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AccuWeather: Severe Storms in Central US Cause $80-$90B in Damages, Economic Loss
MarketScout: Q1 Composite Personal Lines Rates Up 4.9%; Commercial Rates Up 3%
Tariffs Will Lead to 2M Fewer Auto Sales in US This Year, Firm Forecasts
Research Council Finds Personal Auto Insurance Affordability Better Than in the 2000s
Small Businesses Continue to Be Underserved by Cyber Insurers: CyberCube Report
Court: Truck Driver Can Seek Treble Damages Over THC in CBD Product
Growth Is Good but Disciplined Growth Is Better: Lloyd’s Execs Say
Closer Look: Soft D&O Market May Come to an End as Risk Complexities Rise
Special Report: Revisiting California’s Wildfires: A Personal Journey: Part 2 of a 2 Part Series
Closer Look: BuyerFriendly April Reinsurance Renewal Bodes Well for Mid-Year Renewals: Brokers
Special Report: Young Agent Survey: The Good and Bad About Being an Independent Insurance Agent
Closer Look: Gen AI Is Shaking Up Underwriting, but Can It Replace Human Judgment?
Majority of Small Business Leaders Think AI Will Play ‘Crucial Role’ in Work
Minding Your Business: Perpetuation Planning –Part One
What Does the Future Hold for Independent Agencies?
Closing Quote: Fighting Insurance Fraud: A LongTerm Win for the Industry
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Young Agent Leaders
There’s no better time to excel and grow in the insurance world, some say. The talent gap has opened new doors for accelerated advancement for the driven and focused young professional. This issue of Insurance Journal features exclusive results from the 2025 Young Agents Survey where young agents nationwide shared their views on the insurance industry and their experiences as agents. (See page 30 for the full report.)
Overall, young agents seem unsure about the U.S. economy in 2025, with nearly half of those responding to this year’s survey indicating they feel “cautious.” But despite their caution, one-third of young agents reported feeling “very optimistic” about the future of the agency system as well as their career choice, according to the survey’s results.
The talent gap in the agency concerns young agents, as well. According to the survey, 43.2% of the young agents responding to the survey feel that finding new employees for their agency is one of their biggest challenges. Another big challenge: finding new customers.
Despite their concerns, nearly half of the young agents responding to the survey believe their income will be higher this year than last year. That’s good news.
Many of the young agents responding to the survey shared their biggest moments of success, which include helping people and businesses navigate through complex risk, establishing and growing relationships, and excelling in a role that tends to be mostly male.
“My proudest moment is leveraging being a young female in a predominantly male field,” one female young agent wrote.
Another said: “I’m very proud of this industry for continuing to recruit young talent and providing ample opportunity for advancement to those who seek it. I believe this industry provides tremendous opportunity for those that are driven and curious.”
Like in previous years, young agents overwhelmingly report each year that they would still recommend a career in insurance to other young people entering the workforce, even with their concerns.
‘It is not for everyone, but for the right person it is a great career.’
“I think the independent agency system is one of the few career opportunities in America that allows you a clear path to financial freedom with minimal leverage risk,” one young agent wrote.
Another added: “It is not for everyone, but for the right person it is a great career. Your only real constraints are your time and effort.”
This issue also highlights seven successful young agents and why they chose a career in insurance. They each come from different backgrounds and offer advice for other young agents entering the field.
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News & Markets
AccuWeather: Severe Storms in Central US Cause $80-$90B in Damages, Economic Loss
Amultiday severe weather outbreak in the central U.S. caused an estimated $80 billion to $90 billion in total damage and economic loss, according to a preliminary estimate from AccuWeather.
From April 2 to April 6, a rare weather system dumped 8-16 inches of rainfall across Arkansas, Missouri, Mississippi, Tennessee, Kentucky, Illinois, and Indiana. Some communities reported localized amounts of rainfall up to 20 inches, leading to extreme flash flooding, AccuWeather said.
Flooding is typically not covered by a standard homeowners insurance policy. AccuWeather said it uses “independent methods” to come up with its direct and indirect impacts of the storm, and includes insured and uninsured losses.
There have been nearly 90 reports of tornadoes since the start of April, the weather agency said, and at least three tornadoes have been preliminarily rated as EF3 or stronger, with winds of 136 mph or higher, in Arkansas, Missouri, and Tennessee.
also caused damage during the rare, multiday severe weather outbreak, according to AccuWeather meteorologists.
Hailstones as large as 3 inches or more in diameter and wind gusts up to 100 mph
AccuWeather cautioned that damage estimates are still preliminary, adding that major river flooding will continue in
some areas for days to come, resulting in additional risk to lives and property.
“A rare atmospheric river continually resupplying a firehose of deep tropical moisture into the central U.S., combined with a series of storms traversing the same area in rapid succession, created a ‘perfect storm’ for catastrophic flooding and devastating tornadoes,” said AccuWeather Chief Meteorologist Jonathan Porter.
The early-April severe storm outbreak is on pace to become the third multi-billion-dollar weather disaster in 2025.
AccuWeather estimated the January southern winter storm resulted in $14-$17 billion in total damage and economic loss, while the January Los Angeles wildfires caused an estimated $250-$275 billion in losses.
“There is no doubt that the frequency and severity of extreme weather in America is escalating,” Porter said. “More people, businesses, and communities are feeling the direct impacts, which are being fueled by a warming climate.”
MarketScout: Q1 Composite Personal Lines Rates Up 4.9%; Commercial Rates Up 3%
According to the MarketScout Market Barometer, the composite rate for U.S. personal lines kept rising in the first quarter to 4.9%, up from 4% during the prior three-month period.
Richard Kerr, CEO of Novatae Risk Group, said the increase was likely due to the “lingering impact of recent California wildfires.”
“It often takes time for the market to respond to catastrophic events,” he said. “Rates are now trending upward and could rise further as we head into hurricane season.”
For the last quarter of 2024, the composite rate for personal lines went up 4%, and the increase was about 5.8% for all of 2024—the highest yearly jump in a dozen years, according to MarketScout, a division of Novatae Risk Group.
Homeowners insurance led the Q1 increases, especially high-net-worth homes. Homes valued at more than $1
million increased 7.3%.
Meanwhile in commercial lines, the composite rate increased 3% in Q1. The commercial composite rate increased about 2.6% in Q4 2024.
“Umbrella and excess liability, along
with automobile coverages, saw the most significant rate hikes this quarter—both increasing by 6.7%,” Kerr said.
Marketscout said transportation companies saw the highest Q1 2025 increase, at 6%.
Tariffs Will Lead to 2M Fewer Auto Sales in US This Year, Firm Forecasts
By Kalea Hall and Nora Eckert
U.S. and Canada auto sales could decline by 1.8 million vehicles this year and be stagnant over the next decade if the global trade war escalates, a Detroit-area automotive advisory firm forecasts.
If the current tariffs stay in place until 2035, sales of light-duty vehicles in the U.S. and Canada would be about 7 million units lower than the 24.6 million sales in a scenario with no trade conflicts and strong economic growth, Telemetry said April 7 in a forecast provided exclusively to Reuters.
President Trump’s 25% automotive import tariffs went into effect April 3. Vehicles made in Mexico and Canada face the levy, but automakers compliant with the terms of the U.S.-Mexico-
Canada Agreement can deduct the value of U.S. content. The Trump administration has also imposed reciprocal tariffs of varying rates on different countries, which were not applied to Canada and Mexico.
The tariffs have pressured automakers to make production changes, with General Motors increasing truck output at an Indiana plant and Stellantis, maker of Ram trucks and Jeeps, temporarily shutting down production at two plants in Mexico and in Canada, affecting five U.S. facilities that are connected to them.
Automakers including Ford Motor and Stellantis upped their incentive offers to ease consumers’ concerns about the duties adding to vehicle prices. Analysts have projected that sustained tariffs will increase prices by thousands of dollars, and
automakers have warned the same.
“Vehicle affordability is already a major issue for consumers,” said Sam Abuelsamid, vice president of insights at Telemetry.
On average, new vehicles cost nearly $50,000 and interest rates on vehicle loans have increased since the pandemic.
“With sales going down, you’re going to have layoffs,” Abuelsamid said. “And even to the degree that some production shifts to the U.S., it’s not going to be enough to offset the lost employment from higher costs and lower sales.”
Although the rate of EV sales growth has slowed in recent years, Telemetry expects battery electric vehicles to be the most common powertrain across the globe in a decade, with 40.5 million vehicles sold.
The firm expects BEV volumes in Canada and the U.S. to reach 8.8 million units in a scenario with no trade conflicts and strong economic growth.
Copyright 2025 Reuters.
$28 Million
The amount sugar market expert Paul Steed has been accused of stealing from candymaker Mars Inc. In a federal indictment, Steed, of Stamford, Connecticut, has allegedly been stealing from Mars since about 2013 through various schemes, including diverting funds to companies he set up. He is charged with seven counts of wire fraud and two counts of tax evasion.
850,708
The number of cars stolen in 2024, the first time the figure has fallen below 1 million since 2021. Vehicle thefts fell nationally by 17%, down from a peak of 1,020,729 thefts in 2023, according to the National Insurance Crime Bureau. The drop marks the largest annual decrease in vehicles stolen in the last 40 years.
The number of new Corvettes stolen from a Kentucky automobile plant by fence-cutting thieves. The eight cars, valued at $1.2 million, were taken from the GM Bowling Green Assembly plant where the legendary Chevrolet muscle cars have been built since the early 1980s. A man later arrested and charged with the theft of three cars said while being booked into jail that if he “would have made it back to Michigan, I would have been paid big,” according to a police report.
$500 Million
The amount being raised to protect The Getty Center’s priceless art collection as California prepares for another fire-prone summer. The J. Paul Getty Trust is selling top-rated taxable bonds to bolster the art institution’s defenses in the event of another disaster. Investments would include new boilers, irrigation and surveillance systems, as well as water storage and firefighting equipment, according to bond documents.
Declarations
Proxy Discrimination
“The data insurers use for risk-based pricing is data that is actuarially sound and correlated with risk and does not include nor use certain protected class attributes. To argue that insurer use of data, algorithms, or AI in risk-based pricing is biased or skewed would be to say that the actuarially sound data is not representative of the risk the policyholder represents, which insurance laws already prohibit.”
— Lindsey Klarkowski, NAMIC’s policy vice president in data science, AI/[machine learning], and cybersecurity in response to concern from regulators, advocates and policymakers over whether AI in underwriting would lead to proxy discrimination, an algorithmic bias and eventual changes to the affordability and availability of insurance products in certain areas or for certain classes.
Smelly Fertilizer
“The smell is so overwhelming that it goes through my oxygen machine and straight up my nose, which makes it very difficult for me to even walk out my door.”
— Leslie Stewart, a resident of Lincoln County, Oklahoma, commenting on the use of human waste biosolids as agricultural fertilizer. The state is considering a ban on the practice. A recent study from the U.S. Environmental Protection Agency suggests that human health risks associated with toxic per- and polyfluoroalkyl substances (PFAS) were elevated in some places where biosolid sludge was applied to farm fields.
Wildfire Mapping
“The reason we map these areas is to tie these really important wildfire mitigations to them, helping us to ensure that as we build out new communities, we’re building to the level of hazard that exists, giving them an increased chance of surviving a wildfire,”
— California State Fire Marshal Daniel Berlant in response to the California’s Department of Forestry and Fire Protection’s new, color-coded maps that place 3.7 million residents in “high” or “very high” fire hazard areas. The maps are based on new tech modeling, climate change and indications of moderate, high and very high areas of wildfire risk.
Ineligible Cat Fund Claims
“Over time, information about each claim evolves as the insurer gains information about the cause and origin of the loss. This inherently means that some claims initially identified as hurricane claims are later determined to not be associated with the hurricane, and conversely that some claims intentionally or unintentionally not reported as hurricane claims are determined to be associated with a storm.”
— Universal Property & Casualty Insurance Co., one of Florida’s largest property insurers, after Florida Attorney General James Uthmeier announced the company must pay a $4 million fine — plus attorney fees — for allegedly submitting ineligible Cat Fund claims that it said were the result of 2017’s Hurricane Irma.
Poor Data Security Practices
“When companies have poor data security practices, they put individuals at risk of identity theft and other fraud. Auto insurance companies need to make sure that the systems they use to store people’s data are protected to prevent cybercriminals from stealing driver’s license numbers, Social Security numbers, and other private information.”
— New York Attorney General Letitia James in response to securing $975,000 in penalties from auto insurance company Root over a data breach that the state says exposed the personal information of about 45,000 New Yorkers. The settlement follows similar charges resulting in payments of $5.1 million from GEICO and Travelers and $500,000 from Noblr.
Ethanol Carbon Emissions
“We don’t want to see haves and have-nots. We want as many ethanol producers to be able to sequester their CO2 as possible.”
— Tad Hepner, vice president of strategy and innovation at the Renewable Fuels Association, arguing that stopping Summit Carbon Solutions in South Dakota would put ethanol producers in the state at a competitive disadvantage to out-of-state plants connected to the pipeline. The proposed 2,500-mile, $8.9 billion pipeline would carry carbon emissions from ethanol plants in Iowa, Minnesota, Nebraska, North Dakota and South Dakota to be stored underground permanently in North Dakota. Summit said it wants to indefinitely delay its plans after South Dakota passed a law limiting its ability to acquire land for the project.
News & Markets
Insurance Research Council Finds Personal Auto Insurance
Affordability Better Than in the 2000s
According to a new report from the Insurance Research Council, auto insurance is more affordable now than at the start of the 21st century.
The IRC, an affiliate of The Institutes, concluded that the average expenditure for auto insurance—as a percentage of median household income—is better recently than in 2000 because median household income grew “somewhat faster” than auto insurance costs.
Average expenditures were $1,127 and median household income was $74,580 in 2022,
the most recent year data is available. Therefore, U.S. households spent 1.51% of income on auto insurance. This was a slight increase from the previous year, according to the IRC’s report.
But looking at the longerterm trend, auto insurance affordability has improved over the last two decades. The average expenditure as a share of income was 1.64% in 2000 even though the expenditure on auto insurance was $690.
The auto insurance expenditure for the 2000s averaged 1.7%, said the IRC. For the 2010s, the expenditure
averaged 1.6%.
The IRC expects affordability to deteriorate when data is received for 2023 and 2024 due to recent increases in insurance rates.
“The expenditure share is projected to increase to approximately 1.6% in 2023 and 1.7% in 2024, a significant increase from the low in 2021 but still below the peak of 1.9% in 2003,” said Dale Porfilio, president of the IRC.
The report also breaks down the difference in auto insurance affordability per state. Based on 2022 data, the highest auto insurance outlay as a percentage of household income was Louisiana (2.67%), Florida (2.49%), Mississippi (2.18%), New York (2.04%), and Georgia (1.99%).
The IRC said the affordability of auto insurance is determined by key underlying cost drivers in each state that include:
• Accident frequency
• Repair costs
• Tendency to file injury claims
• Injury claim severity
• Expense Index
• Uninsured motorists (UM)
• Underinsured motorists (UIM)
• Claim litigation
On the topic of uninsured or underinsured drivers, the IRC earlier this year found that one in three motorists were either uninsured or underinsured in 2023. According to a report, the combined rate is 10 percentage points higher than 2017.
“With the abrupt changes in the economy and impacts on household income, [uninsured-motorist] rates rose in nearly every state from 2019 to 2020,” said Porfilio. “We have been watching for UM rates to improve with lower unemployment and household income increases, but the IRC’s latest research shows UM rates continue to tick upward in most states. We presume deteriorating insurance affordability is more than offsetting economic improvements.”
Small Businesses Continue to Be Underserved by Cyber Insurers: CyberCube Report
Cyber risk analytics firm CyberCube in a report said the cyber insurance market continues to underserve small businesses although these businesses represent a significant share of the global economic output.
“This protection gap
presents both an opportunity and a responsibility for brokers and (re)insurers,” said William Altman, director of Cyber Threat Intelligence Services at CyberCube, in a statement.
“Brokers play a crucial role in driving adoption among small businesses, helping them recognize the value
of cyber coverage. For (re) insurers, expanding to small enterprises not only broadens market reach and enhances portfolio diversification but also strengthens economic resilience,” he said.
CyberCube’s biannual threat briefing shows small businesses (defined as $10
million to $250 million in annual revenue) from around the globe were attacked in 2024 through February 2025 via ransomware, especially. Data shared from Coveware, a cyber extortion incident response firm, indicate companies with 11 to 1,000 employees account for 75% of Coveware’s response
Supreme Court: Truck Driver Can Seek Treble Damages Over THC in CBD Product
By Lindsay Whitehurst
The Supreme Court on April 2 sided with a truck driver who wants to sue for triple damages over a CBD hemp product he said was falsely advertised as being free from marijuana’s active ingredient and resulted in him getting fired.
The 5-4 opinion clears the way for the trucker to seek triple damages under an anti-mob law. It doesn’t decide his underlying claims that the product’s THC content got him fired.
is a generally legal hemp compound that is widely sold as a dietary supplement.
