In relation to underwriting in insurance, it is the successive up- and-down pattern that characterizes the property and casualty (P&C) insurance market. This market fluctuates between soft and hard conditions. Soft market conditions reduces profitability and increases claims, leading to underwriting losses and a shrinking underwriting capacity. As a result, insurance companies implement stricter underwriting standards, paving the way for hard market conditions.

On the other hand, hard market conditions result in high levels of profitability, which, in turn, attract new investments into the industry, injecting more underwriting capacity and leading to increased competition. With such high level of competition, the stage is set for the market to a return to soft market conditions. Although such underwriting cycles are typically commonplace in the global P&C insurance business, conditions vary across countries and/ or product line categories.