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Funder’s
Closer Look: Reinsurers Have Made Major Structural Changes to Improve Profits. Will Discipline Last?
Look
Oily Rags to a Break Room Microwave: Combatting Overlooked Risks in High-Severity Industries
Competitive Advantage: Mirror Tests and Absolute Exclusions
It Covered? Random Thoughts About Certificates of Insurance and Related Topics
Marketing Connection: Adapting to the Short Attention Span
Quote: A Wake-Up Call from Hawaii: Why We Must Invest in Pre-Disaster Preparation
AI for Agents
Artificial intelligence (AI) tools are creating exciting times for just about everyone.
The insurance industry is standing on the cusp of an exhilarating technological revolution, primarily driven by AI, writes Anupam Gupta, Applied System’s chief product officer, in this issue of Insurance Journal (see page 48). AI is opening new doors on what is possible and creating lasting value for agencies and their clients, Gupta said.
But how and why independent agencies use AI today varies greatly.
To better understand the state of AI in insurance agencies and how agency employees are using AI, the research team at Liberty Mutual surveyed 1,242 independent insurance agencies in the recently released 2025 Independent Agents at Work Study. The study found that many in the IA world still distrust certain AI tools, and some even view the technology as a threat.
The 2025 Agents at Work Study also noted that Millennials and Gen Z agency employees are the most likely to use AI for work. On average, the study found that 16% of agency employees estimated using AI for work on a weekly basis while 8% reported using it daily. Interestingly, some 57% of agency employees reported being interested in using AI for work. Perhaps, many agency employees are still searching for the best ways to use AI tools in their daily work. Of course, AI might already be embedded within an agency’s tech stack, but there are many other tools that may be helpful as well.
The Liberty Mutual study offered a few takeaways for agency leaders when it comes to employee use of AI tools.
1. Create an AI policy for your agency. “Even if you haven’t officially implemented AI tools in your agency, your staff may be using AI tools to help with their jobs,” the study said. “Your agency needs an AI policy to help reduce potential risks and safeguard sensitive client information.”
‘On
average, the study found that 16% of agency employees estimated using AI for work on a weekly
basis while 8% reported using
it daily.’
2. Identify pain points and complete a tech audit. “With new AI-backed technology popping up every day, the options for implementing AI can feel overwhelming,” the study said. Begin the AI journey by identifying your agency’s main pain points. “Then look at your existing technology tools to see what capabilities and add-ons may be available to you already.”
3. Engage your agency staff on this journey. “Reassure your staff that AI won’t replace them,” the study recommended. “Bring staff in on the process of choosing and implementing new technology that will impact their day-to-day work, and invest in training to help them learn how to use AI tools.”
A special thank you to this issue's sponsor, Ryan Specialty.
Chairman of the Board Mark Wells | mwells@wellsmedia.com
Contributors: Christopher Boggs, Sean Briscoe, Anupam Gupta, Monica Ningen
Columnists: Chris Burand, Anita Nevins, Bill Wilson
SALES / MARKETING
Chief Marketing Officer
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South Central Sales
Mindy Trammell | mtrammell@insurancejournal.com
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Dave Molchan | (800) 897-9965 x145
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Sr. Sales & Marketing Coordinator
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DESIGN / WEB / VIDEO
V.P. of Design
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Director Patrick Wraight | pwraight@ijacademy.com
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Andrea Wells V.P. of Content
News & Markets
Carrier Revenue Growth Expected to Outpace Hiring in Next Year
By Allen Laman
Approximately 81% of insurance companies expect to increase their revenue in the next 12 months, but only about 53% expect to increase their staff in that same period, according to a new insurance labor market outlook study from The Jacobson Group and Aon. Historical study data shows that the percentage of companies expected to grow staff has stayed largely the same since July 2023.
“In past years, we’d see that the growth and staffing expectations were largely aligned,” said Jeff Rieder, partner at Aon and head of STG Performance Benchmarking. “And now we’re starting to see, for the same period now for at least 18 months, that there has been somewhat of a divergence in terms of the companies expected to grow staff relative to revenue expectations.”
Thirty-three percent of insurance companies expect to maintain current staff levels in the next year, while 14% plan on decreases, according to the report. Meanwhile, 14% of companies expect flat revenue growth, and 5% forecast revenue decreases.
Approximately 84% of the study’s participants are property/casualty insurance carriers. The twice-annual study strives to provide an analysis of labor trends and staffing expectations and challenges of the U.S. insurance labor market. The study covers nearly 15% of the insurance market by employees.