Douglas Horn said he wanted to treat chronic shoulder and back pain after a serious accident. He chose the product because it was advertised as being free from THC, which gives marijuana its high. CBD
But lab tests taken after Horn was fired for failing a routine drug test confirmed the product did have THC, he claimed.
Horn sued the Vista, California-based Medical Marijuana Inc. and sought triple damages under the Racketeer Influenced and Corrupt
Organizations (RICO) Act.
The company pushed back, disputing Horn’s account and saying he can’t sue for higher damages because he’s claiming a personal injury rather than harm to his business.
Horn said his firing was a business injury and he’s been financially ruined, and an appeals court allowed Horn’s claim to go forward.
Writing for the court, Justice Amy Coney Barrett said Horn had the better argument. “In short, a plaintiff can seek damages for business or property loss regardless of whether the loss resulted from a personal injury,” Barrett wrote for an unusual coalition that included her fellow conservative Justice Neil Gorsuch and the nine-member court’s three liberals. Barrett also noted that the decision was no guarantee that Horn ultimately would prevail. In dissent, Justice Brett Kavanaugh wrote that “RICO’s categorical exclusion of personal-injury suits” should have been enough to end Horn’s case.
Copyright 2025 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
cases. Small businesses often lack the cybersecurity defenses to prevent and mitigate attacks. Adding to the current grim outlook is the fact hackers are starting to use artificial intelligence to automate some parts of cyberattacks. CyberCube said it does not expect AI to “revolutionize cyberattacks against small businesses,” but the San Francisco-based firm is keeping an eye on how AI’s use might assist attackers.
“AI could theoretically accelerate the growth of threat actors targeting small business with lower- and mid-value ransoms by making attacks cheaper, more efficient, and more scalable,” CyberCube said.
Of particular note is the education sector, which is a high risk due to lower
investment in cybersecurity and the valuable student and employee information these
institutions hold. Half of the student information and learning systems used by small education organization have exceptionally large data breach and outage risks, CyberCube added. One student information system, cloud-based PowerSchool, suffered a data breach in January.
News & Markets
Premium Growth Is Good but Disciplined Growth Is Better: Lloyd’s Execs Say
By L.S. Howard
Lloyd’s executives said the market has continued to demonstrate its value to stakeholders by delivering 6.5% premium growth while maintaining underwriting discipline.
Lloyd’s saw a continuation of positive returns with profit before tax of £9.6 billion ($12.4 billion) during 2024, down from £10.7 billion ($13.8 billion) in 2023. The market achieved a combined ratio of 86.9 for full-year 2024, compared with 84.0 for FY2023. (A combined ratio below 100 indicates an underwriting profit.)
Lloyd’s Chief Financial Officer Burkhard Keese said that 2024 was a year when the market once again “proved our underwriting discipline and delivered profitable growth of 6.5%,” or gross written premium totaling £55.5 billion ($71.7 billion), compared with £52.1 billion ($67.3 billion) for FY2023.
Keese and Chief Executive Officer John
Neal both spoke during a recent media briefing to discuss Lloyd’s full-year results for 2024.
“Lloyd’s has been relentless in pursuing sustainable, profitable performance in the market. We’ve been on a seven-year journey to deliver the change our stakeholders wanted: to consistently focus on the delivery of disciplined underwriting, to modernize our performance and oversight frameworks, to address the cost of doing business at Lloyd’s, and to show leadership on the issues that matter,” said Neal, who will exit the market this year to become global CEO of Aon Reinsurance and chairman of Aon’s Climate Solutions unit.
“Our track record since 2017 speaks for itself. To date, we’re reporting a combined ratio for 2024 of 86.9. We have reduced our underlying combined ratio to 79.1, (which excludes major claims), or a 16-point improvement on that same ratio from 2019,” Neal said, adding that Lloyd’s
Discipline must be maintained
strong reserving position continued to support some positive prior year reserve releases, which reduced the 2024 combined ratio by 2.4%.
“The key components of the combined ratio are moving positively. Importantly, the attritional loss ratio—most directly under the underwriters’ control as they select, manage, and price risk—has reduced to 47.1% and is now consistently below 50%. Operating expenses have fallen over the period from 40% [in 2017] to 34% [in 2024], with opportunities to manage this ratio further post digitalization,” Neal added.
The market’s 2024 expense ratio of 34.4 remained flat with 2023, which Keese described as “a small disappointment.”
Most Important Measure
Both Keese and Neal focused a lot of their commentary on Lloyd’s underlying combined ratio, which Keese described as “the most important measure.”
“With our underlying combined ratio of 79.1, we have achieved our profitability threshold of 80 for the third consecutive year, proving once again how well our Lloyd’s system works,” said Keese, who is also stepping down from his CFO position this year.
“An underlying combined ratio of 80 means that we can absorb losses up to £8 billion [$10.3 billion] net of reinsurance before our underwriting result turns negative [and the combined ratio rises above 100],” said Keese, noting that this allows Lloyd’s to absorb another £4.9 billion ($6.3 billion) of net large losses before it would report an overall loss of net income.
was relatively low.
While 2024 is the second consecutive year when Lloyd’s reported very high profitability, Keese warned the market shouldn’t get “carried away”—in other words, it should avoid resting on its laurels.
“As our normal net major claims are usually around £4 billion [$5.2 billion], this resilience is reassuring for both our policyholders and capital providers,” Keese said.
Since 2018, Lloyd’s has achieved topline growth of over 50% and its underlying combined ratio has been reduced from 93 in 2018 to 79 in 2024, which represents an increase in annual underwriting profit of £6.4 billion ($8.3 billion), Keese said.
“Strong underwriting discipline is our north star, and we expect the market to consistently target an underlying combined ratio of around 80. We’ve seen strong performance on both sides of the P&L with the underwriting profit of £5.3 billion [$6.9 billion], complemented by another strong investment return totaling £4.9 billion [$6.3 billion],” Neal said. (The underwriting profit in 2023 was £5.9 billion, and that year’s investment return was £5.3 billion.)
Keese noted that Lloyd’s profit before tax stands at £9.6 billion, or £1 billion less than reported for 2023, but this decrease was expected after the exceptional year of 2023 when natural catastrophe activity
“We have not earned our cost of capital over the last seven years, meaning the high profits in 2023 and 2024 were not enough to offset the results since 2018, and I believe it is very much true for the whole industry,” he said.
‘Strong underwriting discipline is our north star, and we expect the market to consistently target an underlying combined ratio of around 80.’
Return on Capital
“This means we must maintain underwriting discipline. We can all agree that 7.6% of return [on capital since 2018] is not sufficient for existing and new investors. Without setting a specific target and depending, of course, on the nature of the book, an investor typically would expect to see 10% to 15% returns,” Keese said, adding that for the market to reach an adequate return on capital, it needs to achieve double-digit returns for several years. The 2024 return on capital of 21.0%
is down from 25.3% in 2023, which brings the seven-year average to 7.6%. (See related graphic on page 14.)
The return on capital at Lloyd’s was 21% for 2024, down from 2023’s significant 25.3% but taking the seven-year average now back to 7.6%.
Keese further explained during the Q&A session that investors need to be paid for their cut of the risks they take.
“We have earned 7.6% return on capital over the last eight years, and we must give the investors a chance to earn that money back. And I think that will force discipline because there’s a certain fatigue still in the investor community of deploying money into the insurance sector.”
Both Keese and Neal expressed confidence that Lloyd’s wouldn’t see widespread rate softening, given investor demand for better returns and the nature of evolving risks.
“We’re in an unusual world of protectionism, nationalist behaviors, and geopolitics,” said Neal. “I mean there’s a whole heap of complexity out there, which … has heightened the perception of risk amongst the buyers of insurance.”
He noted that Lloyd’s is growing at three-times the rate of gross domestic product while insurance globally is growing at twice the rate of GDP. “So, I think there is plenty of opportunity for underwriters to see risk, accept risk, but only accept risk where the price is right.”
Indeed, Neal said the market in 2023 and 2024 has shown discipline around the right price for the right risk—a trend that will likely continue.
“The 2024 results demonstrate clearly that the Lloyd’s market is in good shape, underpinned by that commitment to performance, discipline, and sensible scale,” said Neal in his wrapup commentary. “And to remain in this position, we will remain laser focused on underwriting profitability to deliver exceptional value to our market, our investors, and of course to our customers.”
Business Moves
National
Mitsui Sumitomo Insurance Co., W.R. Berkely Corp.
Japanese property/casualty insurer
Mitsui Sumitomo Insurance Co. will buy a 15% stake in W.R. Berkely Corp. through open market purchases or private transactions with third parties. W.R. Berkely said the Berkely family will not sell any of its common stock as part of the deal. MSI will not buy any shares from the company itself. The day-to-day operations of W.R. Berkley Corp. will not be affected by this agreement between MSI and the Berkley family.
Under the terms of the agreement, the Berkley family will recommend the nomination and election of an MSI “direct designee” to W.R. Berkley’s board of directors when MSI acquires at least 12.5% of outstanding shares. Prior to that threshold – when MSI buys 4.9% of shares – “MSI agrees to vote those shares pursuant to the recommendations of the Berkley Family, except in limited circumstances where the Berkley Family will vote the MSI shares in the same proportion as all of the non-MSI shares are voted.”
MSI’s investment is expected to be completed by the end of the first quarter 2026, pending regulatory approvals.
The
Doctors Company, ProAssurance Corp.
The Doctors Company has entered an agreement to acquire ProAssurance Corp. for $1.3 billion, taking the company private. Birmingham, Alabama-headquartered
ProAssurance is a specialty insurer with expertise in medical liability, products liability for medical technology and life sciences, and workers' compensation insurance.
The Doctors Co. of Napa, California is the nation's largest physician-owned medical malpractice insurer.
The transaction is expected to close in the first half of 2026. Upon completion, ProAssurance's common stock will no longer be listed on the New York Stock Exchange, and ProAssurance will become a wholly owned subsidiary of The Doctors Co., creating a combined company with assets of approximately $12 billion.
International
Nirvana, Pulse
Managing general agent Nirvana announced it is acquiring Pulse, an MGA specializing in non-standard accident, health and life, and sports & leisure insurances. Financial terms of the deal were not disclosed.
Nirvana underwrites a global book of business across media errors & omissions (E&O), tech E&O, cyber, and warranty and indemnity lines of insurance. Neither business plans any changes to their teams as a result of the transaction, and brokers and clients will therefore continue to interact with their usual underwriter contacts without disruption to service.
The transaction is subject to standard change of control processes with both the Financial Conduct Authority (FCA) in the
UK and the Financial Services and Markets Authority (FSMA) in Belgium.
East
Liberty Mutual Insurance to Sunset Safeco Insurance
Safeco Insurance will stop being a brand name in 2026, and Liberty Mutual Insurance will sell all of its personal lines products under the Liberty Mutual name. Safeco has been Liberty Mutual’s brand for the independent agent channel to sell home, auto and specialty business since Safeco was acquired by the Boston-based insurer in 2008.
Liberty Mutual said the policies of Safeco customers will not be impacted, and customers will keep their agent relationship. Liberty Mutual also uses direct distribution and licensed sales reps.
Since it was bought by Liberty Mutual, Safeco’s 22,000 or so independent agencies helped grow the business to $13 billion in annual premium, as the company sometimes stepped in to assume books of business from other insurers. It did so late last year, taking on the personal lines book of Main Street America.
In September 2024, Safeco said it entered into a personal auto and umbrella lines book transfer agreement with Columbia Insurance Group.
Midwest
WTW, Global Commercial Credit LLC
WTW announced the acquisition of Global Commercial Credit LLC (GCC) into Willis, a WTW business.
Founded in Michigan in 1995 with a primary focus on developing custom-tailored credit risk management solutions for clients, GCC has developed a foundation in specialized products, including trade credit and political risk insurance and credit information services.
The addition of GCC will enhance Willis’ diversification across industries, further expanding the business’ footprint across targeted, strategic sectors. This acquisition provides geographic expansion in a key growth area of the North American market.
As part of its acquisition of GCC, WTW
will also acquire ProfitGuard, a specialized credit risk management service that is complementary to trade credit insurance and can be scaled to provide added value for Willis’ global clients.
RYZE, Acorn Claims
RYZE Claim Solutions, a full-service claims management provider, announced its acquisition of Acorn Claims, a Springfield, Missouri-based firm specializing in daily and catastrophe claims services nationwide.
RYZE said the transaction further supports its position in the industry, reinforcing its commitment to innovation, service excellence, and continued expansion as a part of its previously released M&A strategy.
Acorn Claims offers a comprehensive suite of claims management services, including Third-Party Administration (TPA) and its proprietary audit service, Expert Technical Analysis (ETA), which is a dedicated review process to ensure mitigation work is performed to industry standards.
Rob Brown and Kirk Belz will join the RYZE management team.
Hub International Limited, Dansig
Hub international Limited announced that it has acquired the assets of Dansig, Inc., d/b/a Dansig Insurance Risk Advisors (Dansig). Terms of the transaction were not disclosed.
Located in Decatur, Illinois, Dansig is an independent insurance risk advisor offering a suite of employee benefits services, and commercial and personal insurance to help clients manage insurance costs, reduce risk and engage employees.
Daniel Reynolds, President & CEO, and the Dansig team will join Hub Midwest West.
Dansig will be referred to as Dansig Insurance Risk Advisors, a Hub International company.
South Central
Arthur J. Gallagher’s Risk Placement Services, Litchfield Special Risks Inc. Arthur J. Gallagher division Risk
Placement Services (RPS) acquired Litchfield Special Risks Inc. (LSR), based in El Paso, Texas.
Bill Brenton and his team will remain in their current location under the direction of Ash Thomas, the Western Region vice president for RPS.
LSR is a wholesale insurance broker and managing general agency specializing in transportation and property/casualty solutions for Texas and Southwest retail agents.
RPS is the U.S. wholesale brokerage, binding authority and programs division of Arthur J. Gallagher & Co., an insurance brokerage, risk management and consulting services firm headquartered in Rolling Meadows, Illinois.
RYZE Claim Solutions, Leading Edge Claims Service
RYZE Claim Solutions, a full-service claims management company, acquired Leading Edge Claims Service, a firm based in Southlake, Texas.
Under the agreement, Leading Edge will operate as a division of RYZE while maintaining its leadership, with company founder and President Troy Hansen continuing to lead operations.
Founded in 2007, Leading Edge Claims Service has earned its reputation as a provider of quality claims services nationwide. The company’s expertise is in daily and catastrophe claims and third-party administration (TPA).
Southeast
Berkshire Hathaway’s GEICO
Berkshire Hathaway’s GEICO insurance plans to open a new campus in Tampa late this summer, bringing more than 1,000 jobs to the area.
The property and auto insurer also plans to open an office in the Dallas area by this fall, adding another 1,000 jobs, the company said in news releases.
The three-building, 190,000-foot Tampa site was purchased two years ago by Greenleaf Capital, the real estate division of Tampa-based HCI Group.
HCI is the parent company of potential GEICO competitors: Homeowners Choice
Insurance, TypTap Insurance, Tailrow and CORE condominium insurance firms. GEICO has signed a multi-year lease on the property, HCI said in a news release.
The office complex near the Tampa International Airport was previously home to New York Life. The Tampa Bay Times reported that the property sold in 2023 for almost $13 million. HCI said that the campus now has a value of $17 million. HCI Group reported almost $15 million in net investment income for 2024, up 28% from 2023.
GEICO already has offices in Lakeland and Jacksonville, with some 3,800 employees in Florida. The firm said job opportunities at the new Tampa office will include insurance sales, service, and claims positions.
In Texas, the company announced late last year that it planned to open an office in Richardson, north of Dallas, bringing about 500 jobs to the site.
GEICO said it was adding a second building to the expansion plans and an additional 1,000 jobs. The complex is scheduled to open late this year.
West
CoreLogic Rebrands to Cotality
Property data provider CoreLogic is rebranding to Cotality. The rebrand includes a new name, logo and brand identity.
The new Cotality also comes with a new tagline, “Intelligence beyond bounds,” which the company said serves as an expression of its identity.
The company is based in Irvine, California, and has operations in the U.S., Canada, the United Kingdom, Australia, New Zealand, India and Germany.
World Insurance Associates LLC, Royalty Insurance Services
World Insurance Associates LLC has acquired Royalty Insurance Services in Van Nuys, California.
Royalty has provided commercial trucking insurance for over 23 years.
World Insurance Associates is headquartered in Iselin, New Jersey with more than 300 offices across the U.S. and U.K.
National Tobias “Toby” Cushing, previously casualty technical director at Zurich North America, has been appointed to the newly created role of deputy chief underwriting officer. He is responsible for supporting Zurich North America’s underwriters across all lines of business, including property, casualty, specialty lines, excess and surplus and crop insurance.
Cushing, who is based out of Zurich’s New York City Offices, joined Zurich as head of construction Casualty in 2022. Since joining, he has held several underwriting leadership roles of increasing responsibility.
