DEFINITION of 'Invisible Hard Market'

A property/casualty insurance market phenomenon in which the market is hardening (seeing reduced supply and higher prices) but the normally positive effects of a hard market are not visible to insurers. Under ordinary circumstances, a hard market is considered a good thing for insurers because it increases underwriting income. In the invisible hard market, insurers are not seeing this increase and thus not seeing a better bottom line.

BREAKING DOWN 'Invisible Hard Market'

For the invisible hard market to become visible, MMC President and CEO Brian Duperreault, who coined the term, said that either the economy would need to strengthen (which would increase exposure), insurance companies' investment income would need to stabilize, or a major insurable event would need to occur. He recommended that insurers behave as if the market was still soft by strongly controlling claims and expenses.

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