The business insurance market is very lucrative for insurance companies, so if you are small business owner, you have probably been approached by more than a few of these firms. You might find the promises and costs they make to be vastly different from each other, but let’s face it, your company needs protection in case of lawsuits, property damage and a whole host of other problems that may arise. What you may not know is that your premiums can be higher or lower based on the type of market you are currently in – hard markets and soft markets. Here’s how to tell them apart:

Soft Market – This occurs when insurance companies are competing for your business, so they will offer lower rates to outdo their competition.

Hard Market – This occurs when insurance policies are seen as a “hot” commodity. The companies will set their rates and premiums accordingly, usually to the detriment of the buyer.

Soft markets are excellent for businesses looking to switch companies or buy a new policy. With insurance companies offering lower premiums, you will have a much lower range of pricing. This is the exact opposite of a hard market, which causes insurance companies to drive premium costs up. In fact, these premiums may even rise for low-risk businesses. During a hard market, you may have a tough time getting your company underwritten, a step that many companies need to take.

The problem with the insurance market is determining how it will fluctuate during the course of any given period. While there is no way to move the market on your own, it will undoubtedly move from hard to soft and back throughout the year, giving you time to adjust your policies accordingly. Connect with a CT insurance professional to determine when buying conditions are best for you and your needs.

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