Just like Economics, insurance premiums have a cycle, moving in between ‘hard’ and ‘soft’ rates.

A ‘Hard Market’ is where insurers are not clambering over each other to get your business. They may have had a really bad year of weather disasters or investment losses. There is not much competition between the insurance companies, thus we all pay more for our cover.

A ‘Soft Market’ is where premiums have been driven down by factors like competition and investment profits. Insurers are super keen to get your premiums. They think that good returns can be made from investing your premiums. Another reason is the appearance of a new insurer on the scene who is keen to grasp some market share. So, they will ‘soften’ their rates to get your money rolling in.

Why we bore you with this is that for many years we have had a quite soft period on life insurance rates, and now the profitability of many insurers is stretched. We can all expect some ‘hardening’ of rates. In particular, rates for income protection are reacting to the big losses experienced in mental disorder (stress, anxiety and depression) claims. It’s the first condition ever to cost insurers more in claims than spinal disorders.

This makes it a great time to have a professional adviser guiding you, and to accept the offer of an annual review when it comes around.