Before joining, Cushing held various roles at The Hartford, including serving as head of construction for middle and large commercial. Earlier in his career, he practiced law as an insurance coverage litigator and advisor for complex insurance transactions. Zurich North America is headquartered in Schaumburg, Illinois.
and chairman of global casualty product board for Chubb. He has also held casualty and risk management leadership roles of increasing responsibility at AIG and Crum & Forster.
East
Plymouth Rock Home Assurance Corporation, headquartered in Boston, appointed Kevin Zygmunt as its chief operating officer.
In his new role, he oversees operations for the marketing, underwriting, service, and claims teams for the home group.
Zygmunt most recently led the home insurance vertical for EverQuote, leading planning and operations. Before joining EverQuote, he spent five years at the Boston Consulting Group, working in multiple industries and practice areas.
Midwest
JM Wilson also promoted Devan Dodd to executive P&C underwriter. He underwrites new and renewal commercial risks, working with carrier underwriters and independent insurance agents in Michigan and Texas. Dodd started as an intern with the property and casualty team in 2014. He was promoted to P&C technician in 2015, then to P&C underwriter in 2021, and senior P&C underwriter in 2023.
The company also promoted Jim Ladik to senior P&C underwriter. He will underwrite new and renewal commercial risks, working with carrier underwriters and independent insurance agents in Michigan and Texas. He joined JM Wilson in March of 2022 as a P&C underwriter.
in Iselin, New Jersey, named Katie Scheuer as division revenue leader, Great Lakes region, a new position at the company. Scheuer, who has 16 years of industry experience, previously served as division growth leader for Great Lakes and West Regions at World Insurance Associates. Before joining World Insurance Associates, she served as executive vice president of sales at American Trust Insurance LLC.
South Central
CRU Group, headquartered in Dallas, named Catherine Sutton vice president for the U.S. Southwest region. Sutton has an education in engineering and experience in insurance adjusting, forensic engineering and account management. Based in Austin, Texas, Sutton will report to Senior Vice President of U.S. Business Development, Tim Lalaian. CRU Group provides loss adjusting, claims management and staffing services for the property/casualty industries across the U.S. and Canada.
Everest, headquartered in Hamilton, Bermuda, appointed Joe Fobert as head of U.S. retail casualty and industry practices for Everest Insurance. He will report to William Hazelton, executive vice president of Everest Insurance and president of North America Insurance.
Fobert has over three decades of commercial underwriting expertise, having previously served as head of major accounts excess casualty Joe Fobert
JM Wilson, headquartered in Portage, Michigan, promoted Natalie Staruch as executive property & casualty (P&C) underwriter. She underwrites new and renewal commercial risks, working with carrier underwriters and independent insurance agents in JM Wilson’s southern region.
Staruch joined JM Wilson in 2021 as a P&C underwriter and was promoted to senior P&C underwriter in 2023. She has over 14 years of experience in the insurance industry.
JM Wilson also re-hired Phil Snyder-Knutson as senior transportation underwriter. He underwrites new and renewal commercial transportation risks, working with carrier underwriters and independent insurance agents in Michigan, Minnesota and Texas. With 15 years of experience in the insurance industry, SnyderKnutson previously served as a commercial transportation underwriter at JM Wilson for the southern region.
Huntington Insurance Inc., headquartered in Columbus, Ohio, hired Detroit-based Kathy Weaver as senior director of property and casualty (P&C). Weaver previously served for 16 years at Aon, beginning as an account executive and most recently serving as managing director and Michigan market leader.
Insurance Associates, headquartered
Brown & Riding, headquartered in Dallas, hired Robert Conyers Jr. to lead B&R’s environmental practice with Jeff Hubbard. With over eight years of industry experience, Conyers joined Brown & Riding in 2017 and was named a principal in 2023.
Southeast
Mangrove Property Insurance Company, headquartered in St. Petersburg, Florida, appointed
World
Natalie Staruch
Tim Cotton
Kevin Zygmunt
Tim Cotton as chief operating officer.
Cotton has 30 years of industry experience, 28 of which have been in the Florida property market.
Hiscox, headquartered in Atlanta, appointed Kate Rarick as vice president, businessowners policy (BOP) practice leader.
Mangrove also named Chris August the head of distribution. August has over 23 years of insurance industry experience, most recently serving as head of distribution at Orchid Insurance.
Allan Franklin was named chief financial officer and treasurer. Franklin has over 15 years of accounting experience in the public and private sectors, with a focus on the property and casualty insurance industry. Before joining Mangrove, he served as vice president of finance and accounting at Cabrillo Coastal General Insurance Agency LLC, U.S. Coastal Ins Co., and U.S. Coastal P&C Ins Co.
Eduardo Miranda, Mangrove’s new senior vice president, risk, underwriting and analytics, has 25-plus years of experience. He comes to Mangrove from Universal North America Insurance Company.
Brian Turnau, claims director, has over 20 years of professional insurance industry experience, with a focus on claims-related operations for multiple carriers, including experience with catastrophic weather events. Previous roles include vice president of claims at FedNat.
Rarick joins Hiscox from Nationwide and will report to Paul Spelman, senior vice president of underwriting management.
Rarick has over 15 years of underwriting experience, most recently serving as Nationwide’s associate vice president of small commercial underwriting. Prior to her last role, Rarick worked as a claims specialist, progressing to commercial underwriter and then director of commercial underwriting at Nationwide.
Summit, a regional provider of workers’ compensation insurance based in Lakeland, Florida, announced that Greg Thomas is the new vice president of the firm’s mid-Atlantic region.
West
Aspire General Insurance, headquartered in Rancho Cucamonga, California, promoted Tyler Nicholson to the newly created role of chief revenue and distribution officer.
Nicholson has over 20 years of industry experience, joining Aspire in 2016 as director of marketing. He was promoted to vice president of marketing in 2020. Nicholson is responsible for driving Aspire’s revenue growth strategies and oversees all distribution channels.
Aspire also promoted Myles Storms to senior vice president of operations. Storms has a
strong background in commercial insurance sales and operations. He began his career at Inszone Insurance, then joined Aspire as a territory marketing manager and held several leadership roles, including corporate project manager and director of corporate projects.
Trucordia, headquartered in Lindon, Utah, named Aaron Davidson the senior vice president (SVP), broking and strategy. Davidson comes to Trucordia from Peak 8 Advisors, where he was a managing partner.
Aspire also promoted Madison Storms to senior vice president of HR. She joined Aspire in 2020, bringing a people-first approach to talent strategy. Under her leadership of the HR department, the company has grown by 300 employees.
Earlier in his career, Davidson served as chief executive officer and president of Relay Partners and held senior positions of increasing responsibility at ServiceNow and Guidewire Solutions.
Venbrook Group LLC, headquartered in Woodland Hills, California, appointed David Hicks as senior vice president, transportation practice lead. He will be based in the greater Sacramento, California, area.
Hicks joins Venbrook with 22 years of experience in transportation insurance. Most recently, Hicks served as vice president at James G. Parker and previously at HUB Transportation. He brings longstanding relationships with specialty companies to Venbrook, giving the firm immediate access to exclusive markets and commercial products that help address specific industry risks.
Builders & Tradesmen’s Insurance Services Inc. (BTIS), an Amynta Group company headquartered in Rocklin, California, promoted Jessica Keefe to senior vice president and head of operations. Keefe has over 20 years of expertise in compliance, operations optimization, and strategic business growth. Since joining BTIS in 2010, he has earned multiple promotions, including accounting operations manager, surety department program manager, senior manager, and vice president.
Danny Reeder joined Alliant Insurance Services as vice president within its employee benefits group.
Based in Utah, Reeder has over 13 years of leadership experience in executive consulting, account management, and benefits strategy.
Prior to joining Alliant, Reeder was a sales executive with Moreton & Company. Alliant is headquartered in Irvine, California.
Tyler Nicholson
Allan Franklin
Chris August
Myles Storms
Madison Storms
David Hicks
Aaron Davidson
Closer Look: Directors & Officers
Soft D&O Market May Come to an End as Risk Complexities Rise
By Chad Hemenway
Buyers of directors and officers (D&O) liability insurance have benefited from strong capacity and healthy competition among insurers to see consistent rate decreases at renewal over the last several years.
Those days may be coming to an end thanks to a growing number of risk complexities within the marketplace—and the past may come back to bite, as well.
Insurance industry rating analysts from AM Best recently said adverse development is embedded in prior-year losses and defense and cost containment (DCC) expense reserves. Therefore, insurers’ premium base to support future claims activity has diminished, AM
Best added, and the negative effect on the financial performance of some D&O insurers could soon begin to be seen.
Renewal premium continued to fall during the first quarter of 2025, but AM Best wondered if D&O prices “fell too far, too quickly” from a time about four years ago when new capacity looking for good returns in a high-rate environment entered to create a crowded field of insurers and, eventually, the current soft market.
‘Reduction Fatigue’
For now, brokers agree that a buyers’ market persists but there are signs of a reversal.
In a recent report, Lockton noted that public and private D&O insurance buyers continue to see a stable market, with rates for public companies
dropping 9.5% during fourth-quarter 2024.
However, many insurers look to have “reduction fatigue,” according to Lockton.
Some private and nonprofit D&O buyers can similarly still secure rate reductions at renewal, but Lockton warned buyers that insurers have indicated “rates have bottomed out.”
“Where they can, insurers are trying to hold the line on rate to start 2025,” Lockton said.
Woodruff Sawyer late last year said the number of D&O renewals with flat or increased premiums was on the rise for the first time in 18 months. Premium decreases remained prevalent, but the pace of the reductions was slowing.
For 2025, seasoned D&O insurers will “defend their
turf,” the broker said. “Established carriers will work hard to keep rates at what they deem reasonable to avoid the dynamic of underpricing today only to then be forced into hard market pricing or leaving the D&O market altogether,” Woodruff Sawyer added.
Lockton said there is “not as much premium pressure on incumbents in the current market” and that insurers are more likely to evaluate terms and conditions on an individual risk basis.
Broker Aon concurred, adding that insurers are starting to rethink capacity deployment, and newer carriers in the market are “struggling to gain market share.”
Factors driving the market are plentiful and in flux. To
start with some of the more traditional marketplace drivers, the number of securities class action lawsuits in federal and state courts has risen, and the impacts of social inflation and third-party litigation financing continue.
The number of securities class action filings increased for the second consecutive year in 2024, according to a report by Cornerstone Research. The number of “core” filings—those excluding M&A filings—reached 220, 14% higher than the 1997-2023 historical average.
Cornerstone noted that the number of special-purpose acquisition company (SPAC), cryptocurrency, and cybersecurity-related filings fell in 2024 compared to 2023 but artificial intelligence (AI)-related filings more than doubled, including those with allegations of “AI-washing.”
“As a D&O risk, AI is used to provide data and support to corporate decision-makers, leading potentially to questions of the sufficiency of oversight and due diligence,” according to a recent article from
broker WTW. “The adequacy and accuracy of investor disclosures relating to the use and scope of AI are also areas of potential risk.”
WTW also highlighted the D&O risk of bankruptcies (among the “most severe” claims, it added) and pointed out a 33% increase in bankruptcy filings through the fiscal year ending September 2024.
Impact of Tariffs
Most recently, tariffs imposed by President Trump on trillions of dollars in imports could impact the D&O line. Stock market volatility, uncertainty, and financial distress to businesses could manifest claims. Shareholders will be paying attention to what companies have to say about the effect on operations and financial results.
“Among the risks is that companies’ strategies and corporate disclosures may later prove to have been ill-founded or inappropriately optimistic and subject to hindsight challenges by aggressive plaintiffs’ lawyers,” said Kevin M. LaCroix, executive vice
president, RT ProExec, in his “D&O Diary” blog.
There had been some optimism that better economic conditions would signal a return of initial public offering (IPO) activity—another driver of D&O claims—but companies thinking about it may keep the brakes applied and wait for the market to improve from its dive following the announcement of tariffs.
Continuing the topic of Trump, Lockton said the market remains “cautiously optimistic” that federal regulation and Securities and Exchange Commission (SEC) oversight under the current presidential administration will be more business friendly.
“We don’t know how the change in administration will ultimately impact the D&O landscape, but what we do know is that everything a company does at the board level is increasingly being scrutinized,” said Adam Furmansky, deputy U.S. D&O product leader at Aon, in a recent report. “There are just more opportunities for D&O claims to be filed. It seems that as anything devel-
ops in the larger economy, it can lead to a source of claims.”
The SEC’s recoveries from penalties topped $8 billion in fiscal year 2024 despite fewer enforcement actions. President Trump ordered a pause to enforcement of the Foreign Corrupt Practices Act (FCPA).
WTW’s experts said they expect SEC changes to include “rollback of cyber and [environmental, social, and governance] ESG enforcement and disclosure requirements, and an emphasis away from agency-imposed corporate penalties,” but warned against thinking risk will be reduced.
“It is always possible that the reverse may be true—that the lessening of regulatory risk may give rise to a more aggressive plaintiffs’ bar eager to act on purported wrongdoing against which the SEC may be reluctant to act,” WTW said.
Furthermore, changes to views on diversity, equity, and inclusion (DEI) may impact corporate governance and investment risk.
Early on, President Trump signed executive orders to terminate DEI programs within the federal government and within companies or educational institutions that get federal funds. Many high-profile private companies, such as Walmart, Google, Target, Ford, Meta, Amazon, McDonald’s, and Harley-Davidson, have rolled back DEI initiatives.
Lockton said business leaders “face an increasingly complex environment of competing federal and state regulations, as states where Democrats are in power try to blunt the impact of the Trump administration, particularly around hot-button issues such as DEI and ESG investing.”
Special Report: California's Wildfires
Revisiting California’s Wildfires: A Personal Journey PART TWO OF A
TWO-PART SERIES
By Russ Banham
In this second article in a two-part series, Journalist Russ Banham endeavors to better understand the factors behind the devastating fires in Los Angeles County and the roles that public officials, fire suppression personnel, insurance regulators, insurance carriers, and homeowners can play to forge a safer future.
Read Part 1, “An Insurance
Journalist’s Perspective on Southern California’s Wildfires,” in Insurance Journal’s April 7, 2025, print issue or visit www. CarrierManagement.com.
Last weekend, my wife, Jenny, and I drove three miles from our home to see firsthand the widespread devastation caused by the Eaton Fire in Altadena. I had been determined not to visit the scene of such grief and
despair out of respect for others’ privacy. But after writing about our four-day mandatory evacuation and plans to invest in fortifying our house against the next wildfire, a fact-finding mission was in order. I needed to ascertain why some houses survived the annihilation. It was a splendid day with
mostly blue skies as Jenny drove her car slowly through the charred remains of the neighborhood. Most of the hazardous debris had been removed by the U.S. Army Corps of Engineers. What remained took on a solemn quality.
Carbonized bikes and cars littered many lots. Fireplace
chimneys poked out of flattened rows of houses like tombstones. Springtime bouquets of wild yellow sunflowers called California Goldfield bordered blackened trees wrapped in strips of colored tape for removal. Former mansions were evident by their grand staircases, beckoning guests to nothingness.
“It’s like the ruins of an ancient city,” whispered Jenny, an art teacher at an elementary school in the San Fernando Valley.
Now and then, a house sprouted serenely from the wreckage. Jenny stopped the car, and I studied them. All were built with noncombustible materials like brick, stone, and stucco. I do not know if other houses, now gone, were made of similar materials, but the information was encouraging.
I was in my quiet reporter mode taking notes while Jenny talked about the memories the houses held—the kids’ drawings, photo albums, precious heirlooms, and holiday parties. “I need to go home now,” she said.
Living in California
We live in the same wildland-urban interface in between the San Gabriel Mountains and the built environment in La Cañada Flintridge as the people of Altadena, in a 75-year-old house on a block of similar vintage structures.
As I wrote in my previous article of this series, Jenny and I have decided to stay put in spite of the wildfire risks. We love the woodsy environs, hiking in local hills, proximity to all Los Angeles offers, and our neighbors.
We took out a HELOC to make our house as fire resistant as possible, with the aim of receiving the IBHS Wildfire Prepared Home program designation. We’re also hopeful to exit the California FAIR Plan at some point. Capital has been earmarked for double-paned, tempered glass windows framed in noncombustible materials; fire-resistant aluminum fencing and front gate; fire-resistant steel barriers between our house and flanking structures; and Class
A fire-rated intumescent paint as an alternative to expensive siding. I took care of relatively inexpensive improvements like clearing the vegetation surrounding our house and replacing the vents near the foundation, in the attic, and under the eaves.
Over the past month, I conducted a series of interviews to better understand the causes of wildfires, what is being done to reduce their severity and frequency in a sprawling county of foothills and mountains, and our chances of finding homeowners insurance in the private insurance market. The interviewees included the head of Los Angeles County’s forest management program, a veteran fire investigator, California’s former insurance commissioner, my independent insurance agent, and several neighbors.
I wanted to know:
• Why did the wildlands get so wild, what is being done to tame them, and will fire-suppression activities like prescribed burns and low-lying vegetation clearing expand?
• Since we know the ignition sources for many recent wildfires—sparking from power lines, fireworks, the burning of debris, fires set by homeless
Jan. 9.
people, and arson—can the laws banning such activities be strengthened and vigorously enforced?
