Whether you are an individual looking to get insurance coverage for everyday life or acting on behalf of a company, you always need to learn as much as possible about the insurance market when seeking a plan. Like any industry, the insurance market undergoes ebbs and flows you need to know about.

Today, the insurance industry is worth more than $1.3 trillion. If the industry is going through a downturn, known as a hard market, you need to learn how to navigate it in a way that serves you. These tips will help you figure out how to navigate a hard market to find a plan that works for you. 

What Is a Hard Market?

First, you must understand what dictates a hard market and what it means when shopping for insurance coverage. A hard market involves upswings in supply and demand within the insurance Market.

It involves an upturn in premiums and a downturn in capacity. You can expect these market changes for several reasons, including inflation, natural disasters, and other issues.

Here are some of the variables you need to consider whenever you are in the midst of a hard insurance market:

Premium Rates Go Up

The most noteworthy condition of a hard market is that insurance premiums increase. In these markets, you will inevitably pay more for the coverage. As such, expect it to be harder to find deals like you might in a more competitive market.

This is the case for several types of insurance, including business, homeowners, and automotive insurance policies. These dips in the market could take some time for rates to return to normal.

Insurance Companies Don’t Offer as Many Plans

Whenever there are upswings in markets, corrections must always be made. Regarding insurance, providers will not offer as many plans as before. This means that the policies you would typically be able to receive are less available, and you will have to do some digging to find coverage.

It’s normal for hard insurance markets to last a few years or so before completely making corrections. As such, you must do your homework and understand what is available.

Companies Have Less Competition

It is also important to know that competition comes to a standstill in a hard insurance market. Companies desire less growth in these markets and are more likely to return to basics while assessing their finances.

Contrast this with a soft market, during which insurance companies are more growth-oriented. 

It’s not uncommon to see companies become more conservative during these times since marketplace capacity is much smaller.

Underwriting Becomes Stricter

Companies deal with more risk in a hard market, so they are more careful when taking on new customers. As such, expect the underwriting process to become more strict in a hard market. Companies are less focused on expansion and are more about retaining the business they do have. New customers must have their ducks in a row when attempting to find a new insurance plan in these conditions.

Working with an Insurance Agency vs. DIY: What Yields a Better Rate in a Hard Market?

When it comes to obtaining insurance, especially for specialized needs like a small business or high-value property, you’re faced with a choice: work with an insurance agency or handle the application process yourself to try and get a better rate. Each approach comes with its own set of advantages and drawbacks.

Working with an Insurance Agency

When considering how to secure the best insurance coverage at a reasonable rate, many people turn to the services of an insurance agency. These agencies act as middlemen between insurance companies and clients, aiming to match the latter’s needs with the most suitable policies available on the market. 

Utilizing the agency’s expertise can offer various benefits but comes with its own considerations.

Keep the following in mind when working with an insurance agency:

• Specialized Guidance: Agents are trained professionals who understand the intricacies of insurance policies. They can guide you in selecting the right coverage for your specific needs.
• Time-Saving: An insurance agent can quickly provide multiple quotes from different insurers, saving you the time to approach each company individually.
• Better Negotiating Power: Agents often have established relationships with insurance companies, sometimes leading to better deals or additional coverage options that you might need help finding on your own.
• Holistic Risk Assessment: Agents can help identify potential risks you may have yet to consider and suggest suitable coverages.

DIY: Handling Your Application

For those who value autonomy and control, navigating the insurance landscape is an enticing option. The Do-It-Yourself (DIY) approach lets you handle your insurance application personally, from initial research to final negotiation. While this hands-on method eliminates the need for middlemen, it requires considerable time and effort. 

Keep the following in mind when handling your application yourself:

• Full Control: You control every aspect of your application including selecting the type of coverage.
• Time-Consuming: Researching various insurance providers, understanding the terms, and comparing quotes can be lengthy.
• Risk of Inadequate Coverage: Without expert advice, there’s a risk you might overlook important coverages, leaving you underinsured.
• Limited Access to Carriers: Agents often have access to insurance companies that may not work directly with customers.

Key Takeaways

In a hard market, where insurance premiums are high, and underwriting criteria are stringent, the question of whether to go with an insurance agency or take the DIY route gains even more significance. While agencies offer the advantage of specialized guidance, precious in a restrictive market, the DIY approach may work for those willing to put in the time.

Working with an agency can offer you the benefit of navigating the hard market’s challenges with advice and securing coverages you may not have known were available or necessary.

The right choice largely depends on your preferred choice, the complexity of your insurance needs, and the amount of time you can dedicate to the process. Whichever path you choose, being informed is your best strategy to sail through the rough waters of a hard insurance market successfully.