Navigating the Hard Market 2023

Navigating the Hard Market 2023


The insurance industry has, since 2018, been in a phase commonly referred to as a “hard” market. At present, all indications are that it will continue for at least another 12-18 months.

The drivers are simple:  insurance companies re-evaluating their portfolios, because of profitability or lack thereof, and withdrawing capacity for insuring certain classes of business; spiraling inflation, supply chain issues and the direct impact of climate change and related cost of natural disasters. 

This alone has contributed to the increase in reinsurance costs of over 25%, year over year, in some categories.  When reinsurance (the cost of insurance for the insurance company) costs rise, at this magnitude it forces insurers to raise rates charged consumers or they withdraw from certain market segments.  When insurers withdraw from segments, shrinking capacity, it has a lemming effect causing others to also withdraw if for no other reason than they don’t want to take on the burden of replacing the capacity surrendered by withdrawing insurers.          

 This can be confusing for business owners trying to forecast future insurance costs. while experts try to project whether insurance premiums will rise and by how much.

What is clear is that risk management, loss control and safety continue to be crucial to the success of any business insurance package, regardless of market conditions. Now is a good time to evaluate your business’s risk management plan as a whole to ensure your business can attain favorable pricing regardless of market conditions.

What a Hardening Market Means for Your Business

During times of a soft market, like the past few years, business owners see cost reductions in their organization’s insurance premiums, even without a reduction in their risk. As a result, business owners are often unwilling to spend time and resources on loss control and risk management because they already see their insurance premiums dropping. This reduction in pricing is deceptive, setting businesses up for a shock when the market takes a turn.

It's important to take advantage of the opportunity to get ahead of the game by proactively addressing losses and risks now. When insurance prices begin to climb, those organizations that have taken the initiative to address losses and mitigate risk will see modest increases in premiums, whereas those that simply rode the market without working to reduce risk will have a harder time placing coverage and won’t be offered as competitive of rates. As a business owner, a 15 per cent increase in cost will still be unpleasant, but a 40 per cent increase in addition to a reduction in coverage could end up affecting your company's well-being in the short and long term.

Even in the hard market, a business with effective loss control and risk management initiatives will always pay less.

Risk management, loss control and safety continue to be crucial to the success of any business insurance package, regardless of market conditions.

Take Charge of Loss Control

The best approach to control losses is to prevent injury and illness, manage claims effectively and implement cost containment strategies. If you work to reduce risk and prevent loss now, the increase in your premiums later will be minimized. Reith & Associates Insurance and Financial Services Limited’s consultative approach can:

  • Pinpoint your exposures and cost drivers
  • Identify the best loss control solutions to address your unique risks
  • Create a solid business contingency plan to account for disasters and other unpredictable risks
  • Build a company culture focused on safety
  • Manage claims efficiently to keep costs down

Using all the resources available to you from Reith & Associates Insurance and Financial Services Limited, we can help you control costs and ensure your business is protected.