• What are the most effective ways for homeowners to fortify their properties against fire without breaking the bank?
• Will the insurance industry financially encourage homeowner wildfire mitigations that reduce the possibility of widespread destruction?
As I was doing the interview, California was in the process of releasing a series of updates to its Fire Hazard Severity Zone maps. The last batch, published by the California Department of Forestry and Fire Protection (Cal Fire) on March 24, added more than 440,000 acres to Los Angeles County’s fire hazard zones. Areas in the county with the highest fire hazard
increased by 30%. Cal Fire is the state agency responsible for fire prevention, fire protection, and resource management on over 31 million acres of California’s wildlands. Across California, 1.2 million acres are now categorized in the “very high” fire hazard zone, up from 860,000 acres a decade ago. Approximately 4.5 million acres are in a “high” or “moderate” hazard zone. Altogether, 3.7 million people live within the three zones statewide—an area twice the size of Delaware.
A Paradigm Shift
Several people I talked with believe that in the aftermath of the seven fires that raged simultaneously on Jan. 9 throughout Los Angeles County, residents have reached
continued on page 24
Russ Banham visiting the charred remains of some homes in Altadena, California, destroyed by the Eaton Fire on
Special Report: California's Wildfires
continued from page 23
the breaking point and are demanding government actions that radically decrease wildfire ignition sources and the combustible fuel load of forests.
“Existential dread is a powerful force,” said my insurance agent, Azy Susman, owner of Susman Insurance Services Inc. “Most everyone in Los Angeles County knows someone directly affected by the recent wildfires. People living in urban areas a few miles from the foothills used to think they were protected. Now there’s obvious proof they’re not, due to the velocity and unpredictability of the Santa Ana winds carrying embers miles away.”
More than 100 of Azy’s clients lost their homes in the Eaton and Palisades fires. “The first time they called after the fires erupted, they were unbelievably calm. They were in shock, of course,” she said. “The second time, they talked about the typical insurance issues, the nitty gritty of what they had to fill out and when they would receive payment. The third time, they talked about the impact on their kids. That’s when the emotions spilled over.”
The overwhelming majority of Azy’s clients received a check from their insurance adjuster within days. “My clients and other agents’ clients were not battling with their insurance carriers, as the press reported. However, many homeowners in the FAIR Plan sadly have yet to receive their claim payments—a nightmare for them and agents trying to expedite the checks. In my office, it was all hands on deck.”
Her staff of 17 people worked
at her office in Brentwood from 6 a.m. till 10 p.m. and through the weekend to do everything possible for policyholders during one of the worst weeks of their lives. “When clients told me they needed a place to live—no joke—I went on Zillow to help them search,” she said. “I’m a problem solver by nature.”
‘My clients and other agents’ clients were not battling with
their insurance carriers, as the press reported.
However, many homeowners in the FAIR Plan sadly have yet to receive their claim payments—a nightmare for them and agents trying to expedite the checks.’
Captain Kevin Montoya, head of the Prescribed Fire Management Program at the Los Angeles County Fire Department (LACoFD), also senses change in the air. “There’s a paradigm shift underway since the big wildfires,” he told me. “Unlike the Paradise Fire, this disaster was close to home. People in LA County watched entire communities close to them burn to the ground. Events like these change perceptions of what can be done and what needs to be done.”
Captain Montoya is a 24-year veteran firefighter, paramedic, engineer, and fire crew supervisor. When not out responding to an incident, he is responsible for supervising
the fuel loads in the county’s forests, analyzing potential fire behaviors, and managing prescribed fire activities. His office is fortuitously located at LACoFD’s Fire Camp 2 in La Cañada Flintridge, where we reside. When I referred to him as Captain Montoya, he humbly asked me to call him Kevin.
During our one-hour conversation, we discussed hiking in the Angeles Forest abutting La Cañada Flintridge and traded some of our favorite trails. He mentioned that a crew was set to thin the vegetation in the hills north of our home in the next week—a stroke of plain good luck. He also pointed out the monumental task before the forest management teams he leads.
“If you look at photographs of California in the late 19th century and compare them with photographs from today, there’s a dramatic difference. Back then, natural fires and small fires purposely started by Native Americans cleared out much of the understory and smaller trees, reducing the risk of fires climbing into the bigger trees,” he explained. “Due to the suppression of fires over the past 150 years, you literally ‘can’t see the forest for the trees.’ There’s so much material to burn, it climbs like a ladder into the tree canopy and takes off from there.”
To decrease this gargantuan fuel load, the budget of the Wildfire and Forest Resilience Action Plan has almost doubled in the past six years to $4 billion. The capital goes toward the work Kevin and his peers across California do—prescribed burns and the thinning out and removal of low-lying chapparal and other
vegetation. Over the same period, the number of Cal Fire employees providing these services also nearly doubled from 5,829 to 10,741.
Despite the additional capital and personnel, Kevin is realistic about the chances of quickly overcoming 150 years of fire suppression. “The idea that we can turn around [the forests] in a meaningful way overnight is hindered by obstacles. Every time you touch the ground in a forest in California, you have to fill out and file an EIR [Environmental Impact Report]. If you’re starting from scratch, you’re looking at a thousand pages, depending on who owns the land—the state, federal government, or a private landowner. Often, you need to hire an expensive environmental consultant just to fill out and file the EIL.”
A 200-acre forest management project costs $200,000, he said. “That’s a pretty heavy lift in a world where the climate keeps getting hotter and drier. But we’re definitely moving in the right direction, continuously reducing the fuel load and changing the behavior of wildfires.”
To get a better grasp on the success of these activities, I perused Cal Fire’s Fuels Treatment Effectiveness Dashboard, launched two months before the Eaton and Palisades fire. As its name indicates, viewers can click on a recent fire incident to view treatment details like fuel breaks, vegetation mastication, and tree thinning to determine if the action produced a positive impact. In several random clicks, I was encouraged to see the prescribed treatments decreased the intensity and slowed the
progress of the wildfires.
Not knowing much about EIRs, I discovered the regulations came into effect with the California Environmental Quality Act of 1970. The goal of the legislation was to inform the public about the environmental effects of proposed forestland projects. Given the enormous increase in large wildfires and burned acreage in the 55 years since the regulation was effected, perhaps the time has come to find a more pragmatic balance between environmental concerns and citizens’ safety and economic well-being. “It’s taken events like the Eaton fire to change the perception of what can be done and should be done within reason,” Kevin said.
Monitoring Ignition Sources
My interview with arson specialist Joe Toscano, a fire investigator for major global insurers and reinsurers the past 30 years, underscored the difficulties inherent in stopping human sources of wildfire ignition. “There’s not much that can be done to prevent an arsonist from committing an act of arson, but earlier detection would provide an opportunity for fire suppression professionals to respond in a timely manner,” Toscano said.
A step in the right direction is the use of satellites already equipped with sensors to monitor wildfire spread. “The sensors can detect thermal signatures attributable to incip-
ient fires in areas like riverbeds, where homeless people start cooking fires or campfires for warmth,” he said, adding that drones equipped with similar sensors can provide the same surveillance.
The number of fires ignited by homeless people in Los Angeles has climbed steadily in recent years. Nearly 14,000 such fires were reported in 2023, nearly double the number in 2020, according to Los Angeles Fire Department data. Although fires in unpermitted areas are banned, advocates for unhoused people contend they should not be arrested for basic human needs but should instead be equipped with fire extinguishers and other fire suppression tools.
“My first inclination is to keep such bans intact and strictly enforce them, considering the consequences,” Toscano said.
The exact cause of the Eaton and Palisades fires is still under investigation, although lightning has been ruled out. While a homeless encampment was found near the suspected ignition point in Altadena’s Eaton Canyon, other evidence points to a dormant transmission tower with a history of electricity arcing as sparking the fire. Southern California Edison (SCE), the utility serving much of the region, is investigating both possibilities and other potential causes. In 2024, 178 fires were sparked by continued on page 26
Special Report: California's Wildfires
continued from page 25
SCE equipment, up from 105 in 2015, according to annual state reports filed by the utility.
A report by the California Office of Energy Infrastructure cited in a March 30 article in The Los Angeles Times indicated that SCE has “thousands of open work orders to fix equipment problems found in inspections.” The good news is the rising amount of SCE capital spent on insulated wires, tree trimming and equipment inspections. In 2024, the utility dedicated $1.9 billion to reducing the risk of a wildfire, up 29% from the prior year, the article stated.
Hope Springs Eternal
The interviewees gave me a modicum of hope that the wildfire intensity will moderate a bit in the years ahead, assuming public support for needed change does not wane. In a recent poll administered by The Los Angeles Times, 80% of voters in Los Angeles County said they back tougher building codes to make homes more fire-resistant, even if it increases costs. Residents also said they are willing to pay higher taxes to boost funding for fire protection agencies.
Jenny and I share these opinions and are optimistic our wildfire risk mitigations will protect our house. That’s a bold declaration, but we are not alone in making it.
When my first article on the wildfires was published and featured on LinkedIn, several people I’d interviewed in the past as well as complete strangers reached out in support of our decision. Among them was Art Fliegelman, senior financial analyst, Office of Financial Research, at the
U.S. Treasury Department.
“You are totally correct that mitigation is the only real viable solution. Without that, it is just rolling dice until the next event occurs,” Fliegelman emailed me. “Hopefully your changes will do the job. … Unlike a hurricane or flood, the risk of a fire depends a lot on what neighbors have or have not done. I have confidence LA will come back, but it depends upon people making the right choices and not repeating past mistakes. … It sounds like you are doing a lot of the right things.”
‘The idea that we can turn around [the forests] in a meaningful way overnight is hindered by obstacles. Every time you touch the ground in a forest in California, you have to fill out and file an EIR [Environmental Impact Report].’
Fliegelman’s comment about the need to involve neighbors in protecting a community against wildfires struck home. We’ve had several such conversations. The families whose houses flank ours are participating in the cost of building fire-resistant steel barriers between our homes. My neighbor across the street, featured in the previous article as Catherine for her privacy, was extremely helpful in passing on the names of local contractors. (Kevin Kochar at Mulholland Brand gave me a tutorial on the fire-resistance differences in different grades
of steel, aluminum, and vinyl gates that greatly assisted our decision-making.)
Catherine also weighed in on the recent decision that Pacific Palisades made to bury utility lines underground as the neighborhood rebuilds—a remedy every county in a high-risk hazard area should pursue, she said. “When they were installing the sewer system a decade ago in La Cañada Flintridge and had all the roads torn up, several residents got together and urged the City Council to put the electric [lines] underground at the same time,” Catherine informed me. “They should have been more forward-thinking, but they’re a group of five people running a city part-time.”
The last person I interviewed was Dave Jones, the former state insurance commissioner and the director of the Climate Risk Initiative at the UC Berkeley School of Law. I wanted to know if the investments Jenny and I were making would provide the means to exit the California FAIR Plan. While Jones extolled our efforts, he explained that the exorbitant cost of the recent wildfires to insurers financially backing the plan make it unlikely for the time being. Recent estimates indicate the FAIR Plan expects to incur over $4 billion in losses.
Another impediment is regulatory. “Policyholders in the FAIR Plan are not rated for the investments they’ve made in property, community, and landscape scale mitigation,” Jones explained. “I and others have written to the insurance department to make this necessary change.”
Until that occurs—if it happens at all—we and the 450,000
other Californians compelled to buy homeowners insurance from the FAIR Plan are looking at premium increases of 40% to 50% this year, possibly even more. I asked my insurance agent if she thought that market stability was forthcoming.
“Do I think State Farm will insure 85% of high fire hazard areas over the next few years as stipulated by the state’s new insurance regulation? No, not in their dire financial straits,” Azy said. “But carriers like Travelers, Safeco, and Mercury appear to be interested. The premium will be higher, but at least it’s a way for people to leave the FAIR Plan, eventually. And if Mercury or Travelers agree to insure your and Jenny’s home, there’s a good chance you’ll get discounts for hardening your premises against wildfire damage.”
There’s an old saying attributed to Roman playwright Titus Maccius Plautus, “You have to spend money to make money.” It would be great to say goodbye to the FAIR Plan someday, but more important to us and our neighbors is what Jenny latched onto during our pilgrimage to Altadena: the preservation of our memoryfilled homes.
Banham is a veteran insurance reporter, business journalist, and best-selling author.
This article was first published in Carrier Management (www. carriermanagement.com) in early April 2025, a sister publication to Insurance Journal. In Part One of this series, Banham wrote about his personal experience living through the Eaton Fire on Jan. 9 and his and his wife’s endeavor to manage their future risk of wildfires by fortifying their home.
News & Markets
Delivery Company Must Repay $2M for Workers’ Comp Scheme
ALos Angeles, California, couple was sentenced after an investigation reportedly found they underreported more than $21 million in employee payroll for their delivery companies.
John Nemandoust, 70, was sentenced to 60 days in county jail, and Annette Assil, 62, was sentenced to 30 days. The pair were sentenced to 10 years of felony probation and also ordered to pay $2.2 million in restitution for unpaid workers’ comp insurance premiums.
The California Department of Insurance launched an investigation into the three
companies the owned by the couple: A-1 Valley Services, Prompt Delivery and Affordable Messenger. Investigators began looking at the companies after receiving information that two of the companies were uninsured. Investigators reportedly found that between 2013 and 2017, the couple only obtained workers’ comp coverage for Valley Services employees, while leaving Prompt Delivery and Affordable Messenger uninsured.
When employees from the uninsured companies sustained work-related injuries, the couple reportedly filed claims under
Valley Services’ policy. Over the four-year period, at least 20 uninsured employees had claims improperly filed under Valley Services’ policy, according to the CDI.
A forensic audit reportedly found that the companies’ combined gross payroll exceeded $25 million, while they only reported roughly $1.4 million to their insurance carrier. This resulted in $21 million payroll underreporting. This scheme allowed the couple to avoid paying $3 million in workers’ comp premiums.
The Los Angeles County District Attorney’s Office prosecuted the case.
California Plumbing Contractor Ordered to Pay $1M for Workers’ Comp Fraud
Aplumbing contractor has been ordered to pay $1 million in restitution to the State Compensation Insurance Fund as part of a workers’ comp fraud prosecution.
Daniela G. Birdwell, 41, owner of GPS Plumbing, pleaded guilty to one count of workers’ comp insurance premium fraud. A judge also imposed a sentence of two years of formal felony probation, 320 hours of community service and ordered Birdwell to pay $10,000 per month towards restitution.
The State Fund provided workers’ comp
coverage to GPS Plumbing from June 2016 through May 2021. The fraud was first discovered when a State Fund special investigation unit noticed a difference between wages the company reported to the Employment Development Department and wages reported to the State Fund during policy audits.
State Fund then conducted an audit of
GPS Plumbing’s workers’ comp records, which investigators say uncovered millions of dollars in unreported payroll. The State Fund’s Special Investigation Unit submitted a report of its suspected fraud case to the San Diego County District Attorney’s Office and the California Department of Insurance for investigation.
Deputy District Attorney David Bagheri prosecuted the case.
My New Markets
Excess Property
Market Detail: Excess Limits Property coverage with maximum $5 million limit on stand-alone or quota share basis through an exclusive capacity arrangement with Ardellis Insurance Ltd (AMBest Rated A) attaching at a minimum of $5 million for the following classes: habitational, hotel, retail, warehouse, wood products, food processing, manufacturing, mercantile, sawmills, poultry and LRO. Limitations for Excess Coverage include: No Tier 1 Cat exposures at or above attachment point. Does not follow broker manuscript forms and will require Ardellis Excess Form. Excluding flood and earthquake. If 100% or the majority of the TIV is in the following states (resulting in Surplus Lines taxes being filed for the state), Ardellis cannot currently participate: Arkansas, California, Connecticut, Florida, Hawaii, New Jersey, New Mexico, New York, Utah and the District of Columbia. Submission Guidelines: SOV with COPE; loss control for complex classes; five-year loss runs with explanations; ACORD(s); and target layering/pricing with expiring carrier info. Available Limits: Maximum $5 million limit on stand-alone or quota share basis Carrier: Ardellis
States: All states excluding Arkansas, California, Connecticut, Florida, Hawaii, New Jersey, New Mexico, New York, Utah and the District of Columbia
Last Mile Delivery, Sprinter Van, Amazon Contractors
Market Detail: Competitive program for last mile delivery, home delivery and Amazon contractors for auto physical damage, motor truck cargo and general liability. No CDL required. Additional Credits for CDL driver. Coverage for target goods can be included (clothing, footwear, electronics). Very fast quotes and amazing service!