“The one thing that is interesting is noting the percentage of companies that are expected to decrease employees during that same period,” Rieder said of the stretch between July 2023 and the most recent study. “Hovering at 14%, we’ve not seen that kind of sustained level near the mid-teen level since the emergence of the [recession] back in 2010.”
While the P/C industry had strong, sustained premium growth in the previous five years, the study’s findings show premium was very much driven off rate growth rather than true, organic growth in policy count, Rieder explained. Knowing this, companies are now more cautious when it comes to hiring expectations, and tariff-related uncertainty has perhaps also made companies more cautious, he added.
“We know that for many companies, they’ve been exposed to severe catastrophes, convective storms, [and] the wildfires that impacted California [during] the first month of this year as well,” Rieder said. “And when you couple that with the backdrop of artificial intelligence and technology gains, we’re seeing that, in many cases, this is perhaps tempering the staffing plans and staffing outlook.”
Data from the U.S. Bureau of Labor Statistics shows a notable decrease in the number of insurance and finance job openings in recent years. That number peaked at 393,000 openings in 2022 and fell in each consecutive year to 307,000 in 2025. There were 246,000 openings in June, specifically.
“All the trends are really kind of pointing
out to perhaps modest expectations for growth in headcount,” Rieder said. “Particularly as there’s fewer job openings—roughly 10% fewer than what we saw at this time two years ago.”
Jeff Blair, senior vice president of executive search and business development at The Jacobson Group, explained that regional and commercial P/C carriers are “higher than average in looking to reduce staff.” The study found that while 59% of commercial lines P/C carriers expect to increase staff in the next 12 months, 16% expect to decrease their headcount.
Overall, 12% of personal lines P/C companies expect to decrease staff during the next year. Notably, all those carriers expect the decrease to be less than 2%. Fortyseven percent of personal lines carriers expect to increase staff. Meanwhile, 7% of balanced-lines companies plan to decrease staff during the next year, and 50% expect to increase headcount.
The industry’s greatest need is for technology staff, followed by underwriting and claims employees, according to the study. Large and medium-sized companies are most likely to hire technology staff in the next 12 months, followed by underwriting and analytics employees. Small-sized companies have the greatest need in claims, followed by underwriting and technology.
Overall insurance industry employment remained mostly flat from the previous report, dropping just 0.5% from January and remaining below pre-pandemic results. Blair explained that some of the largest job growth is from agents and brokers.
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Figures
$750 Million
The cost of a fly factory in southern Texas set to breed billions of sterile male New World screwworm flies, ramping up the state’s efforts to keep flesh-eating maggots in Mexico from crossing the border and damaging the American cattle industry. The USDA also plans to deploy $100 million in technology, such as flytraps and lures, and step up border patrols by “tick riders” mounted on horseback, as well as to train dogs to sniff out the parasite.
.01 Inches
The number of insurance companies Georgia Insurance Commissioner John King plans to fine for failing to cover mental health treatments as required by law. Proposed fines total $20 million. The fines were based on a 2023 audit and came after mental health advocates criticized health insurers and King’s office for failing to follow and enforce the state’s Mental Health Parity Act of 2022. The companies have not been named.
The amount of rain it takes to trigger an incremental payout from Vortex Weather Insurance’s RainSure, the latest addition to its line of parametric rain insurance products. RainSure offers incremental payouts for every .01 inch of rain up to a .25-inch, .5-inch, or 1-inch threshold selected by the policyholder.
$1 Billion
The dollar amount allegedly fraudulently taken from consumers because Zelle refused to adopt critical safety features. New York Attorney General Letitia James is suing the company after the U.S. Consumer Financial Protection Bureau’s decision in March to drop a similar case. That agency has ended most enforcement activity following U.S. President Donald Trump’s return to the White House.
News & Markets
Cyber Buyers See Added Limits, Low Premium in Mature Market: Report
By Jahna Jacobson
Cyber insurance remains an area of growth opportunity for property and casualty insurers, particularly in the face of large-scale risk factors.
According to a new report, “CYBER: Insights on the current and future state of the US cyber insurance market” from Risk Placement Services (RPS), insurtechs, MGA startups, and other new players are creating a lot of extra capacity in the market, while some existing carriers are loosening underwriting standards to maintain market share.
“Those markets that were previously only offering a $1 million or a $2 million limit have since gone to $5 million,” said RPS National Cyber Practice Leader Steve Robinson. Widespread premium reductions and additional capacity are still defining the market, with limit availability
increasing even as risks become more prominent, he added.
