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State of the Market

In the world of insurance, we describe the type of market we are in as “hard” or “soft”.  A hard market indicates increased pricing, increased retention/deductible levels, and restrictive terms and conditions.  A soft market is an opposite: pricing and retention/deductible stabilization or reductions, and enhanced coverage.  The last hard market was shortly after the credit crisis in 2008.  Insurers paid out large losses from this crisis and resulted in a hardened market for only a short while.  From 2009-2010 on, financial institutions have reduced premium and enhanced terms.  We are now beginning to see a shift in this trend.  Insurers are now requiring stabilization and some insurers are even requiring premium increases.  Coverage is not yet being restricted.  This new shift is due to the premiums being so low that insurers are holding the line and are not able to put limits upon programs that fall below what they deem their “cost of capital”.  Regulators are not slowing down and claims are still a reality.  Historically we have seen a hard market sparked by a systemic issue, but this doesn’t seem to be the case.  It is simply the fact that insurers cannot be profitable to have the claim reserves needed at the rates and coverage they are providing in the marketplace.  Whispers of change are here, will it last?  Only the future will tell.


The FI Group of Starkweather & Shepley Insurance Brokerage, Inc. provides "hands-on" service. We work with you to identify the most appropriate, competitively priced coverage to address your firm's liability needs. The FI team specializes in coverage specific to the Investment Industry.

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