How long the cycles run?

Historically, the textbook length of an insurance market cycle—from the depths of a soft market, through a hard market, and back again—is 5 to 7 years, though they can occasionally stretch up to a decade.

However, these cycles don't run on a strict calendar. They are driven entirely by the mechanics of capital, supply and demand, and major world events.

Here is how the cycle actually breathes, and why the one we are currently exiting was so historically unusual:

The Anatomy of the Cycle

The industry swings between two extremes based on how much capital is available to back risks:

1. The Soft Market (Where we are heading now): Insurers and reinsurers have made massive profits. Capital floods into the market because investors want a piece of those returns. With so much capital competing for the same business, underwriters slash rates and loosen their standards just to win market share. Over several years, these cheap premiums fail to cover the rising cost of claims, and profitability erodes.
2. The Shock (The Turning Point): A catalyst forces the market to turn. This is usually a massive string of catastrophic losses (like severe hurricane seasons), a crash in the stock market (destroying insurers' investment income), or a realization that they have been vastly underpricing risk.
3. The Hard Market (Where we just were): Hemorrhaging money, insurers panic. They pull back their capital, refuse to write high-risk policies, and drastically hike rates to repair their balance sheets. With limited capacity available, insurance brokers (like Brown & Brown) have to fight to find coverage for their clients, and premiums skyrocket.
4. The Normalization: High rates eventually restore profitability. Those massive profits act like blood in the water for institutional investors, new capital floods back in, and the soft market begins anew.

Why the Recent Cycle Broke the Rules

The hard market the industry just went through was exceptionally long and punishing, running for nearly six to seven years rather than the usual two or three years of peak hardening. It was sustained by a relentless sequence of shocks:

The Prolonged Soft Market2014 – 2017

Capital was abundant, and property rates were steadily declining. Insurers were keeping prices artificially low to compete, masking the fact that underlying climate risks were growing.

The Hard Market Begins2018 – 2019

Following massive payouts from 2017's Hurricanes Harvey, Irma, and Maria, insurers realized they were severely underpriced. Commercial property rates began to rise sharply as capacity tightened.

The Unprecedented Peak2020 – 2023

Normally, the market would have started softening here. Instead, a perfect storm hit: COVID-19 uncertainty, skyrocketing economic inflation (making building repairs massively expensive), and six consecutive years of global natural disasters exceeding $100 billion in damages. Property rates surged by 30% to 50%+ during this window.

The Softening Reality2024 – 2026

Having achieved record profitability from those massive rate hikes, reinsurers and alternative capital providers are finally flush with cash again. Competition has returned, driving the 15% to 35% CAT property rate declines we see today.

Ultimately, cycles run until greed overtakes fear (driving rates down) or fear overtakes greed (driving rates up). Right now, after years of record profits, the market is firmly back in its "greed" phase, which is exactly what is squeezing Brown & Brown's organic commission growth.

Want to know how brokers actually adapt to survive soft markets?