Officially, the Soft Market was declared over in November 2011. In the insurance industry the markets cycle between soft and hard based on available capacity. It is even possible to have cycles within a specific niche of the market that run counter to the overall industry. The soft market began sometime in 2005 and has been one of the longest running in the past century. During the soft market rates for personal and commercial lines were depressed based on excess available capacity in coverage by insurance carriers. This led to stagnate premiums and in some cases lower premiums among some carriers specifically in the commercial industry. Even though the economic bubble burst in the homeowners market in 2008 the insurance industry was recording a slow down as early as 2005. This led to a false sense of security among policy holders and agents that during the recession insurance premiums would remain stable.
Now that the industry has resolved the extra capacity with companies leaving specific markets and tightening underwriting objectives we will begin to see a hardening market with increases in premiums across the board. We are already seeing rate increases among homeowner’s policies nationwide and in specific commercial segments. As time goes on we will also see rate increases in auto and many of the ancillary coverages in personal lines. This will prove a challenge for policy holders and agents as the public struggles with incomes that are still most flat from the recession and higher insurance costs. I am not advocating that you should move your insurance at each rate increase as that would be counter intuitive to your long term goal of getting the best coverage for the premium paid. However, it is important to know where you stand within the market and your insurance agent should be communicating with you at least every 24 months as to how you compare and what your options are.