Aside from the obvious (claims paid, addition of a low time pilot, etc.) a hardening market may be the cause of a premium increase at renewal. Simply put, the insurance industry goes through cycles. In a soft market, premiums go down, underwriting standards relax in order to compete with excess capacity, and insurance companies begin to lose money. When this occurs, some underwriters and reinsurers leave the business. This causes a lack of capacity and the premiums go up, underwriting standards tighten, and underwriters begin to make money again. Seeing the profitability, underwriters come back into the insurance market place and once again begin to bid down the prices, and the cycle starts all over again.