Industry experts have been speculating about a turn in insurance pricing for quite a while (see older commentary here, here and our prior post), but are we actually getting close? Some very impressive experts are saying so. Not right now, but over the next couple of years.
[The hard market] is definitely coming, but maybe not as fast as some people would think
Prices are beginning to firm in the sense that insurers are not granting dramatic decreases on the businesses they write. Over the next two to three years, rates will move up gradually as carriers flee inadequately underwritten business and work to replace their reserves
One of the primary drivers of the new market direction will be the realization that pricing cannot continue in the direction it has been and needs to change. Whether it will be a single dramatic event, the eventual realization that reserves are inadequate or an increase in reinsurance rates, there will be a mind change that will precipitate a change in market direction.
Note – the insurance industry is cyclical, ranging from “soft” to “hard” (see here).