In a soft market, what typically happens to insurance rates?

In a soft market, insurance rates typically decrease or become more flexible. This trend occurs because there is an oversupply of insurance capacity in the market, often leading to increased competition among insurers. As a result, companies are more likely to lower their rates to attract and retain customers. Additionally, insurers may offer more lenient underwriting criteria and enhanced coverage options to entice potential clients, further contributing to the flexibility in pricing.

This environment contrasts significantly with a hard market, where insurance rates tend to increase due to tighter underwriting standards and reduced competition. Therefore, understanding the characteristics of a soft market helps insurance professionals adjust their strategies accordingly to benefit from the favorable conditions for consumers.