Plan your future

How does the insurance market operate and does this affect my yearly premium?

The insurance industry operates in cycles, characterised by alternating periods of hard and soft markets. During a soft market, insurance is more accessible and affordable for customers, with increased competition among insurers. In a hard market, premiums rise, coverage becomes scarcer, and insurers adopt stricter underwriting standards due to factors like increased claim costs or economic conditions. These cyclical fluctuations are influenced by various factors, including natural disasters, economic trends, and regulatory changes, and they impact both insurers and policyholders, requiring adaptability and strategic planning within the industry.

Insurers adapt to the market trends and prioritise the long-term interests of their policyholders by setting aside profits to invest in providing better premiums. By strategically allocating resources and profits, insurers can enhance their financial stability and maintain competitive pricing for policyholders. This practice allows them to offer comprehensive coverage, improve customer service, and innovate in an ever-evolving insurance landscape. Ultimately, the focus on investing in better premiums reflects insurers’ commitment to delivering value and protection to their clients while safeguarding their financial sustainability. The insurance market can change considerably throughout the course of the year.