Despite consensus between insureds, carriers, and brokers that the Property Casualty insurance market is “hard,” industry commentary uses some version of the word “soft” with increasing regularity. For example, recent headlines include, “Is the insurance market turning soft again, and what should insurers do about it?” or “Q1 shows ‘clear’ signs of commercial P/C softening, says CIAB.”

Maybe it’s a desire to think positive, simply nostalgia for past markets, or even an attempt to manifest better renewal terms into existence. To be clear, the market has been objectively hard for more than 30 straight quarters. It’s unprecedented. I’m not sure when we will stop measuring in quarters and start measuring in years but, as we approach a decade, I’m advocating for a shift to measure in years. You heard it here first – ha.

Now, let’s get back to what soft really means and compare it to the definition of a ‘hard’ market.

Defining Hard and Soft Markets

A soft market means decreasing rates, increasing carrier capacity—the amount of limit available to insureds—and a broadening underwriting appetite. The hallmark of a hard market is the opposite—increasing rates, reduced capacity, and increased underwriter scrutiny—and insureds everywhere felt it for the last seven years (see what we’re doing now with years vs. quarters?).

It was the cyber rate increase and the excess carrier renewing with half of the prior year’s limit without claim activity followed by auto premiums that climbed like helium balloons. It was the carrier knocking on the broker’s door and saying “We’d love to take a shot at ABC Corp. because it’s exactly what we want” a decade ago to that same carrier resigning to the fact that they can’t underwrite the account and sharing “Ugh… I know I said I wanted to look at ABC Corp. but we can’t offer terms because …you know, it’s a hard market.”

We all lived it. Want another example? Ask anyone with a teenager what it’s like to get insurance for their new driver or how their homeowners insurance premium changed year over year. These are realities and reflective of the current hard market. Need additional data points to round out the picture? Check out The Council of Insurance Agents and Brokers (CIAB) quarterly newsletter—great information from a reputable source.

At the same time, our teams are negotiating and delivering renewals. Oftentimes these two items sync nicely but, at times, they don’t. As the market softens, it’s becoming harder to forecast. We’re seeing areas consistent with CIAB guidance for some and for others, we’re seeing departures from that guidance.

Signs of Softening? Time Will Tell

So, what’s all the conversation about a soft or softening market? It’s a reflection on the glimmers of light we’re seeing in the darkness of the hard market. For years, premiums have increased faster than an insured’s revenue has grown. We’re starting to see some balance between those two numbers. Industry, performance, exposures, geography and a list of other factors create renewal variation, but the fact remains that most insureds are seeing better renewals than they were in the past several years. To be fair, better than the last couple of years isn’t that high of a hurdle to clear.

In other words, it’s getting better but it’s still an increase. Said another way, the year over year trend may be improving but rates are still increasing and that means the market will continue to feel hard for the majority of buyers.

This is where brokers make a difference. In an environment that is evolving but still challenging, the ability to interpret market signals, anticipate carrier behavior, and creatively negotiate on behalf of clients is critical. So, while the market may be improving at the margins, don’t mistake that for general softness. For now, it’s still a hard market—one where broker expertise is valuable. At Holmes Murphy, our team is on your side. If you’re ready to work with experts who are committed to your success, reach out today.