What is NOT a characteristic of underwriting in a hard market?

In a hard market, insurance underwriting generally features stricter conditions and less favorable terms for policyholders. One of the primary characteristics of this market cycle is higher premiums or rates, as insurers seek to improve their financial performance and reduce exposure to risk.

Restricted coverages are also typical of a hard market, as insurance companies may limit the policies they underwrite, leading to narrower terms on what risks they are willing to cover. Additionally, the increased use of surplus lines occurs because standard carriers may not be able or willing to provide coverage for certain higher-risk scenarios, prompting brokers to seek alternative solutions that could offer coverage outside of standard markets.

In contrast, pricing decreases are not characteristic of a hard market. Rather, they are indicative of a soft market, where competition among insurers leads to lower premiums. Therefore, the correct response reflects a misunderstanding of market conditions; in a hard market, prices typically rise, not fall.