Available Limits: Not available Carrier: Non-admitted
States: All states excluding Alaska, Hawaii, Kentucky, Michigan, Washington and the District of Columbia
Contact: Thomas Bradshaw, thom@ tcbinspro.com, 574-583-8661
Student Health
Market Detail: Special Markets Insurance Consultants (SMIC) offers exclusive health insurance options for inbound international students. Plans and pricing give higher education and private K-12 school clients affordable options. Eligible accounts: International college and university students and international K-12 students. Coverage: Non-ACA-compliant plans for inbound international students
Available Limits: Not available
Carrier: Multiple carriers, Non-admitted States: All states and the District of Columbia, excluding New York
Contact: Krista Stanek, krista.stanek@ amwins.com, 715-303-6128
Medispa Insurance Program
Market Detail: Breckenridge’s medispa insurance program provides comprehensive coverage for facilities that offer advanced medical-grade treatments and procedures. Medispa insurance coverage is a special variety of professional, general, and other liability coverages but as each medispa provides different treatments and procedures, “one size fits all” coverage may be harmful for businesses. Coverages: Business personal property, general liability, professional liability and cyber options. Coverage varies, please refer to policy documents for specific terms and conditions. Classes: cryotherapy, medical-grade facials, Botox or Dysport, Lazer hair removal, laser skin resurfacing, chemical peels, microdermabrasion, microneedling, micro-coring, skin lightening, medical weight loss, anti-aging hormone treatments, Intense Pulsed Light (IPL) therapy, body contouring, float tanks, massage therapy, IV therapy, salt chambers, hyperbaric treatments and more. Limits and highlights: $1 million/$1 million to $2 million/$4 million. Quick response time (24-48 hours in most cases).
Coverage available even if there is professional/collegiate athlete exposure. Other related exposures can be considered with cryotherapy (i.e. physical therapy, sports rehab, massage therapy). Mobile and stationary. Risk management services free with policy – see policy for details. Has pen. Available Limits: $2 million maximum
premium; $1 million minimum premium Carrier: Non-admitted
States: All 50 states and the District of Columbia
Contact: Victoria Dearing, vdearing@ breckis.com, 469-320-4033
Small Business E&O
Market Detail: Small businesses form the bedrock of the economy and employ nearly half of all U.S employees. An errors and omission program can protect owners and employees against claims of negligence, common mistakes or inadequate work. Appetite ranges from consultants, health and wellness, small agents and brokers, education, pet and animal services, contractors, construction managers, bookkeeping, inspectors, real estate agents, surveyors and many more.
Features: Over 850 different risk types, limits available up to $2 million/$2 million, deductibles from $0, minimum premium$350, AM Best – A- (Excellent) rated carrier, non-admitted, primary only. Coverage Highlights: Claims Made policy form, pay on behalf basis, Duty to Defend / Consent to Settle, $250/$5,000 trial attendance reimbursement, $5,000/$5,000 disciplinary proceeding reimbursement, claims reporting as soon as practicable, liberalization clause, 60-day ERP at Nil AP, bilateral ERP of up to five years and unlimited retirement extended reporting for sole traders. Has pen.
Available Limits: $2 million/$2 million
Carrier: Non-admitted
States: All states and the District of Columbia, excluding Alaska and Hawaii
Contact: Alan Lambert, Alan.lambert@ ververisk.com
Closer Look: Reinsurance
Buyer-Friendly April Reinsurance Renewal Bodes Well for Mid-Year Renewals: Brokers
By L.S. Howard
The April reinsurance renewals saw a competitive, buyer-friendly market with plentiful capacity and price reductions for loss-free accounts—in a continuation of the favorable market conditions seen in January, according to reports published by Aon and Gallagher Re.
“The positive renewal bodes well for upcoming mid-year renewals, when we expect buyer-friendly conditions will prevail, supported by robust levels of capacity and reinsurer appetite,” said Aon in its report titled “Reinsurance Market Dynamics — April 2025 Renewal.”
“A competitive reinsurance market resulted in much improved pricing for most insurers at 4/1, a key renewal period for Japan, South Korea, and India,” which Aon said was driven by enhanced reinsurer results and relatively benign natural catastrophe loss activity across Asia.
Indeed, insurers with loss-free property catastrophe accounts in Japan and South Korea were able to get double-digit price reductions, said Aon. “Previously challenged areas, such as per-risk covers, also enjoyed more favorable pricing, as insurers leveraged property catastrophe business and reinsurer growth ambitions to garner more holistic support.”
Abundant reinsurance capacity in most lines helped buyers achieve better renewal outcomes with risk-adjusted price reductions as well as coverage and structural improvements, said Gallagher Re in its report titled “1st View — Finding the Path.”
“However, most reinsurers are still comfortable with levels of rate adequacy in nearly all lines of business, following the significant re-pricing of risk in the reinsurance market [which has occurred over the past few years],” Gallagher Re continued.
Favorable Conditions Likely to Continue
Despite an active first quarter for natural catastrophe claims, Aon expects that the favorable conditions seen at January and April renewals will continue at mid-year,
supported by abundant reinsurance capacity and reinsurer appetite for more business. (June and July are key renewal dates for insurers in the U.S., Australia, and New Zealand.)
“Assuming no major unexpected events during the remainder of 2025, it is likely that the differentiated approach to risk-adjusted rate reductions being taken by the global reinsurance market will not only continue but accelerate,” confirmed Gallagher Re.
“Reinsurers will try to ensure that variations between accounts with profitable results and reasonable pricing margins, and loss-making accounts with perceived insufficient margins, are maintained,” Gallagher said. “The challenge for reinsurers will be balancing the desire to deploy increasing capital levels in an attractive market with the pressure to support less differentiated, blanket rate reductions.”
“[T]he reinsurance market is highly capitalized and competitive ahead of mid-year renewals. With pent-up supply still outstripping demand, the mid-year represents the last major renewal opportunity for reinsurers to meet 2025 growth targets and earn premium to offset losses in the first quarter,” said Aon.
The Aon report noted that these market dynamics will create opportunities for reinsurance buyers “to explore frequency protections and top-up covers in an increasingly favorable pricing environment.” (Reinsurers pulled back significantly from loss-making frequency layers, driven by so-called secondary perils such as floods and severe convective storms, during the January 2023 renewals.)
Record Reinsurance Capital
The main driver of more buyer-friendly renewals during 2025 is the strong results that reinsurers reported in 2023
and 2024, which has helped increase traditional capital levels to record levels, the brokers agreed.
Moody’s Ratings published a report this week showing that the four largest European reinsurers—Munich Re, Swiss Re, Hannover Re, and SCOR—achieved record combined earnings of €11 billion for 2024, an 8% increase from 2023. These record profits were driven by strong property/casualty underwriting and investment returns, despite higher industry catastrophe claims, Moody’s said.
Gallagher Re estimated that traditional reinsurance capital reached an all-time high of $655 billion, driven by “excellent reinsurer results.” On the other hand, Aon’s estimate for global reinsurer capital was $715 billion in 2024, which was driven by strong retained earnings and an expanding catastrophe bond market.
The Palisades Fire ravages a neighborhood amid high winds in the Pacific Palisades neighborhood of Los Angeles, Jan. 7, 2025. (AP Photo/Ethan Swope)
‘The positive renewal bodes well for upcoming mid-year renewals, when we expect buyer-friendly conditions will prevail, supported by robust levels of capacity and reinsurer appetite.’
Strong investor demand in insurancelinked securities (ILS) investments has led alternative capital to reach an all-time peak of $114 billion, said Gallagher Re. (Aon estimated that alternative capital hit nearly $115 billion, which includes approximately $50 billion in catastrophe bonds.)
Overall, market capital (which includes traditional and alternative capital) has increased by 5.3% to $769 billion as of Dec. 31, 2024, according to Gallagher Re.
Los Angeles Wildfires
Gallagher Re said the impact of California’s wildfire losses is substantial but manageable—with the latest estimates near $40 billion gross.
While claims currently sit within reinsurers’ 2025 natural catastrophe budgets, there is market sensitivity around the degree to which the losses “have eroded remaining catastrophe budgets so early in the year—with traditionally higher cat loss quarters still to come,” the Gallagher report added.
“The Los Angeles wildfires in January, which are expected to cost the industry
between $32 billion and $38 billion, had little to no impact on capacity, pricing, and terms for Asia Pacific renewals,” Aon confirmed.
Ceded losses from the Los Angeles wildfires are an estimated $11 billion to $17 billion, which Aon said is “significant” for reinsurers but will have varying impact. “These losses have absorbed 25% to 33% of major reinsurers’ annual catastrophe allowances, which may affect how some come to the market at mid-year,” the broker said.
“For the relatively small and diverse group of U.S. regional and national insurers renewing at 4/1, the Los Angeles wildfires had mixed results based on wildfire exposure and loss experience,” Aon continued.
“That said, U.S. insurers with loss-free risks saw rate reductions in line with 1/1, while loss-impacted accounts experienced an orderly and stable renewal.”
Despite the wildfires, Aon noted that reinsurers continued to trade and deploy capacity uninterrupted, continuing to support insurers with significant wildfire exposure. “Some reinsurers stepped up to offer additional wildfire capacity and were rewarded with larger signings.”
Gallagher Re said the mid-year renewals, which have wider geographic footprints, “will provide better insight on the market impact” of the Los Angeles wildfires. “What is clear is that these losses will fall asymmetrically, with a much higher concentration of loss on a limited number of primary carriers.”
Special Report: Young Agents Survey
The Good and Bad About Being an Independent Insurance Agent
Young Agents' Biggest Challenges
By Andrea Wells
What’s so great about being a young independent agent today?
Freedom, quality of life, opportunities to grow, challenges and the ability to solve them, the people and relationships built, the compensation, and, of course, the satisfaction that comes with helping others. What’s not so great?
Burnout, the hard market, worries over the U.S. economy and its impact on business, hiring employees, “unhealthy” competitors in the market, and the “not-so-great” reputation of the industry.
Even with the challenges young agents face today, most (79.8%) told Insurance Journal they would recommend being an insurance agent to another young person.
Young agents also report
feeling unsure about 2025. In fact, their outlook on economic conditions in 2025 is much more negative than it was in 2024, the survey found.
Just 14.6% of young agents reported feeling “very optimistic” about the outlook of the U.S. economy in 2025, while another 28.6% reported feeling “optimistic.” That’s considerably different than the 50.0% of young agents responding to the 2024 survey who said their view on the U.S. economy was “very optimistic,” with another 18% reporting “optimistic” feelings about the economy last year. Nearly half (46.0%) reported feeling “cautious” and 10.8% do not feel optimistic about 2025’s economy at all.
Young agents are typically an optimistic crowd, and despite their outlook on the U.S. economy, optimism still ranks high. When it comes to their career choice, 44.1% of young agents responding to this year’s survey reported they feel “very optimistic” on the outlook of their career (down slightly from 45.3% of in the 2024 survey).
Young agents reported feeling more positive about the future of the agency system this year. According to the survey, 32.9% of young agents felt “very optimistic” about the future of the agency system compared to just 28.7% in the 2024 survey.
Pressures surrounding U.S. economic trends may be leading to mixed feelings over income growth in 2025. Some 47.4% of young agents reported feeling “very optimistic” that their income will be greater in 2025 than in 2024, with another 32.9% feeling “optimistic” that their income will rise this year over last year’s. In last year’s survey, more than
half (55.2%) of young agents believed their income would be greater than the previous year.
The annual Insurance Journal survey polls the opinions and views of independent agents 40 years old and younger. More than 225 young agents responded to this year’s online survey during March.
What do young agents say about their careers in insurance?
Insurance Journal shines the spotlight on a few, including a former teacher turned producer, a lawyer turned coverage expert in cyber and management liability, a former college baseball player whose competitive spirit in sports gives him a homerun in sales, and a hobby farmer who found his passion works as a specialty agency.
Teacher to Producer
Joey Maxwell, 33, didn’t know he’d enter the insurance world. After college, he signed up to teach 7th grade English, part of Teach for America’s Teacher Corps program.
After completing his two-year commitment, Maxwell began polling friends, family, and mentors about future career possibilities. Surprisingly, many recommended the insurance industry.
“I was like, ‘What do you mean, with State Farm?’” he asked. “I didn’t know my job existed.”
After some research on job roles within the insurance industry, Maxwell found his first producer role with an independent agency.
“At one point I wanted to be a lawyer, but this [role] allowed me to play armchair attorney,” Maxwell said. “The job kind continued on page 32
Profile of Young Agents
Older Side of Young
62.6% are 31 to 40 years old
37.4% are 30 and under
Career Choice
78.5% consider insurance to be a permanent career choice
15.1% are unsure
79.8% would recommend career choice to another young person
9.6% are not sure they would
10.6% wouldn’t recommend being an agent
Experience
18.4% have less than three years in insurance
20.6% have three to five years
34.9% have six to 10 years
20.6% have 11 to 15 years
5.5% have more than 15 years
Education
58.7% have a college degree
15.9% completed only high school
21.7% have a master’s, doctorate, or other advanced degree
52.8% have completed or are working on an insurance designation
75.4% have an insurance agent mentor
Family Affairs
61.0% work in family-owned agencies
40.0% are members of the family that owns the agency
Size
18.4% work for agencies generating $5 million or less in P/C premium
43.8% work for agencies generating $6 million to $25 million in P/C premium
29.2% work for agencies generating more than $26 million
61.6% are privately-held agencies 23.7% are private-equity backed
are publicly-owned firms
Employment Status
76.6% are independent agents
presently are sole owners of an agency
share ownership with a partner(s)
Ownership Dreams
55.8% do not presently own an agency; of these
49.1% would like to own someday; and of those 29.4% feel very confident ownership dreams will come true
35.8% don’t believe it will happen
Book of Business
58.6% target mostly commercial lines
41.4% target mostly personal lines
Gender and Politics
Male
Female
Republican
Democrat
Independent
Libertarian Ethnic Background
White/Caucasian
Hispanic/Latino
Black
Native American What Young Agents Do
attend local business or community meetings
volunteer in the community
get involved in local politics
use Facebook
use LinkedIn
use X
Special Report: Young Agents Survey
continued from page 31 of forces you to know a lot about a lot of things,” which is something he loves.
Maxwell moved right into production. “The typical role is come and start on the service side of the business, spend a couple years learning what you’re doing, and then switch to producing,” he said. “But I was like ‘just throw me in the deep end.’ I’m either going to kick my way to the surface or I’ll drown.” He made it to the surface and more.
Today, Maxwell serves as partner at Atlanta-based Sterling Seacrest Pritchard,
the largest privately-held independent insurance broker in Georgia.
Doing it all has helped Maxwell learn the insurance business fast. After attending a two-week education program, he jumped at the opportunity to follow senior brokers to client meetings where he became a “fly on the wall,” listening and learning.
He also believes his interactions with carriers helped pave the way to success. “I was very fortunate, I think, that we do not have a centralized marketing [division] in our firm,” he said. That forced
him to interact with carrier underwriters often. “That was highly educational—learning how different policies, different coverages interact and how claims worked,” he said. “I developed several really good underwriting relationships.”
Maxwell doesn’t recommend jumping right into production to other young professionals. “I don’t regret doing it myself, but I wish I had recognized how little I knew beforehand,” he said. He advises others to learn technical details of coverage early and never stop learning.
“I still go into my mentor’s
calendar at the beginning of every week. If there’s a meeting that looks interesting, I ask him about it and then just listen.”
Legal Adjacent
When Katie Pope, 32, took the bar exam after graduating from law school, she expected to wait for the results and then find a job as an attorney. But as she was waiting for her exam score, she was offered a job in what was pitched as a “legal adjacent” industry.
“I had a great conversation with a guy [at Lockton] who ended up being my boss about cyber, fiduciary duty, and
D&O,” Pope said.
Pope’s background in law has helped her become an expert in contract interpretation for cyber insurance and management liability and also claims.
Today, Pope is the vice president of executive lines at Los Angeles-based The Liberty Company Insurance Brokers, where she continues to hone her legal skills in cyber coverage as well as D&O, E&O, and EPL coverage. While she produces a bit of business on her own, her primary role is to be a resource to other producers at the firm.
Pope admits that the coldcalling aspect of production is her top skill. “It definitely takes a certain type of person,” she said. “I have a little bit of that in me, but I also do enjoy being an expert and a resource,” she added, noting that she plans to build a book of her own one day because of her coverage expertise.
What she enjoys the most about working on the agency side of the business is having the chance to touch every aspect of life. “Insurance is just so topical,” she said. It’s the backbone of the economy. “Because companies won’t take risks unless they’re able to mitigate that risk,” she continued on page 34
What Young Agents Think
As a younger agent, I have to work harder to gain the confidence of clients.
I fear that my career will be hurt by a merger or sale of my agency.
I wish I could specialize more than I am now permitted to do.
I have one or more areas of specialization.
Much of my production supports older producers in the agency.
During my career, I have worked for more than one agency.
While in my present position, I have been offered a job with another agency.
Success in this business is mostly about building relationships.
Efficiency and effectiveness are more important than relationships to succeed in this business.
I propose new ideas but our firm rarely seems to get to them.
The agency ranks could use more women and minorities.
I have already completed or am working to complete a CPCU, CIC, ARM or other insurance designation program.
In 25 years, the
agency
Young Agent Opinions on Current Employer
Special Report: Young Agents Survey
said. “Everybody needs these different coverages to protect themselves because nobody wants to get hit with millions of dollars in legal fees or an actual settlement amount.”
