What is the hard market in insurance terminology?

In insurance terminology, the hard market refers to a condition in which there are high premiums and stricter underwriting standards. This occurs when insurers become more cautious about the risks they are willing to underwrite due to factors like increasing claims or financial instability. During a hard market, insurers may limit coverage options and become more selective in their acceptance of applications, leading to higher costs for consumers seeking insurance.

This environment contrasts with a soft market, where competition increases, resulting in lower premiums and more favorable coverage terms for consumers. The hard market reflects a shift toward increased caution among insurers, which is a response to the perceived risk in the marketplace.