Which characteristic defines a soft market in the insurance industry?

A soft market in the insurance industry is characterized by competitive pricing and lenient coverage conditions. During this phase, insurers often lower premiums to attract more clients and increase market share. This heightened competition typically leads to more favorable terms for policyholders, such as broader coverage options and less stringent underwriting practices. Insurers may relax their requirements to secure business, reflecting a desire to maintain or grow their customer base in a favorable economic or insurance environment.

Higher premiums and strict policy terms are indicative of a hard market, where insurers are more conservative and cautious. Restricted capacity in coverage options and increased underwriting requirements generally align with a hard market scenario as well. Thus, the characteristics associated with a soft market are distinctly focused on making insurance more accessible and affordable for consumers.