Navigating the Hard Market: Strategies for Controlling Increasing Business Insurance Costs

Why Are Your Business Insurance Costs on the Rise?

The insurance industry has been experiencing significant changes that – if they haven’t yet – will directly impact your business. With the United States property and casualty insurance recording an $8.2 billion underwriting loss in the first quarter, insurance carriers are taking measures to mitigate their risks. This blog post will delve into the concept of a hard market, the role of reinsurance companies, and practical strategies for positioning your business to better control insurance costs amidst the challenges faced in 2023 and 2024.

Understanding the Hard Market

A hard market refers to a phase in the insurance industry characterized by reduced capacity, increased premiums, and stricter underwriting guidelines. The insurance industry is cyclical, with periods of soft markets, where prices are competitive, followed by hard markets, where prices rise and availability of coverage becomes limited. It’s crucial for business owners to understand the dynamics of a hard market to adapt effectively.

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The Role of Reinsurance Companies

Reinsurance plays a vital role in the insurance industry and has a direct impact on businesses seeking coverage. Reinsurance companies provide insurance to primary insurers, helping them manage their risk exposure. By purchasing reinsurance, primary insurers transfer a portion of their risk to these higher-level companies, reducing their financial liability in case of catastrophic events.

Factors Driving Increasing Insurance Costs

Several factors contribute to the increasing insurance costs experienced in the current market. The rise in natural disasters and their associated costs, such as those seen in California, Florida, Texas, the Midwest, and Gulf Coast states, has significantly impacted insurance carriers. Additionally, inflation, escalating construction expenses, and liability claims in various sectors, including general liability and cyber liability, further drive insurance rate increases.

Implications for Businesses

As a business owner, it’s essential to be aware of the implications of the hard market and increasing insurance costs. Insurance carriers will likely pass on their elevated expenses to policyholders, resulting in higher premiums. Moreover, insurers will adopt stricter underwriting guidelines, making it crucial for businesses to position themselves strategically to secure favorable pricing. Additionally, insurers may be quicker to terminate policies in case of claims, emphasizing the need for effective risk management.

Strategies for Controlling Increasing Costs

  1. Holistic Risk Management Approach:
    Take a comprehensive approach to risk management by evaluating your property schedule, retention strategies, and deductible programs. Assess the feasibility of filing small claims and consider higher deductibles to lower premium costs.
  2. Forecasting and Data Analysis:
    Forecast future losses to anticipate insurance costs accurately. Monitor past claims history, develop forecasting models, and analyze data to make informed decisions about coverage.
  3. Enhancing Risk Profile:
    Implement practices to improve your business’s risk profile. Focus on accident and injury prevention, develop programs for efficient claims recovery, and demonstrate cost-reduction measures to insurers.
  4. Effective Communication with Insurers:
    Maintain open communication with your insurance carriers. Clearly articulate the risk management measures you have in place and how they contribute to minimizing losses. Highlight your efforts to reduce costs and request stable pricing or smaller rate increases.


As the insurance industry experiences a hard market, businesses must adapt their risk management strategies to navigate the challenges and control increasing insurance costs. By understanding the role of reinsurance companies, being aware of market dynamics, and implementing effective risk management practices, businesses can position themselves to mitigate the impact of rising premiums and stringent underwriting guidelines. Embracing proactive risk management approaches and maintaining a strong partnership with insurers can provide a competitive advantage in an evolving economic environment.

About the Author

Ryan Stillwell is the owner of Stillwell Risk Partners, an insurance brokerage firm specializing in customized risk management programs. With a focus on proactive strategies, Ryan assists clients in addressing the emerging challenges

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