I find this Guy Carpenter chart interesting:
The light blue ovals denote periods of excess capital. The dark blue denote periods of inadequate capital.
I’m not sure of any takeaway, except to note that capital excess and shortage do not, by itself, drive the market. The 2008-2009 period (labeled “Crisis”) did not drive a hard market, nor did the 1998-2000 period.
Personally, I believe what constitutes a hard market has changed, and we’re in one now.¹ And of course, according to this chart, we’re in a period of excess capital.
¹ Prices are rising mildly – in the 5% range – and I suggest that such increases are the new normal for a hard market, because the industry has gotten so much better at tracking rate and exposure. I hasten to add that a lot of smart people – namely, just about everyone in the industry – disagrees.