“We’re seeing more now that can do $10 million and even some at $15 million, and that’s reflective of the capacity,” he said.
According to Jack Rosen, RPS area assistant vice president, the market will remain unsettled until the next wave of consolidation reduces the number of carriers. Inconsistencies in carrier approaches, especially in handling claims adjudication and methodologies employed for pricing risk, also contribute to the potential for lingering volatility.
tion, all involving insureds inadvertently sending money to bad actors.”
In response to the evolving threat landscape, carriers are adapting services to increasingly offer preventative resources like training, risk assessments, and security tool access.
Carriers are also adjusting the wording in their policies to consider increased vendor risk and guard against AI as an attack vector source for both privacy and security liability, as well as cybercrime.
“Premiums today are so low that you’re seeing $100,000 or $200,000 claims on policies with a $5,000 premium,” Rosen said. “And many claims are not necessarily traditional data loss claims but financial-related incidents like social engineering fraud and invoice manipula-
“The insurance community in general has played a major role in moving the needle in the right direction in terms of organizations’ cyber readiness,” Robinson said. “That’s because now there are requirements for basic data hygiene, information security practices, policies and procedures that need to be in place to even qualify for cyber insurance.”
Business Moves
National
Hiscox, Corix Insurance Services, Vouch Insurance Company
Global specialist insurer Hiscox agreed to acquire a specialist insurtech business focused on addressing the insurance needs of small businesses operating in sectors such as technology start-ups, life sciences, and professional services.
As part of the transaction, Hiscox is acquiring Corix Insurance Services LLC and Vouch Insurance Company from Vouch Inc., subject to customary conditions and regulatory approvals.
Hiscox USA is a digital provider of small business specialty insurance and serves more than 600,000 customers through multi-channel distribution.
Vouch Inc. remains an independent insurance broker, now singularly focused on providing risk management services to companies across technology, life sciences, and professional services. As part of the transaction, Hiscox and Vouch Inc. have agreed to a multi-year distribution deal.
Nationwide, Markel Insurance
Global specialty insurer Markel Insurance completed the sale of the renewal rights for its $1.2 billion global reinsurance business to Nationwide.
This transaction was announced on July 30.
For Nationwide, acquiring the renewal rights creates an opportunity to diversify and expand its presence in the specialty reinsurance market and the insurance and
financial services products.
Nationwide will delegate the underwriting and management of all renewal policies included in this transaction to Ryan Re Underwriting Managers, a managing general underwriter of Ryan, through the expansion of their existing strategic alliance.
Virginia-based Markel did not sell any insurance company entities as part of the transaction, and Markel’s global reinsurance division has entered runoff, with premiums continuing to earn out over the next two to three years.
East
Smith Brothers Insurance, Moscato & Associates
Connecticut-based Smith Brothers Insurance acquired Moscato & Associates of Ithaca, New York.
Moscato & Associates, an independent agency specializing in employee benefits, individual health, and Medicare, will maintain its location in Ithaca. Edward Moscato and his team will join Smith Brothers.
The acquisition expands Smith Brothers’ employee benefits practice and its New York presence into the central and southern New York tier. Smith Brothers is an independently operated insurance broker with more than 250 professionals in offices throughout Connecticut, Massachusetts, New Jersey, and New York.
ALKEME, Innovative Insurance Group
California-based insurance brokerage
ALKEME announced its acquisition of
Innovative Insurance Group, one of Virginia’s largest insurance agencies. The Innovative team will continue operating from its eight Virginia locations.
Founded in 2015 through the merger of four Virginia benefits agencies, Innovative Insurance Group offers employee benefits, human resources, Affordable Care Act compliance and reporting. Principals who built the firm include Sam Irby, Earl Weaver, and Charlie Webb.
ALKEME is a full-service insurance agency providing commercial and personal insurance, employee and executive benefits, retirement and wealth management services.
Michigan-based Brightstone Specialty Group acquired RMS Hospitality Group and its affiliated claims firm, Fortis Risk Solutions, from RMS Insurance Brokerage LLC. The acquisitions expand Brightstone’s presence in the franchise food, hospitality, and restaurant sectors.
RMS Hospitality Group is a national insurance program with more than 20 years of experience. Fortis Risk Solutions is a third-party administrator. Both are based in Garden City, New York.