Her advice to young agents: Be curious. “I know getting into insurance kind of sounds boring on its face,” she said. “But if you think about how it impacts all these other aspects of life, the economy, how companies run and how they take risks, it makes it more enjoyable.”
Insure What You Love
Terren Moore, 28, found a way to do what he loves in insurance. Moore started hobby farming when he was just 15 years old and became a member of the Texas Farm Bureau. He didn’t grow up farming but had a passion for the outdoors.
At 21, he landed a job as an insurance advisor with the Texas Farm Bureau, and four years later he opened the doors to his own independent agency, MFI Agency in Greenville, Texas. MFI specializes in the agricultural industry. “We insure anything agricultural—so feed stores, wholesale nurseries, livestock haulers, farms, ranches, that’s our bread and butter,” he said.
After spending some time speaking to other agency owners about the process of starting an agency—the risk, the reward, the time it took to be successful—Moore knew he wanted to be an agency owner. “I was 24 at the time. I was young and said, ‘Well, if I’m ever going to do this, now’s the time,’” he said.
“I’ve always had an entrepreneurial spirit since I was 15 years old,” he said. That’s
when he first began selling produce from his own hobby farm. “I just always enjoyed the freedom of doing my own thing.”
Moore said he loves helping agricultural businesses find the right coverage for their unique risks. “Being an agency owner is awesome. I enjoy growing something that I’m passionate about.”
“The hardest part of being an agency owner is having the focus and discipline to say no,” he said. Moore said he could quote any piece of business that walks in the door, but that would distract him from the end goal. “What I want most is to insure agricultural businesses, so those are the kinds of accounts I want.”
His advice for young agents: always keep the end goal in mind. “That’s probably the most important thing that I did,” he said. Instead of working for another agency, earning a steady salary that provides comfortability, he kept his end goal top of mind. “I always knew the end goal for me was to be an owner.” So, why not start there, he said.
Competitive Spirit
For 29-year-old Winston Welch, a commercial insurance broker at Crest Insurance Group based in Tucson, Arizona, the competitive nature of a sales-driven job has been a good fit. He grew
up in sports, playing baseball in college.
After college, Welch spent a few years working for a sport-related technology firm before he landed at Crest. He knew Crest CEO Cody Ritchie from his childhood neighborhood. “I reached out to him just to see what different opportunities there are in insurance, and I really liked what I heard about the company,” he said. “It seemed like a new opportunity where I could get into a profession, have a stable career, but also really help people.”
Another thing Welch values is the firm’s culture. Crest Insurance Group was named an Insurance Journal Best Agency to Work For in 2023.
“It’s [important] to be with a company that you like,” Welch said, and management plays a big role in that. “Our CEO, he’s really into sports, so the company’s almost run like a sports team. It’s like he handpicked a roster.”
Welch has spent some time working on small business accounts and is moving toward building his larger account book of business. He enjoys the competitive nature of large commercial insurance. “It’s kind of exciting; it’s almost like your own little mini company by myself.”
Welch admits he’s “super competitive,” so transferring that skillset to a job that holds
the ability to earn more than just a regular salary is ideal.
“To be able to wake up each day and decide the more effort you put into this, the more money you’re going to make, and the more people you’re going to be able to help out is probably a good transition,” he said. “I am happy to work all the time. I know that the harder you work in a sport, the better you’re going to be. And the harder you work in insurance, the more money that you make, and the more people you’ll help.”
Concierge Service
Service is key for any independent agency but it’s non-negotiable when it comes to serving the ultrahigh-net-worth market, said Sam Villagrasa-Petroski, 29, who serves as vice president of strategy and growth at Concierge Insurance Solutions based in Wyneewood, Pennsylvnia.
Nine months into his position at the firm, an agency formed exclusively for the ultra-high-net-worth insurance space, Villagrasa-Petroski’s focus is not only to grow the agency’s book but also serve as the liaison for agency-carrier relations. His training and background as an underwriter and sales manager for Chubb has helped him to understand the needs of a carrier while also protecting the agency’s
Winston Welch
Katie Pope
Joey Maxwell
clients, he said.
His carrier experience allows for a better understanding of what the carriers want and need. “That’s a very difficult thing to do if you’ve only been a producer all your life, or an account manager, because you’ve only seen one side,” he said. “I can more or less speak the underwriting language that a lot of these carriers are looking for, which helps in procuring even the most difficult to the easiest solutions.”
In the ultra-high-net-worth market, or any market, understanding underwriting and gaining technical expertise on coverage will help build a book of business, he said. Plus, insurance is still a relationship driven business. “You still have to be able to add value by servicing clients in the way they want to be,” he said. “The amount of technical expertise needed in our field today is more than ever.”
He said the opportunity to advance and succeed in the industry is the best it’s ever been for driven young professionals. “If you have those [technical] skills, you’re going to be able to grow your book of business very quickly,” he said. With today’s growing talent gap, the opportunities are “massive” for the right person, he added.
Captive to Independent
For third-generation
insurance agency owner Joe Iten, 32, watching his dad turn his agency from captive (Nationwide) to independent was not easy.
Iten, a commercial lines agent for his family’s agency, Florida-based Iten Agency, was in high school at the time but became a “fly on the wall” watching and learning as his dad navigated the transition.
“I wasn’t involved in the agency at that point—it started around 2015—but it was a very hard time to go through,” he said. However, the change ended up as a blessing, he said, opening many new doors for the agency to grow.
“We were able to move from a more homeowners-focused agency to doing small commercial, and it gave us the ability to work with brokers and do some larger commercial,” Iten said. By the time Iten joined the family business, he was able to jump right into commercial insurance sales.
Iten said he has been fortunate to have a mentor in his father, which has helped him the most. He tells other young agents entering the field to find a mentor and get involved with the industry. “Get involved in your state association,” he said. It’s there that young professionals meet others who can help them in many ways.
“I have found in my time in the industry that more often than not, the agent down the
street is going to be more of a friend than a competitor,” he said. “There’s been times where I’ve had people come to me, send me a policy, and I’ll pick up the phone and say to the other agent, ‘Hey, I’m getting a call on X, Y, and Z. What’s your take on this?’ Or, ‘I wanted to bring this to your attention.’’’
Working together can be beneficial to both agents, he said. “At the end of the day we’re helping the consumer, and I have found a lot of value in that,” he said. That’s his favorite part about being an agent, he told Insurance Journal. “I love the ability to help business owners navigate challenges, and its rewarding to be able to help them in a time of need.”
Passion for Health
Walter Winter, 39, jokes that while the other kids wanted to be firefighters or astronauts growing up, he wanted to be an insurance broker. Not really, but what he did want to do was lead a healthy life.
“I’ve always had a passion for people’s health,” said Winter, a senior vice president and partner at Woodruff Sawyer. “There was a point where I actually invested in a CrossFit gym. So, employee benefits was a natural transition,” he said. “It is more than insurance; it’s making people healthier.”
While he doesn’t work to protect a company’s balance sheet, he does protect their people—and that’s “super important,” he said. That’s the good part of employee benefits, he told Insurance Journal. The bad might be the emotional side of a difficult claim situation.
“Sometimes we end up helping employees with really tricky claim issues, and you get to know them through that process, and we get to see people at their best and their worst,” Winter said.
“It could be helping a growing family having a baby— helping them navigate what that looks like from a payment perspective and the insurance—or it could be helping people when someone’s going through cancer treatment, trying to figure out how to get a specialty medication covered in an affordable way,” Winter said. “Benefits is a lot more emotional than property/ casualty insurance,” he added. “Both are tremendously important, but different.”
Winter recommends to young people entering insurance—whether in the property/ casualty space or employee benefits—to make sure to find a helpful mentor.
“I don’t know if I want to use the word mentor, but I think someone who is willing to invest in you because they care about you,” he said.
Terren Moore
Sam Villagrasa-Petroski Joe Iten
Walter Winter
Special Report: Young Agents Survey
What Young Agents Think About the P/C Industry
What Young Agents Think Makes a Good Work Environment
1. Having a leadership team that believes in you and wants to see you succeed, along with fair compensation.
2. Flexibility, compensation, leadership.
3. Culture. We want a culture of people who want to win but also enjoy having fun along the way. Flexibility is important to the service staff, and we really want them to enjoy a work-life balance by staying ahead of deadlines.
4. I appreciate balance. I just want to feel challenged and rewarded without being run all the way into the ground.
5. Flex environments unlock people's natural workflow genius— sparking next-level innovation that lifts the whole company.
6. Impact-driven mission; collaborative, selfless culture; and sustainable compensation.
7. Insurance is stressful enough; a toxic office or cutthroat competition drains energy. I thrive where colleagues collaborate, share knowledge, and celebrate wins.
8. Meaningful work, strong compensation, and sense of community.
9. Good communication from leadership & work-life balance.
10. What is most important in a good workplace is the ability for everyone to share their ideas and be listened to. The acknowledgement of ideas and the attempt to execute shows the team how valued they are and how appreciative I am that they go above and beyond.
11. Being rewarded with compensation but also affirmation that you are integral to this team.
12. Structure and trust; C-suite/executive leadership not micromanaging middle management. Accountability that starts at the C-suite/executive leadership level and flows down.
13. I believe that work should not just be about making money but also about having a positive impact on society.
14. Fair compensation, the ability to work remotely is important to me. I don't foresee working for any company ever that doesn't allow me to work remotely. Communication and transparency are very important as well.
15. For me, salary is the most important in a good working
environment, because it is reasonable and competitive, is a direct recognition of the value of work, can guarantee life, meet material needs, enhance work motivation and enthusiasm, but also reflects the company's attention to talents, enhances my sense of belonging and loyalty, and encourages me to work for the company for a long time.
16. Treated like an adult. Not micromanaged with a “time card” and watched every action. If you hire someone, trust them and let them do what you hired them to do. If they can't, or take advantage of your trust, fire them.
17. Compensation is obviously the most important. You could have the best work environment with the most supportive management, but if you aren't compensated fairly, then it sours everything else. After compensation I would say flexibility and work-life balance. This industry can get brutal with a hard market, so being able to properly destress and having dedicated time away from it all is important.
18. For me, the most important thing in a good working environment is to do good deeds, because helping others can bring spiritual satisfaction far beyond material returns, promote the formation of close emotional connection among colleagues for the purpose of goodwill, create a harmonious team atmosphere, improve the company's social image, and stimulate my motivation and enthusiasm for work.
19. Reliability. Whether you are the office assistant or the owner: Be Reliable. Do what you say you are going to do. Be there for your clients. Pay your staff what you say you will pay them. And be the one that outpaces everyone else.
20. The success and trust of my co-workers and team. When everyone is happy and working together it makes for a very successful agency!
21. Career development opportunities in a good working environment are vital to me.
22. Flex work lets employees align jobs with life—maximizing productivity when they're sharpest, while making room for what matters.
What Young Agents Like Most
1. Being my own boss, working as much as I want. When you are commission based you make your money, so you hustle. I worked 24/7. And loved it. I am career focused.
2. I thoroughly enjoy the relationships that develop over the years. It is so much fun being along for the ride with an individual’s life stages.
3. I love the ability to help business owners navigate challenges, and it’s rewarding to be able to help them in a time of need.
4. Ability to adapt without too many constraints of a captive. I have been on the captive side, and it was not the best experience.
5. The freedom, quality of life, and ability to be with my family any time they need me.
6. I like meeting lots of people and seeing different kinds of businesses. It really expands your world view and shows you how many ways there are to make a living.
7. Career development opportunities and the establishment of interpersonal networks.
8. Helping with rebuilding lives.
9. Seeing my book of business grow 30% YoY because of MY decisions—not a corporate playbook.
10. Freedom and flexibility.
11. The ability to shop with multiple carriers, the challenge of keeping all options top of mind.
12. I take great pride in the impact my business has on the local community. It’s rewarding to know that I’m making a tangible difference in people’s lives.
13. As an independent, commercial agent/broker, I have more freedom to go after the industries I find the most rewarding.
14. It is very nice to have a variety of options/markets for my customers. I truly feel as if I am representing their best interests rather than selling them a product.
15. I can attract clients in any segment of the workforce or life that interests me. If I am passionate about coffee and can build a niche there. If I love real estate I can specialize and network with realtors.
16. I like that it is a career I was able to go into without a degree and it be entry level while also being a hybrid position. Learn everything on the job and get to move up while I am learning.
17. The one thing I love most is meeting new people and getting to hear their stories and walks of life, whether that be a new underwriter or insured. I love the personal relationships I have developed over the years.
18. The business scope is wide, including not only the sale of insurance products but also risk assessment, insurance planning, claims assistance, and other links.
19. As an independent practitioner, I love business independence and innovation. I can choose customized products according to customer needs and gain trust.
20. The relationships that are built and the different personalities that you encounter through clients we have.
What Young Agents Like Least
1. Rollercoaster of emotions related to sales.
2. I am always on call, which makes it difficult to fully detach from work.
3. The perception of being an “insurance agent” can be a negative one, even for a great agent.
4. Claims management can be stressful. Customers expect the agent to also act as adjuster, so setting expectations at the start of the claim is important.
5. Burnout. It’s hard to take the time you need to reset, but you have to or you’ll continue to suffer from burnout.
6. Not being able to dedicate as much time as I’d like to sales.
7. The flip side of being able to quote through multiple carriers is that requoting takes a lot of time, and with rates increasing so substantially, we are doing a lot of requotes.
8. Complex compliance requirements. This involves a lot of time and effort to ensure that all documentation, client interactions, and business practices are fully compliant to avoid legal issues and penalties.
9. There are many costs associated with running an independent agency. These include office rent (if applicable), marketing expenses, software subscriptions for managing client data and operations, and professional development costs to stay competitive. Balancing these expenses with an inconsistent income stream can be a major source of stress.
10. Dealing with the current hard market and uncertainty with the U.S. economy.
11. Managing an independent agency involves a significant amount of administrative work, including paperwork, regulatory compliance, and back-office tasks. This can be time-consuming and detract from the time spent on sales and client relationships.
12. The most frustrating part is dealing with the fierce competition in the marketplace.
13. Some customers have misunderstandings or prejudices about the insurance industry. They think that insurance is a scam, or they lack an understanding of insurance clauses and claim settlement procedures.
14. Hiring. Hard to find anyone.
15. When I am not able to help a client, especially one that I have an established relationship with.
16. A lot of work can be done on opportunities with $0 payout in the end if a sale isn’t made.
17. Constantly striving to make yourself and your services stand out is a tough thing to do.
18. Some peers use unfair means to compete, such as maliciously low prices, false publicity, misleading customers, and so on.
19. The insurance industry is rapidly evolving with new technologies like AI, automation, and digital platforms. Keeping up with these advancements and integrating them into the business can be costly and time-consuming.
20. Legacy agents have grown up in the business and often learned from someone’s mistakes generations ago. Newer scratch independents are left to learn lessons the hard way.
Closer Look: Underwriting
Gen AI Is Shaking Up Underwriting, but Can It Replace Human Judgment?
By Elizabeth Blosfield
Artificial intelligence technology has continued to evolve, and it’s affecting many areas of insurance from claims to underwriting to customer service, according to panelists at the 2025 PLUS D&O Symposium in New York City.
But has the technology developed so much that it could replace human underwriting in the next five years?
“I think it is the biggest question out there,” said Jeffrey Chivers, CEO and co-founder of Syllo, an AI-powered litigation workspace that enables lawyers and paralegals to use language models throughout the litigation life cycle.
Another way of asking this question is whether AI can develop judgment—not just in underwriting but across all business domains in which
judgment is an essential part of the job, he said.
“Is there any change here with respect to a model’s ability to exercise the kind of nuanced value judgment and other types of judgments that go into a mission-critical job?” he asked. “Thus far, the answer for me has been no,” he said. “If the answer is yes at some time in the next five years, I think that’s what changes everything.”
Claire Davey, head of product innovation at Relm Insurance, said that major shifts are already happening in other areas of insurance that involve more administrative tasks, however.
“It depends on how the organization wants to deploy [AI] and utilize it,” she said. “But I think many jobs, particularly those that are administrative, are at risk of being phenomenally changed by artificial intelligence tech-
nology. It is going to be a landmark shift in commerce that we’ve seen in a generation, and insurance is no different.”
That said, Davey agreed that underwriting jobs are safe—for now.
“One of the key governance controls and duties with AI technology is that it does require human oversight, so while AI could perform some underwriting stages, you would hope that there is still a human reviewing its output and sense-checking that,” she said.
AI’s Underwriting Judgment
AI technology is having a material impact on the insurance industry in other ways, panelists agreed. To start, the litigation landscape is already seeing a transformation.
Within five years, there will be a lot more adoption of generative AI across legal and compliance functions, Chivers predicted. “And I
think five years from now, a couple of things will be really prominent.”
He said much debate will continue to emerge around transparency and any red flags discovered within an organization due to AI.
“Do you attribute knowledge to management if you had an AI agent in the background that surfaced these various red flags or yellow flags even if nobody reviewed it?” he said.
“I think the transparency that generative AI brings within a big organization is going to be a big subject of discovery litigation.”
