Have you ever wondered why commercial insurance premiums go up during some years but not others?

If your rates are going up and you’re having a harder time renewing your insurance policy, you may be in what’s known as a hard market.

What is a hard market and how does it affect your business

Here’s an overview of what you need to know about hard markets.

What is a Hard Market?

To answer this question, it’s important to understand that insurance companies make money through a combination of premiums and investments. When the economy is in an upswing and financial prospects are looking good for the insurer, you may be purchasing insurance during what’s known as a soft market.

However, if insurers are experiencing financial pressure, they often have less of an appetite for taking on risk and issuing insurance. If you’re seeing insurers stick more closely to underwriting guidelines while offering plans at higher premiums, you may be looking for insurance in a hard market.

What Does a Hard Market Mean for Your Business?

Here are some of the more common ways that businesses may experience a hard market:

  • Higher premiums mean that your business may have to allocate more funds towards insurance costs
  • You may have to work harder to find an insurer who is willing to take on your account
  • If your business seems like it might be too risky, your insurance provider may refuse to renew your policy

Is Ontario in a Soft Market or a Hard Market?

In November 2020, Insurance Business Mag argued that the insurance market in Canada was already trending towards a hard market. According to the same article, the factors that were driving the commercial insurance industry to harden included natural disasters in recent years, lower insurance costs, and the effect of reduced interest rates on investments. 

Putting it all together, it’s clear that while there’s an argument to be made that we’re not in a hard market yet, business owners may be dealing with rising insurance costs both now and in the future.

Are Your Commercial Insurance Premiums Rising? Here’s What You Can Do

There are a few steps you can take to protect your business during a hard market:

  • You can be aggressive about seeking out discount opportunities
  • You can buy or renew your policy now to lock in your commercial insurance
  • You can hire an experienced and skilled broker who will know how to find the best insurance available


Request your FREE commercial insurance quote today!