RMS Hospitality Group offers insurance for franchise food (quick service, fast food, family/casual style), hospitality (live music venues, bars, nightclubs), and restaurants. RMS also handles claims through its third-party administrator, Fortis Risk Solutions. RMS Hospitality Group will remain in Garden City. RMS Insurance Brokerage is a managing general agent, wholesale broker, risk management consultant, and claims administrator.
Brightstone is a subsidiary of High Street Insurance Partners Inc., comprised of two divisions: specialty services and underwriting.
NFP, Pilot Benefits Group LLC
Insurance broker NFP, an Aon company, acquired Pilot Benefits Group LLC, an employee benefits broker in Melville, New York.
Josh Senders and Ben Senders,
principals at Pilot, will join NFP as senior vice presidents and report to Chris Feneli, managing director, benefits, for NFP’s Northeast region.
The broker, which does business as Pilot|RB, has served nonprofit organizations and middle market businesses for more than 60 years.
Aon, a global insurance broker and risk, retirement, and workforce advisor, acquired NFP in April 2024 for $13 billion. NFP has offices in the U.S., Puerto Rico, Canada, the UK, and Ireland.
Midwest
Higginbotham, Roehr Insurance
Higginbotham partnered with Roehr Insurance, one of the largest property and casualty insurance agencies in Cincinnati, Ohio. The partnership grows Higginbotham’s presence in the Midwest and provides Roehr with expanded resources to support both clients and employees.
Founded by CEO Alvin Roehr in 2012, Roehr Insurance is a full-service agency offering commercial and personal property and casualty insurance, life insurance, bonds, and custom risk management services with licenses and clients in nearly every state.
Southeast
Legacy Risk Solutions, PointeNorth Insurance Group
Georgia-based Legacy Risk Solutions, a network of independent insurance agencies, merged with PointeNorth Insurance Group.
The combined firm will operate as Legacy Risk Solutions, headquartered in Gainesville, Georgia.
Legacy has more than 600 employees in 40 offices. Jason Griffith will continue to serve as CEO of Legacy Risk Solutions alongside Matt Wells, who is now president of Legacy Risk Solutions.
Legacy clients will now have access to more specialty products in hospitality, trucking, investment real estate, and property management, as well as construction and transportation insurance.
South Central
TWFG, Angers & Litz Associates Inc.
Texas-based TWFG Insurance expanded its national footprint with the acquisition of Angers & Litz Associates Inc., a personal and commercial lines insurance agency based in Schenectady, New York.
Angers & Litz has been family-owned and operated since 1963. Michael F. Litz will be staying on as branch manager.
TWFG Insurance has a national network of independent agents offering personal and commercial lines insurance.
USI Insurance Services, Rogers Insurance Center
USI Insurance Services acquired Miami, Oklahoma-based Rogers Insurance Center. Terms of the transaction were not disclosed.
Founded in 1997, Rogers Insurance Center is an independent brokerage firm specializing in commercial and personal risk insurance programs. Rogers Insurance Center is licensed to provide insurance transactions in Oklahoma, Kansas, Missouri, and Arkansas.
World Insurance Associates LLC, Abacus Insurance and Financial Services
World Insurance Associates LLC acquired the business of Abacus Insurance and Financial Services of Irving, Texas. Terms of the transaction were not disclosed.
Abacus provides primarily commercial lines insurance, with some personal lines insurance, with a niche in hotels/motels and convenience stores. The company was founded in 2016 by Rafiq Hassan, Abid Hassan, and Shahira “Saira” Somani. Ankit Patel became a partner in 2024.
West
Marsh McLennan Agency, Olympic Insurance Agency
Marsh McLennan Agency acquired Olympic Insurance Agency, headquartered in Simi Valley, California. All Olympic employees, including principals Don and Bob Barberie, will remain working out of their existing Simi Valley office.
Olympic primarily provides business
insurance, employee benefits, and personal asset protection services to clients in Southern California. The firm specializes in working with real estate investors, property managers, and manufacturing businesses.
Marsh McLennan Agency, a business of Marsh, is a provider of business insurance, employee health and benefits, retirement, and wealth and private client insurance services across the U.S. and Canada. Marsh, a business of Marsh McLennan, is an insurance broker and risk advisor with four businesses: Marsh, Guy Carpenter, Mercer, and Oliver Wyman.
Renaissance, Evolution Partners
Renaissance, a network of independent insurance agencies, acquired the agency network business of Evolution Partners, a California-based membership group that helps independent insurance agencies secure direct appointments with insurance carriers. The arrangement allows Evolution Partners’ members to tap into Renaissance’s network benefits, including expanded market access, placement services, agency technology tools, and service resources.
