This hard market may come back to haunt underwriters

The insurance market is and will always be cyclical, but many things can be done to keep the cycles from being as extreme as they have been. One of the most obvious solutions is for commissions to be removed from all insurance transactions. (Photo: KieferPix/Shutterstock.com)

Only a few years ago, there was considerable debate about whether the insurance market would ever harden again. After almost a decade of relatively soft conditions, some predicted that the historically cyclical industry had finally learned its lessons, as evidenced by a strong and growing balance sheet, stable pricing, abundant capacity, and terms and conditions expanding to provide broader coverage.

Of course, there were signs that all was not perfect. Climate change was clearly increasing both the frequency and severity of natural catastrophes and there were pockets of the market, including property and umbrella, that were known to be underpriced. The overall picture, though, was pretty good for carriers, clients, agents and brokers.