Category: Capacity and rating · Reviewed by Taylor Watts, Broker · New Business · Last reviewed 2026-06-05
A soft market is a period in the insurance or reinsurance cycle characterised by abundant capacity, falling or stable rates, broad terms and competitive conditions favouring buyers. Soft markets typically emerge after sustained profitable periods that attract capital into the market.
Category: Capacity and rating Also known as: buyers’ market Related concepts: hard market, reinsurance cycle, insurance capacity
Characteristics of a soft market include:
Soft markets are typically followed by hard markets when accumulated underwriting losses, capital erosion or a major event triggers a market correction. The cyclical nature of the property and casualty insurance market — and particularly the reinsurance market — is well documented and forms a core part of underwriting strategy.
Soft market conditions are not directly regulated, but the FCA and PRA monitor market conditions for concerns around unsustainable pricing, reserving adequacy and the risk of disorderly subsequent hardening. The PRA’s supervisory statements on reserve adequacy and underwriting discipline reflect these concerns.
Soft markets present opportunities and risks for buyers. Opportunities: buyers can negotiate broader terms, longer policy periods (multi-year programmes), lower deductibles and lower rates. Risks: buyers who lock in favourable terms may face sharp adjustments when the cycle turns, particularly if carriers withdraw from the market or insolvencies occur.
For Apex clients soft conditions in particular classes (e.g. 2017–2018 in many casualty lines; some specialty classes in 2024) typically translate into stable or reducing renewal terms, scope to negotiate enhancements, and capacity for unusual or complex placements.
An illustrative example: the global commercial property market through 2014–2017 was sustained in soft conditions: rates fell year-on-year by 3–6 per cent on average, capacity was plentiful, and large complex risks were placed easily. The cycle turned sharply in 2018–2019 following accumulated catastrophe and attritional losses.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-05. Next review: 2026-12-05.
Apex Insurance Brokers Limited. Authorised and regulated by the Financial Conduct Authority, FRN 724952. Registered in England and Wales, Companies House 07014570. This entry provides general information about UK insurance concepts and is not regulated advice. Consult your insurance broker on your specific position.
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