As part of the acquisition, Navion Insurance Associates, the flagship agency of Evolution Partners, will be the first in the network to adopt the Renaissance platform.
Brown & Brown Dealer Services, Tire Shield
Brown & Brown Dealer Services (BBDS) acquired the assets of Tire Shield. The Tire Shield team will join BBDS and continue to operate from their offices in Las Vegas, Nevada. The team will report to William Kelly, president of BBDS’s administrative services.
Founded in 1997, Tire Shield offers administrative services for dealers and agents, providing tire and wheel road hazard products and GAP waiver products for the RV, automotive, and powersports industries.
Brown & Brown is an insurance brokerage firm with a global presence spanning more than 700 locations and a team of more than 23,000.
People
National
WTW, with U.S. headquarters in Arlington, Virginia, appointed Alena Kharkavets as North American head of claims in its insurance consulting and technology business. Kharkavets comes to WTW from Intact Financial Corporation, where she held progressively senior roles over 20 years.
client advisor within the North America alternative asset insurance solutions (AAIS) vertical. Lockner has over 15 years of experience joining Willis from Goodwin Procter LLP, where she was a partner in the complex litigation and dispute resolution practice.
reinsurance, in June 2023.
WTW also appointed Cédric Thibault as director of insurance consulting and technology (ICT), expanding its Hamilton, Bermuda, office. Thibault has over 20 years of experience, most recently serving as a senior manager with KPMG Canada’s Life Practice. Before KPMG, Thibault held senior roles with Munich Re in Germany and Canada.
WTW also appointed Dale Porfilio as senior director and head of personal and commercial lines business development for ICT. Based in Chicago, Illinois, Porfilio most recently served as chief insurance officer at the Insurance Information Institute (Triple-I) and president of the Insurance Research Council (IRC). Prior to this, Porfilio was senior vice president and corporate chief actuary for Genworth Financial.
Willis, a WTW business headquartered in London, appointed Cecelia Lockner as senior director, strategic
Fusion Specialty Insurance, headquartered in New York City, hired Robert Underhill as head of Americas. Underhill joins Fusion following nine years as global head of transactional liability at Berkshire Hathaway Specialty Insurance. Underhill previously held senior positions at Locke Lord LLP, Fortress Investment Group, Credit Suisse Investment Bank, and Citigroup Investment Banking.
W. R. Berkley Corporation, headquartered in Greenwich, Connecticut, named Shadi Albert as president of Vela Insurance Services. He succeeds Arthur G. Davis, who assumes the role of chairman of the business. Albert joined Berkley as president of Berkley Luxury Group in 2023, after serving as the executive vice president of strategy and business development at Selective Insurance.
East
2021 as a risk management and claims specialist. She previously served nearly 35 years at CNA, most recently as architects/engineers platinum accounts director.
Witherow leads the Ames & Gough Premier Select Team. She joined the firm in 2006 and was promoted to assistant vice president in 2019.
Gonzalez, an account executive, joined Ames & Gough in 2015. She was promoted to senior broker in 2021 and to her current role a year later.
O’Brien has over 25 years of insurance industry experience, joining the firm in 2014. She previously served as an account manager with a regional agency and owned an Allstate agency.
Midwest
Dale Underwriting Partners, the trading name for Dale Managing Agency Limited’s Lloyd’s Syndicate 1729, headquartered in London, appointed Peter Cordell as head of North America casualty effective January 2026. Based in London, Cordell has over 20 years of industry experience, joining Dale from MS Amlin, where he served as head of treaty casualty and financial lines.
Aspen Insurance Holdings Limited, headquartered in Hamilton, Bermuda, appointed John Welch as group chief underwriting officer. Welch has over 30 years of experience, including at AXA XL and XL Catlin Group. He joined Aspen as chief underwriting officer,
ReSource Pro, based in New York City, appointed Eugene “Gene” Hugh as chief financial officer. Hugh will lead the company’s accounting, financial planning and analysis, tax, treasury, legal, and mergers and acquisitions functions. Hugh joins ReSource Pro from Procure Analytics. Before that, he spent 15 years at Intercontinental Exchange.
Ames & Gough, headquartered in McLean, Virginia, appointed Lauren Martin and Jessie Witherow as vice presidents and Nicole Gonzalez and Katie O’Brien as assistant vice presidents. All four executives are based in the firm’s Washington D.C. office.
