Hard Market
A reinsurance market cycle phase where prices increase, capacity reduces, and terms tighten — typically following large losses.
A hard market is a phase of the insurance/reinsurance cycle characterised by rising premiums, reduced capacity, stricter underwriting terms, and greater selectivity by reinsurers. Hard markets typically follow periods of significant underwriting losses — major catastrophe events or prolonged underpricing.
In reinsurance, hard markets see ROLs increase, attachment points rise (cedants retain more), and some coverages become unavailable. ILS capital typically flows in during hard markets to capture elevated returns, which eventually helps restore capacity and moderate pricing.
Hard markets are followed by soft markets as capital floods back in and competition intensifies. The reinsurance market has experienced pronounced hard market conditions following Katrina (2005), Harvey/Irma/Maria (2017), and the 2020–2023 period.
Example usage
“The 2023 January 1 renewals saw the hardest reinsurance market in a decade, with property cat prices rising 30–50% in loss-affected regions.”
Frequently asked questions
What is Hard Market?
A reinsurance market cycle phase where prices increase, capacity reduces, and terms tighten — typically following large losses. A hard market is a phase of the insurance/reinsurance cycle characterised by rising premiums, reduced capacity, stricter underwriting terms, and greater selectivity by reinsurers. Hard markets typically follow periods of significant underwriting losses — major catastrophe events or prolonged underpricing.
How is Hard Market used in practice?
The 2023 January 1 renewals saw the hardest reinsurance market in a decade, with property cat prices rising 30–50% in loss-affected regions.
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