What describes a "soft market" in motor insurance?

A "soft market" in motor insurance is characterized by premiums being driven down because of increased competition among insurers. In a soft market, various insurers may lower prices to attract more customers, leading to a more favorable environment for buyers. This situation often arises when there is an abundance of capital in the insurance market, enabling insurers to compete for a larger market share by offering lower rates.

Consequently, consumers benefit from lower premiums and may also see improvements in service and product offerings, as companies aim to differentiate themselves in a crowded marketplace.

In contrast, elevated rates and limited coverage options typically characterize a "hard market," where competition is reduced, resulting in higher premiums and restricted policy terms. Therefore, the competitive dynamics during a soft market directly influence pricing strategies and coverage availability.