He added another area to watch is the degree to which companies are handing off decision-making responsibilities to AI.
“If we are in a world where companies are handing off that decision-making responsibility, it just raises a host of issues related to coverage,” he said.
This decision-making responsibility needs to be carefully considered with a human in the loop because of generative AI’s shortcomings.
“It’s not a quantitative model, and it also really lacks what I would describe as judgment,” Chivers said. “And so, when I think about how do you understand these large language models and what they bring to the table in terms of artificial intelligence, I think the best way to think about it is in terms of different cognitive skills… [L]arge language models have certain cognitive skills like summarization and classification of things, translation, transcription, [but] they completely lack other cognitive skills.”
Allowing AI to participate in too much decision-making can be particularly dangerous because of one of its best skills so far: linguistics and rhetoric. This means AI models can excel at masking the fact that they lack the judgment to operate as an intelligent agent, Chivers explained.
“If you allow the large language model to generate things like plans and plans of action, it literally generates these for itself. It has some objective in mind, and it writes out 10 steps for itself as to how to accomplish that objective. And it takes each of those steps and generates ideas about how to execute it. And then it goes about, and if you give it access to other systems, it will be able to function, call against those systems, and cause real-world impacts within your organization,” he said.
“At the moment, I think it would be basically insane to allow the current iteration of large language model agents
to actually run wild within systems.”
Underwriters’ AI Judgment
Beyond the use of generative AI within underwriting, how are insurers underwriting companies that use generative AI as a part of their business model?
“I think the risk profiles of insureds who are either developing or utilizing AI are shaped by the use case of that AI,” Davey said. “So, depending upon what it’s been designed to do, that will influence whether its main risk factor is bias or transparency or accountability.”
She said that when Relm Insurance is underwriting an account, it’s important to ask what the AI technology is doing and where its main exposure or risk is when it defaults or something goes wrong.
“Obviously, if it’s handling or being trained on a lot of personally identifiable data, we have an issue there in terms of accountability and privacy. But if we’re looking at an AI model which may be running diagnostics—it may be trying to run forecasts or perhaps providing recommendations— we then have the issue of bias and discrimination,” Davey said.
Relm thinks of those buckets as shaping the risk profile of the insureds, guiding
underwriters in terms of what follow-up questions they’re going to ask. Since Relm aims to provide informed capacity for emerging sectors, Davey said getting comfortable means asking questions and starting a dialogue with clients who are pushing on the frontiers of these emerging technologies.
“It is about trying to get dedicated time with those who are developing those technologies and also managing the technologies to really understand their technical capabilities, but also the governance around them,” she said. “So, it requires an investment on the client side to share their information, share their time with us. But if we can get the right information and we can get the comfort with the technology and their management topic, then we can start to provide capacity for that sector which has historically been underserved in the traditional markets.”
Julie Reiser, partner at Cohen Milstein, thinks about AI risks in terms of both misrepresentation—or AI washing, in which a company overstates the capabilities of its AI technology—as well as employment discrimination.
“I think the overall premise that I’m hearing across the board is that AI is iterative, that we expect people not just to engage once and create a
process, but rather it’s something that you have to check in with and you have to watch each step and then say, ‘Is this creating risk?’” she said. “It’s not like every year you can just check in and it’ll be fine.”
For companies that are only focused on AI, there’s even more risk, and that will require more board oversight and systems in place to manage risk, according to Nick Reider, senior vice president and deputy D&O product leader for the West region at Aon. “If they don’t have those, then they’re going to have a bad time when a good lawsuit is filed,” he said.
“It’s not to say that some mega-corporation that uses AI to simplify one of thousands of processes has no responsibilities whatsoever with respect to AI. Obviously, the directors can’t bury their heads when they learn of misconduct, for example.” However, AI-specific companies will need to have a higher level of governance in place, Reider said.
“But no matter what, just given the regulatory landscape that’s out there right now, there is additional governance that has to be in place at these companies,” he said. “There’s a lot that goes into it.”
Indeed, in the U.S. alone, disagreement has emerged around how to define artificial intelligence and what it could achieve in the next five years, said Boris Feldman, partner at Freshfields US.
“What I’m seeing, at least in the United States, is there are camps that are really concerned about super intelligence and the end of humanity,” he said. “And then there are other camps who are more focused on the here and now of what continued on page 49
Spotlight: Small Business
Majority of Small Business Leaders Think AI Will Play ‘Crucial Role’ in Work Safety
By Allen Laman
More than half of small business leaders believe artificial intelligence will play a “crucial role” in worker safety over the next five years, according to a new report from Pie Insurance.
A survey of decision-makers from just over a thousand small businesses found that 64% of leaders are bullish about AI’s role in workplace safety in the near future. The survey found 81% of those businesses are open to incorporating AI into daily operations and that 44% actively use AI today.
“If you think about it, small businesses, in particular, don’t have the safety resources that large companies have,” said Carla Woodard, SVP of claims at Pie, an insurtech specializing in commercial insurance for small businesses. “AI can definitely help them proactively identify and address those risks.”
Pie found that of the small businesses using AI, 97% reported increased operational efficiency and 73% experienced improved workplace safety. Pie did not collect specific examples of the kinds of AI products currently tapped by these businesses.
Woodard said tools like ChatGPT can be used to create safety checklists or resource guides for employees and leadership to help manage safety needs. AI-powered surveillance systems can detect unsafe behaviors in real time, she added, and predictive analytics can anticipate hazards before they occur.
AI-driven telematics can
monitor and improve driver safety, Woodard said, and automated safety training through virtual safety assistants can make it easier for employees to learn and apply best practices to reduce workplace injuries.
Per Pie’s findings, 75% of small businesses reported workplace injuries in the past year. Nearly half of respondents admitted to improvising safety measures due to a lack of proper equipment. Mental health-related injuries (22%); slips, trips, and falls (20%); cuts, lacerations, and punctures (18%); and overexertion and repetitive strain injuries (13%) were the most common workplace injuries.
Woodard expects AI adoption to grow and its uses to expand in the next half-decade.
When asked how she foresees the technology changing, Woodard said she anticipates predictive analytics tools—such as those used to foresee hazards—will become more accurate. These include pre-
dictive maintenance systems that monitor machinery and equipment to detect potential failures, as well as emergency response systems that detect fires and gas leaks “in more-real time than your traditional sensors.” She also pointed to AI that analyzes employee movements and ergonomics and identifies risks or behaviors that could potentially lead to injuries.
Still, Woodard said risks of using AI tools include the accuracy and reliability of AI’s decision-making and output. The tools and models are only as effective as the data they are trained on, she explained.
“It’s going to be important for anybody who is adopting AI to really have a high level of confidence in the accuracy,” she added, “and having safeguards for, potentially, where there may be a lower level of confidence ... because it could lead to incorrect assessments if they’re not aware of that.”
Over-relying on AI could
create a false sense of security, Woodard said. She believes the best approach for small businesses will be to balance the integration of AI to enhance human safety oversight instead of replacing it entirely. Clear protocols for when human judgment is needed are important, she said.
Pie has not seen premium discounts for small businesses who use AI in their safety programs. Woodard said a financial incentive still exists, though: The technology has the potential to save small businesses money by avoiding or reducing losses.
“I think that agents and brokers need to be aware and embrace the idea that AI can make safety proactive instead of reactive,” Woodard said. “It can really help their clients predict risk and help them to reduce the potential for losses. It can reduce fraud. It can reduce the number of claims and, in general, just lower costs for them.”
Idea Exchange: Is It Covered?
Logic & Language and Forms & Facts Wildfires and Lessons Learned
“I conceive that the great part of the miseries of mankind are brought upon them by false estimates they made of the value of things.”
— Benjamin Franklin
IBy Bill Wilson
t seems difficult to watch a daily newscast that doesn’t have a segment on the latest wildfire. California. Colorado. South Carolina. New York. The list goes on. The frequency of wildfires appears to be increasing and, with the encroachment of civilization, the economic severity is definitely increasing due to the combined effect of the proliferation of residential and commercial structures and our failure
to actively engage in loss prevention measures.
Gen. Jimmy Doolittle once said, “The problem with Americans is that we’re fixers rather than preventers.” In our industry, that is all too often the truth.
As the risk of loss, such as from wildfires, approaches certainty, the insurance mechanism becomes an unsustainable means of managing risk. But there are some things that insurance professionals can do and lessons we can learn from these wildfires. In this article, I’ll focus on just a few of the many.
Property Undervaluation
The first one is the obvious one: properly evaluate the replacement cost of structures and contents, select ade-
quate limits of insurance, and include insurance contract provisions that recognize the increased cost of repair and replacement following a major disaster.
Early in my career at ISO, we offered valuation services using a choice of Marshall & Swift, Boeckh, and/or McGraw Hill products. Over the years, they morphed into Marshal & Swift/ Boeckh and ultimately CoreLogic, now Cotality. For many years, M&S/Boeckh published a report on property undervaluation.
Typically, these reports indicated that most residential and commercial buildings were underinsured, often by 20%-35%, and sometimes individually by 200%-300%. I wrote about this in my December 2023 Insurance Journal
A neighborhood destroyed by the Camp Fire in Paradise, California, in 2018. Photographer: Justin Sullivan/Getty Images
column titled “5 Worthy New Year’s Resolutions.”
Has this problem improved? Given what seems to be a never-ending hard market, that’s probably unlikely. Given that the vast majority of losses are partial and not total, the focus is on reducing premium costs, and the easiest way to do that is to buy as little building coverage as possible without incurring a penalty under a coinsurance or insurance-to-value clause.
This approach works most of the time, but it results in higher unit rates and invariably leads to gross underinsurance in the event of total or near total losses—the kind of losses one encounters in widespread disasters like wildfires and localized events like tornados.
In the c ase of conflagrations like wildfires, there are other considerations beyond just the proper valuation of property. Take, for example, debris removal.
Debris Removal Coverage
The cost to remove and dispose of debris is usually included in the policy limit for that type of property unless the limit is exhausted, as can happen with a total loss. Both the California Paradise and Camp fires are estimated to have destroyed about 17,000 structures, resulting in 12-16 billion pounds of debris.
In the c ase of the Paradise wildfire, there will likely be millions of pounds of toxic debris that must be processed at significant cost. The total cost to identify, clear, transport, and dispose of all debris will likely cost billions of dollars. Demolition, haulage, and landfill tipping fees can be significant, especially following a major disaster.
An additional issue is that many policies, especially commercial forms, have a sublimit for debris removal. For example, in one instance, the direct damage to a building was about $250,000, but due to the remote location of the property, the debris removal expense approached a million dollars—far greater than the 25% sublimit in the policy. The cost to remove debris can be similarly high in congested city locations.
Similar to sublimits that can restrict debris removal coverage, many policies provide an additional amount of coverage beyond the policy limit. That may be an extra 5% in homeowners policies and a flat dollar amount of perhaps $10,000$25,000 in commercial property forms when policy limits are exhausted.
Most property policies have options for purchasing additional amounts of debris removal coverage. However, the problem with this is that these are options that may not be routinely offered by agents and rarely purchased by insureds when offered. There is also the added difficulty of estimating how much additional debris removal coverage is appropriate.
‘As the risk of loss, such as wildfires, approaches certainty, the insurance mechanism becomes an unsustainable means of managing risk.’
Business Income/Extra Expense and Additional Living Expense Coverages
Some years ago, I researched the impact of major losses on businesses and found that, according to one estimate based on hurricanes impacting the Carolinas, 43% of businesses that experienced a serious loss never reopened and 28% of those that did reopen closed within 3 years. While a large national chain store system can usually survive the loss of one store, small businesses usually cannot.
Similarly, in the case of Additional Living Expense (ALE) coverage in homeowners policies, it can take years before a community can recover from a major disaster. In the meantime, with limited ALE coverage, many homeowners may be forced to simply relocate.
The implic ations for businesses and residents impacted by disasters like wildfires when these income coverages are inadequate are obvious, as is the impact on the communities themselves. As we’ve learned in Colorado and
California, in particular, rebuilding communities takes many years and financial sur vival is difficult for everyone and impossible for many.
Ordinance or Law Coverage
Finally, as I run out of room in this month’s column, we have the issue of the impact of rebuilding from that standpoint of increased costs to comply with inevitable changes in building codes, zoning restrictions, and other legal impediments and restrictions.
It’s an easy prediction to make that home and business owners in Paradise are likely to be grossly underinsured when it comes to compliance with new laws impacting rebuilding. We could devote an entire year to a series of columns on that one aspect.
So, will anything be done by the industry to address the many facets of the underinsurance issue?
In 2012, at the insistence of the Big “I” technical affairs committee, ISO introduced form CP 04 09 – Increase in Rebuilding Expenses Following Disaster (Additional Expense Coverage on Annual Aggregate Basis). This is a start, though admittedly, determining how much additional expense coverage is needed is no easy task.
Will anything be done by governments to enact building codes and zoning ordinances and engage in loss prevention methods to address catastrophic exposures like wildfires and floods?
I’ll close this month’s column with another quotation, this one from the German philosopher Hegel: “What experience and history teach is that nations and governments have never learned anything from history and have never acted in accordance with the lessons that could have been drawn from it.”
I hope Hegel was wrong.
Wilson, CPCU, ARM, AIM, AAM, is the founder and CEO of InsuranceCommentary.com and the author of six books, including the Amazon 4.8 stars-rated “When Words Collide…Resolving Insurance Coverage and Claims Disputes,” which BookAuthority has ranked as the #1 insurance book of all time. He can be reached at Bill@InsuranceCommentary.com.
It seemed not so long ago that many wireless carriers were in a race to 5G, touting the speed of their networks to consumers. Now, the successor to that network is in development and could bring a bounty of potential benefits to society and insurers.
By Lee Shavel
Yet, as with some innovations, they often raise as many questions as they do answers. That is the case with a pair of potentially game-changing emerging risks: 6G wireless infrastructure and autonomous trucks. Meanwhile, a third risk with ancient origins presents new liability issues that insurers and the industry should also keep in mind.
Insurance in a 6G Era
A constellation of companies, researchers, and government agencies are hard at work on the successor to today’s 5G wireless network. While that next-generation network is still several years away, it’s not too early to begin considering the possible impacts this new technology may have across insurance lines of business.
Much like all the Gs before it, 6G technology represents a more expansive standard of technological implementation and infrastructure development. One fairly obvious characteristic we might see as networks migrate from 5G to 6G is speed: 6G is expected to support significantly
faster data rates than 5G—reportedly up to as high as 200 Gbit/s for 6G vs. 20 Gbit/s for 5G. A future 6G network could also serve up to three-to-five times as much data traffic throughput within a given geographic area versus 5G. Lower latency, greater reliability, and the ability to serve data to more devices on a network are also promised.
Researchers preparing the groundwork for 6G also expect it to open the door to new capabilities, which may prove valuable for insurers. These innovations include integrated sensors that may allow 6G network devices to use radio waves to obtain additional information about their surroundings based on how objects—vehicles, buildings, and people—interact with the waves they send and receive. Sensors may also access networks in more remote locations, providing the potential to make post-catastrophe damage assessment easier and more efficient, and the full extent of such events more immediately apparent.
The use of so-called digital twins—more accurate virtual representations of real property—could aid in underwriting by helping insurers better understand a building’s performance under various catastrophe scenarios. It may also assist in the claims process with real-time data flowing between the real-world object and its virtual twin to potentially assist adjusters in better understanding pre-loss conditions when a claim is filed.
If 6G sensors proliferate, so, too, might the concept of a digital twin—potentially growing the tool beyond single structures and allowing insurers greater analytical visibility on entire neighborhoods and cities, in addition to critical infrastructure and the movements of people and vehicles.
The advent of the 6G era may also support auto insurance, enabling vehicle data analysis from radar-like passive sensing tools that hypothetically hold the
potential to more accurately reconstruct accident scenes.
A variety of possible risks may accompany these promising opportunities, however. Though research on the potential health impacts of cellular radiation continues, 6G wireless infrastructure may include unique components, like Reconfigurable Intelligent Surfaces (RIS), that are placed in locations where traditional wireless infrastructure isn’t normally located— potentially exposing a greater number of individuals to possible cellular radiation.
Other questions—such as the fate of the existing 5G infrastructure—remain and might not be resolved until the first projected commercial 6G networks become operational in 2029 or 2030.
Will Autonomous Robotrucks Redefine Commercial Auto?
A future in which self-driving semitrailers traverse America’s busy roadways delivering essential consumer goods and raw materials may sound far-fetched, but it isn’t quite as far removed as you’d think. And that future may redefine commercial auto coverage.
Autonomous trucks could account for up to 13% of commercial trucks on U.S. roads by 2035, according to one report by McKinsey, and the industry may grow into a projected $600 billion market in that same time frame.
These vehicles—some of them diesel-powered, others electric—rely on a variety of sensors and cameras to navigate roads and detect obstacles. Advanced algorithms process this data in real-time, enabling the truck to make driving decisions without human intervention. A handful of companies are already testing these self-driving semis in select U.S. markets, and some analysts believe they could help shipping companies address various challenges, from the ongoing driver shortage to transport costs. Though promising, the necessary infrastructure and autonomy likely required for the self-driving trucking industry to grow
and thrive may be years away. The rollout for full autonomy may occur gradually between 2027 and 2040.
