This is what comes to my mind when describing the property casualty market right now. Sorry — you’re probably not going to get that mental picture out of your head any time soon. But it’s a good way to remember the topic!

Currently, we’re in a very soft market. The reason?

Since there haven’t been any catastrophic losses (for example: major floods, hurricanes, or wildfires), there’s plenty of surplus in the marketplace. If you’ve never been through a soft market, you may be questioning your insurance carrier or broker on pricing, premiums, underwriting, etc. For example: Why all of a sudden are premiums lower?

Trust me when I tell you, your insurance carriers and brokers aren’t doing any type of price gouging. The answer to that previous question is actually a product of the marketplace. To help you understand this a bit, I’d like to explain the differences in soft vs. hard markets and how they’ll impact your business.

With a soft market, you have:

• Lower insurance premiums
• Reduced underwriting criteria, which means underwriting is easier
• Increased capacity, meaning insurance carriers write more policies and higher limits
• Increased competition among insurance carriers

With a hard market, everything is flipped. You have:

• Higher insurance premiums
• More stringent underwriting criteria, so underwriting is more difficult
• Reduced capacity
• Less competition among carriers

The Council of Insurance Agents & Brokers recently released the results of its Commercial P/C Market Survey for the second quarter of 2016. Simply put by Ken A. Crerar, president/CEO of The Council, “These results confirm everything we’ve heard from our members anecdotally this year. Carriers are aggressively pricing new business while attempting to hold rates steady on renewals. It’s a buyers’ market.”

This is great news for you. But one thing we always want to warn about…don’t get comfy. Unfortunately, we’re living in the age of a volatile market. Our advice: Remain educated on the marketplace, pricing, and impacts…and make sure you have the proper coverages in place to protect your business.

Now my question to you…what are your thoughts? What have you been seeing in the marketplace? What advice do you have? We’d love to hear from you in the comments section below or you can reach out to us directly. We have experts very well trained in understanding the impacts of such a cyclical market. Let us know how we can help!

Unfortunately, soft markets aren’t permanent. Check out the updates on the 2020 property casualty market.