when applied in the insurance and banking industries the term hardening has a different meaning in these industries hardening is commonly used to refer to periods of more rigorous underwriting or lending standards these periods often arise following a financial shock such as the credit crunch that occurred during the 2007 2008 financial crisis 
more rigorous underwriting or lending practices are sometimes implemented in response to risky decisions by the financial institutions involved such as the optimistic derivative contracts and subprime loan agreements that american banks and insurance companies entered into prior to the 2007 2008 financial crisis in the aftermath of this financial crisis financial firms were keener to reset their lending and underwriting standards on a more conservative footing although this reversal in sentiment amongst financial institutions from risky to more conservative can help reduce the incidence of inappropriate insurance policies and too risky loans it can also make it difficult for creditworthy counterparties to secure credit or insurance in these periods of fiscal hardening consumers and market participants alike will often complain that approval criteria have become unnecessarily onerous 