why are insurance claims increasing?

Why Are Claims Increasing?

SOCIAL TRENDS are a key factor. In an increasingly litigious society, companies are being held accountable more than ever. The result? $10.2B spent on commercial property and liability losses in 2018.

CLIMATE CHANGE is another reason. Record-breaking numbers of catastrophic weather events nationwide have led to extensive property and auto damage.

05

What does the hard market mean for you?

What Does The Hard Market Mean For You?

After a few tough years, the Canadian insurance industry is operating at or near a loss across all lines. With billions of dollars in losses, the industry first started to experience a hard market in 2019 and it continued into the first quarter of 2020. These conditions will, no doubt, persist with the outbreak of COVID-19.

Even the most prepared insurance buyers will have to adapt. Businesses can expect to face: higher premiums, reduced coverage, stricter underwriting criteria, and fewer options to choose from.

06

What can you to reduce your premiums in a hard market?

So what can you do?

Partner with a broker you trust—a broker with a background in your industry, who will keep you up-to-date on market trends, and guide you to the coverage you need. Connect with your broker to gauge how the hard market will affect your business.

Brokers—like PROLINK—are knowledgeable advisors who will advocate for you when you need it most. For more advice, speak to a representative today.

More Questions? Contact Us Today

With over 35 years in the industry, PROLINK has seen it all—soft markets, hard markets, and everything in between. We’ll take the time to understand your unique circumstances and get you the best possible protection at the best possible rate, no matter what’s happening in the market.

If you have any questions about your business, your continuity planning, or your insurance, we are only a call or email away. And if you’re curious about how the hard market will affect your personal insurance contact us below.

More Questions? Contact Us Today

With over 35 years in the industry, PROLINK has seen it all—soft markets, hard markets, and everything in between. We’ll take the time to understand your unique circumstances and get you the best possible protection at the best possible rate, no matter what’s happening in the market.

If you have any questions about your business, your continuity planning, or your insurance, we are only a call or email away. And if you’re curious about how the hard market will affect your personal insurance contact us below.

Will Business Insurance Respond to COVID-19?
Will Business Insurance Respond to COVID-19? As we all search for ways to mitigate our burdens during the COVID-19 crisis, many of us seek to understand how insurance can play a role. Click here for our responses to the questions our clients have asked.
Will Business Insurance Respond to COVID-19?


Personal InsuranceCommercial EnterpriseAssociations & Affinity GroupsLife & Benefits


Personal InsuranceCommercial EnterpriseAssociations & Affinity GroupsLife & Benefits

Search
Generic filters
Exact matches only