Concerns over the safety and dependability of self-driving trucks could, according to some reports, lead to a profound reappraisal of commercial auto coverage for property and casualty insurers. For instance, as autonomy gradually increases—potentially shifting vehicle driving responsibility from an in-person driver to fleet managers or manufacturers—auto insurance products could pivot away from third-party liability and eventually resemble something closer to product liability. Thus, increased automation could raise questions about accident culpability, potentially expanding risk exposure to manufacturers and tech providers.
Ancient Remedy, Modern Liability
In America’s diverse diet of recreational drugs, one product appears to be achieving growing popularity, notoriety, and liability: the herbal supplement kratom.
Derived from the leaves of the Mitragyna speciosa tree, kratom leaves have been consumed for generations across Southeast Asia, either brewed as teas or by chewing the leaves. In low doses, it’s said to deliver a stimulant-like effect. At higher doses, it’s said to behave more like an opioid—indeed, its main chemical
compounds reportedly trigger some of the same chemical sensors in the brain that are also tripped by opioids. Kratom is not listed as a controlled substance federally, but is noted as a “drug of concern” by the Drug Enforcement Administration (DEA). While manufacturers may market kratom products as a treatment for ailments like opioid use disorder, pain, depression, or anxiety, the Food and Drug Administration (FDA) has warned consumers that the substance is not approved for use as a medical treatment.
The drug moves through reportedly
opaque supply chains in the U.S.—commonly found on shelves in convenience stores, gas stations, and vape shops—making its way to the West in reportedly more concentrated forms, such as powders, extracts infused into drinks, or gummies. The market for these products has been valued at up to $1.5 billion.
Kratom has been linked to thousands of deaths across the country since 2020 and is increasingly leading to litigation. For example, a 2023 wrongful death lawsuit resulted in a nuclear verdict of more than $10 million.
Six states have implemented bans on kratom’s intoxicating compounds, and more than a dozen others have laws regulating some aspect of its sale, possession, or distribution. This can leave kratom in a regulatory gray area across more than half the country.
While kratom is a growing concern of the present, 6G wireless and autonomous trucking represent risks of the not-sodistant future. As these technologies and trends continue to evolve, it is crucial for the insurance industry to stay informed and adapt to the changing landscape to manage these risks effectively.
Shavel is president and chief executive officer of Verisk, a data analytics and technology partner to the global insurance industry. He brings nearly 30 years of experience advising and leading publicly traded companies to Verisk.
Idea Exchange: Minding Your Business
Perpetuation Planning – Part One
Perpetuation planning should begin long before owners want to retire. The four major techniques to transfer ownership of a business are:
By Catherine Oak
• Internal sale to key employees, including family members.
• Sale of the business to an outside firm.
• Merging with another agency with plans to eventually sell to the new partners.
• Passing the ownership to family or friends through inheritance.
A quick review of these four techniques shows that a perpetuation plan can either be internal or external. One should be chosen as the primary plan and another as the secondary. This article describes internal perpetuation options.
The Pros and Cons
The successful internal transition of a business requires planning for the founding owners’ retirement, death, or disability. Without a good plan, the fate of the business is up to the whim of outside influences, such as the courts. Also, the lack of any plan may create a situation that will drastically lower the equity or value of the firm, thereby not preserving the family wealth.
Internal perpetuation is usually the riskiest form of perpetuation. Recent statistics indicate that only 35% of family businesses survive past the first generation of ownership and about 20% survive to the third generation.
There are many reasons why small businesses do not always successfully pass down through the generations. Sometimes no family member wants to manage the business, or they may be unable. Not everyone is an entrepreneur capable of running a business successfully. This applies to non-family employees, as well. Typically, however, internal perpetuation fails because the buyers cannot afford to handle the buyout.
or an insurance agency, there are some techniques that can be used to minimize taxes and ensure the payout does not break the business. Like anything else that is worthwhile, these techniques will require planning and usually reduce the retiring owner’s return on equity. For many owners, however, the end results of successfully passing the business to the next generation are more desirable than the sales price or the payout terms.
Pass Control Efficiently
There are numerous options for passing the business to the next generation. The three most common are gifting, stock redemption, and stock purchase. There are also many other tools, such as trusts, that add to the variations that can be used to transfer business ownership. Which tools are used and how the
transfer is structured is based on three things: minimizing taxes, making sure it is affordable, and ensuring the seller has an adequate income stream. It is important, however, that the sale be treated as an “arm’s length sale” to avoid the IRS perceiving it as a gift or a “bargain sale.”
Create a Deferred Liability
Establishing a deferred compensation plan is a tool one can use to lower the value of the firm in order to make the purchase affordable for the new owners. Deferred compensation is a way of saying that you are not currently receiving fair compensation for one’s current work and it is planned to take out more compensation at a later date.
The deferred compensation becomes a liability on the firm’s balance sheet, since it is a debt that must be paid. Because it is a
liability, the value of the firm is lowered by that amount.
There are two uses for this plan: 1) the owner’s deferred compensation and 2) a producer’s deferred compensation.
Owner Deferred Compensation
The firm needs to file with the state that it is establishing a deferred compensation plan. This should be done years in advance of retirement. The plan can be funded or unfunded. However, to lower the value of the firm it should not be funded. Since the deferred compensation is treated as regular compensation, it becomes deductible for the firm.
The retiring owner receives their equity
in two components: the value of their business interest and the deferred compensation. The drawback is the deferred compensation is taxed as ordinary income (currently most people are in the 25% to maximum of 39.6% federal tax brackets alone, depending on their compensation plus payroll taxes), whereas, the income from the sale of the business is taxed as capital gains (which can be a 20% rate now for federal taxes if in the highest tax brackets or lower if in other brackets, down to 15%).
‘Internal perpetuation is usually the riskiest form of perpetuation. Recent statistics indicate that only 35% of family businesses survive past the first generation of ownership and about 20% survive to the third generation.’
Producer Deferred Compensation
In the insurance industry it is acceptable practice for a producer to own their book of business. An axiom in business valuation is that one cannot sell what you don’t own. Therefore, producer-owned books of business are usually excluded in the
valuation of an agency. This technique can be used for relatives as well as non-related employees.
First, the producer/heir signs a regular producer contract as an employee of the agency. This contract includes a clause that allows the producer/heir to own the accounts that they produce. This way the next generation is not paying for their own effort (the book produced) and the cost of buying the agency is effectively reduced.
The drawback to the retiring owner is that their equity in the business is reduced. On the other hand, taxes are minimized (due to the lower value) and the buyout is less likely to cause a drain on the business.
The heirs will also not resent having to pay for their efforts since their books are excluded from the value of the firm.
Other perpetuation options commonly used will be explored in next month’s “Minding Your Business” column, so stay tuned.
Oak is the founder of the consulting firm Oak & Associates, based in Northern California and Bend, Oregon. The firm specializes in financial and management consulting for independent insurance agencies, including valuations, mergers/acquisitions, clusters, sales and marketing planning, as well as perpetuation planning. Phone: 7070935-6565. Email: catoak@gmail.com
Idea Exchange: Trends
What Does the Future Hold for Independent Agencies?
Wouldn’t it be nice to know what the future holds? The insurance market, the economy, and consumer expectations are all shifting, making it hard to know where to focus.
By Ashley Wingate
The Council of Insurance Agents & Brokers (CIAB) reports that fourth-quarter 2024 marked the 29th consecutive quarter of premium increases across all account sizes. As an insurance agent, you already know that rates have been rising for a long time now, and you also know that selling insurance is a lot more complicated.
After 29 quarters of increases, you may be wondering:
• Will rate hikes continue?
• Will independent insurance agents be able to capture market share?
• Which strategies will lead to success going forward?
Even though it’s not possible to predict the future with certainty, current market conditions do shed some light on these questions—and there’s a lot of good news.
Will Rate Hikes Continue?
Many believe rate hikes will likely continue, at least in some lines and regions. The ongoing impact of extreme natural disaster losses means property and auto lines are especially likely to experience additional rate hikes.
While this is unwelcome news (especially for policyholders), there’s a silver lining: When it’s easy to find coverage, many people take a do-it-yourself approach to insurance—bypassing independent insurance agents to buy direct. When the market hardens, more insurance shoppers need help, which creates opportunity for agents.
Will Independent Insurance Agents Be Able to Capture Market Share?
It is highly probable that independent agents will be able to capture market share. Rising rates mean more insurance shoppers need help finding coverage. Independent insurance agents are in the perfect position to provide this assistance because they have access to numerous insurance solutions from multiple carriers.
The Big “I” 2024 Market Share Report found that the independent agency
channel captured 62.2% of the property and casualty market share, including 87% of commercial lines written premium and 39% of personal lines written premium. Notably, the personal lines market share was up from 38% the year before. This data confirms that independent agents are gradually succeeding in growing their market share despite the proliferation of DIY digital options.
There is a caveat: competition among independent insurance agents is fierce. To succeed, agents need to stand out, which brings us to the next question.
Which Strategies Will Lead to Success Going Forward?
To stand out among the competition, independent insurance agents need to provide products and services other agents are not offering. Exceptional customer service is one option. However, on its own, it may not be enough. To gain market share, it’s important to offer insurance solutions that clients may not be able to find elsewhere.
In many cases, this means accessing the excess and surplus market to provide cost-effective solutions for challenging risks. S&P Global reports that the excess and surplus lines market grew by 32.3% in 2021, by 20.1% in 2022, and by 14.5% in 2023. Although growth has slowed since 2021, E&S lines are an increasingly important part of the insurance market.
Looking for More Predictions?
Would you like to explore this topic further? Find even more answers in our free report, “What Does the Future Hold for Independent Agents? 8 Eye-Opening Predictions,” at www.InsuranceJournal. com/research.
Wingate is executive vice president of sales and distribution at Smart Choice, an independent insurance agency network that provides access to more than 100 products. He heads the Smart Choice Agents Program, serves as the liaison to major company partners, and spearheads expansion into new states. Website: www.smartchoice.com
Closer Look: Underwriting
continued from page 39
can we promulgate with respect to how these things are used to protect against the known risks of today.”
Davey said she believes a more colorful claims landscape in terms of litigation and regulation will emerge in the next five years. “I would imagine that for the underwriters here and the brokers here, it’s going to be an interesting five years of conversations with clients about their claims history,” she said.
April 21, 2025
Benchmark Insurance Company 150 Lake Street Wayzata, MN 55391
The above company has made application to the Division of Insurance to amend their Foreign Company License to transact Property and Casualty Insurance in the Commonwealth of Massachusetts.
Any person having any information regarding the company which relates to its suitability for the license or authority the applicant has requested is asked to notify the Division by personal letter to the Commissioner of Insurance, 1000 Washington Street, Suite 810, Boston, MA 021186200, Attn: Financial Surveillance and Company Licensing within 14 days of the date of this notice.
April 21, 2025
Generali USA Insurance Company 28 Liberty Street, Suite 3040 New York, NY 10005
The above company has made application to the Division of Insurance to obtain a Foreign Company License to transact Life, Accident, and Health and Property and Casualty Insurance in the Commonwealth of Massachusetts.
Any person having any information regarding the company which relates to its suitability for the license or authority the applicant has requested is asked to notify the Division by personal letter to the Commissioner of Insurance, 1000 Washington Street, Suite 810, Boston, MA 021186200, Attn: Financial Surveillance and Company Licensing within 14 days of the date of this notice.
Proactive companies will lead the charge to set these standards, Reiser added.
“There will be a proactive group of companies and a reactive group, and the proactive group is going to set the standard for what the reactive group should have done,” she said. “That will be the benchmark. It wouldn’t surprise me.”
Davey said she believes that these emerging AI technologies, although constantly evolving, are insurable.
“It just takes work, and it takes effort,
April 21, 2025
Illinois Emcasco Insurance Company 717 Mulberry Street Des Moines, IA 50309-3872
The above company has made application to the Division of Insurance to obtain a Foreign Company License to transact Property and Casualty Insurance in the Commonwealth of Massachusetts.
Any person having any information regarding the company which relates to its suitability for the license or authority the applicant has requested is asked to notify the Division by personal letter to the Commissioner of Insurance, 1000 Washington Street, Suite 810, Boston, MA 021186200, Attn: Financial Surveillance and Company Licensing within 14 days of the date of this notice.
April 21, 2025
Preferred Professional Insurance Company 11605 Miracle Hills Drive, Suite 200 Omaha, NE 68154-4467
The above company has made application to the Division of Insurance to amend their Foreign Company License to transact Property and Casualty Insurance in the Commonwealth of Massachusetts.
Any person having any information regarding the company which relates to its suitability for the license or authority the applicant has requested is asked to notify the Division by personal letter to the Commissioner of Insurance, 1000 Washington Street, Suite 810, Boston, MA 021186200, Attn: Financial Surveillance and Company Licensing within 14 days of the date of this notice.
and it takes research—and that requires investment and resources,” she said. “So, if we as an insurance company, but also as an insurance sector, want to remain relevant, then we have to put in that upfront to work with clients to understand them and provide the solutions.”
Blosfield is deputy editor at Carrier Management. She hosts The Insuring Cyber Podcast and Between the Lines, a quarterly video series. Email: eblosfield@wellsmedia.com.
April 21, 2025
Western-Southern Life Assurance Company 400 Broadway Cincinnati, OH 45202
The above company has made application to the Division of Insurance to amend their Foreign Company License to transact Variable Life or Variable Annuities in the Commonwealth of Massachusetts.
Any person having any information regarding the company which relates to its suitability for the license or authority the applicant has requested is asked to notify the Division by personal letter to the Commissioner of Insurance, 1 Federal Street, Suite 700, Boston, MA 02110, Attn: Financial Surveillance and Company Licensing within 14 days of the date of this notice.
Fighting Insurance Fraud: A Long-Term Win for the Industry
By Joe Hayes and
‘While certain carriers have taken the lead in fighting fraud, we feel the effort needs broader industry participation.’
Fraud has long plagued the insurance industry, particularly in sectors like New York construction and habitational real estate. From staged trips and falls to fraudulent claims orchestrated by networks of bad actors—including lawyers, doctors, and claimants—the industry has been burdened by an ecosystem that exploits the legal system for financial gain.
In fact, The Coalition Against Insurance Fraud estimates annual losses of approximately $308.6 billion in the U.S.
But we’re seeing a shift occurring, and insurance carriers are stepping up to spearhead efforts to combat fraud. And while the full impact isn’t yet visible, the long-term effects could be transformative.
Recent legal actions against fraudulent claimants have resulted in a staggering number of cases being withdrawn. This suggests that bad actors, now aware of the growing risk of exposure, are backing off.
In fiscal year 2024, the Department of Justice reported more than 250 settlements and judgments related to the False Claims Act, collectively exceeding $2.9 billion. While we’re still in the early stages of this movement, it’s a sign that the tide may be turning.
The more fraudulent claims that are caught, the fewer fraudulent dollars that get paid out, and this will have a direct impact on the market. If the fraud ecosystem—and those profiting from it—starts to recognize that the risk outweighs the reward, fraudulent activity will decline. This benefits not only insurance carriers but
also policyholders and workers who genuinely need support. For too long, fraud has made the landscape unpredictable. Carriers have hesitated to enter or remain in markets rife with abuse, leaving fewer options for honest businesses. But as fraud detection improves and legal actions increase, we may see a renewed willingness from insurers to engage in these markets again. If the industry collectively commits to this fight, it will instill confidence, leading to a more stable and fair insurance environment.
While certain carriers have taken the lead in fighting fraud, we feel the effort needs broader industry participation. Insurance exists to support those who are genuinely injured, not to enrich those exploiting the system. More insurers need to take an active stance—coordinating efforts, sharing insights, and collectively investing in anti-fraud initiatives.
Tradesman program managers, a managing general agency insuring trade contractors in New York, some insurers, and claims administrators are already pushing for reform, but widespread carrier involvement would accelerate change. Fraudulent claims
tie up resources, delaying compensation for real victims who need immediate support. By reducing fraudulent claims, we can ensure that those truly injured receive faster, more efficient payouts, rather than waiting years for a resolution.
The fight against fraud is a long game, but we believe it’s one worth playing. If insurance carriers, tradesmen, and industry stakeholders unite, we can create a more honest, predictable environment. This, in turn, will attract more carriers back into challenging markets, improving competition and pricing for businesses.
We encourage the industry to step up, take action, and ensure that insurance serves its rightful purpose: protecting those who truly need it.
Hayes is the national casualty practice leader for Jencap Group. With over 20 years of experience, Hayes and his team specialize in working with: developers/ owners, general contractors, subcontractors, real estate owners/managers, and more.
Hahn is senior vice president of casualty at Jencap Group. Hahn and his team provide niche coverage expertise to retail agents for: construction, habitational, and the Tri-State Area (New York City specifically).
Kevin Hahn
Research & Trends Center
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