Historically, a hard market is part of the cyclical nature of the insurance industry. At one time, these cycles occurred fairly consistently at about seven year intervals. However, the last significant hard market came in the mid-80s.

A hard market is characterized by increasing rates and/or reduced industry capacity, which leads to affordability and/or availability problems. In addition, both underwriting and claims adjusting usually become more stringent. In the current marketplace, these conditions are exacerbated by increased uncertainty about such loss exposures as terrorism, mold, etc., and by a reinsurance market significantly strained by the events of September 11.