The insurance market, like any other market, has a cycle. The terms “soft” or “hard” are two standard terms used to describe where the insurance industry is in its cycle. In general, a soft market is a time of high competition, abundant coverage availability, and lower premiums. The hard market in general is a time of higher premiums, stringent underwriting standards, and limited availability. It is important for law firms to understand the insurance cycle and what it could mean in terms of their professional liability insurance options.
Currently the insurance industry is in a soft market that has lingered for many years. It has shown signs of potential hardening over the last few years, but an actual hard market has not yet materialized. However, there has been an increasing frequency of events which has indicated to the insurance industry that the market may actually be starting to harden.
At ALPS, underwriting and claims work closely – literally. One of the greatest benefits of being located in the same office is that we are able to share information on a daily basis across departments. An ALPS Claims Attorney recently brought our underwriting department a copy of an article he found in the December 2011 magazine For the Defense, published by DRI and written by Stephen S. van Wert titled The Times they are A-Changin’. That article discusses this very subject in detail and is definitely worth reading for a general understanding of what cycle the insurance industry is in, where it is heading, and why. Specifically for law firms, the article gives some great tips on what can be done to prepare for a potential shift in the market, particularly in reference to its professional liability coverage.We encourage you to read the full article here.