Society Insurance, based in Fond du Lac, Wisconsin, elected Chris Felton of Burlington, Wisconsin, as a director.
Felton is president and chief executive officer of Corporate Central Credit Union, leading strategy, innovation, and operations.
Encova Insurance Executive Vice President and Chief Strategy Officer John Kessler will retire at the end of 2026 after more than 40 years with the company.
Brandon Marshall is now senior vice president, agency operations and marketing. He previously served as an independent agent and led Encova’s underwriting, claims and loss control teams.
Martin joined Ames & Gough in continued on page 20
Additionally, Casei Phillips
Cédric Thibault
Cecelia Lockner
Peter Cordell
Lauren Martin
Jessie Witherow
Katie O'Brien
Chris Felton
People
continued from page 18
was promoted to be Encova’s first senior vice president and chief communications officer.
NI Holdings Inc., headquartered in Fargo, North Dakota, appointed Kelly Dawson to the newly created role of senior vice president and chief human resources officer. She has over 20 years of human resources experience, including leadership roles at Border States and Noridian Healthcare Solutions LLC.
recently served as a principal at Stone Point Capital. His new role combines elements of finance and operations previously spread across other positions.
served in senior roles at Chubb, Fireman’s Fund, and QBE North America.
Area, California, office, Liberty Naranjo, led by managing partners and brothers Jonathan and Michael Naranjo
South Central Hotchkiss Insurance, based in Dallas, Texas, recently added three new partners: Riley Dearing, Jessica Goehring, and Heather Etheredge. Dearing leads the West Texas region for the Hotchkiss Benefits Division. He founded InCore Group, which merged with Hotchkiss in 2023.
Goehring, vice president of affinity programs, leads the agency’s niche programs, association partnerships, and external marketing initiatives.
Etheredge, vice president of human resources, has been at the agency for over 20 years.
Andrew Reutter was appointed CFO/COO of Fort Worth, Texas-based Higginbotham. Reutter most
Novatae Risk Group, headquartered in Dallas, Texas, named Anju Arora to the newly created role of vice president of data, business intelligence, and innovation. Arora has over 25 years of insurance industry experience specializing in actuarial science, regulatory compliance, and product development. She most recently worked at Ethos Specialty, part of Ascot Group.
Stephanie Beach joined Alliant Insurance Services as senior vice president within its employee benefits group, based in Austin, Texas. Beach has over 25 years of experience, most recently serving as a partner at Mercer.
Southeast
Keith Coghlan joined Alliant Insurance Services, headquartered in Irvine, California, as vice president within its employee benefits group. Based in Florida and serving the Southeast, he most recently served as director of new business at WTW.
Liberty Naranjo will serve as a fully integrated employee benefits and P&C insurance advisory firm.
Jonathan Naranjo oversees property and casualty (P&C). He previously served as national real estate practice leader, senior vice president at Newfront Insurance and HUB International.
Michael Naranjo leads employee health and benefits. A Liberty leader since 2024, he previously served as vice president, corporate benefits, at NFP and manager of benefit consulting at Namely.
The Liberty Company Insurance Brokers, headquartered in Gainesville, Florida, named Amber Cowan as chief human resources officer (CHRO). Cowan joins Liberty after serving as CHRO for the West region at USI Insurance Services. Before USI, she held HR leadership roles at SVB and The Cincinnati Insurance Company.
West
Betty Wehmann joined Alliant Insurance Services, headquartered in Irvine, California, as senior vice president (SVP) within its employee benefits group. Based in Northern California, Wehmann previously served as SVP at The Liberty Company, BB&T, and Tanner LLC.
Canal Insurance Company, a subsidiary of Canal Financial Group based in Greenville, South Carolina, named Paul Stachura vice president and chief claims officer. Stachura most recently served as chief claims and engineering risk officer at State Auto Insurance and previously
Nevada Department of Business and Industry appointed Ned Gaines as acting commissioner at the Nevada Division of Insurance. Gaines has over 25 years of experience, recently joining the division as the chief deputy commissioner. He previously served with the Washington Office of Insurance Commissioner as the deputy commissioner of rates, forms, and provider networks.
The Liberty Company Insurance Brokers, headquartered in Gainesville, Florida, launched a San Francisco Bay
Alliant also added Steve Wolfenberger as vice president within its employee benefits group. Based in California, He most recently served as SVP, large group employee benefits, at The Liberty Company Insurance Brokers.
Andy Oldenburg was appointed SVP within the Alliant Americas division. Based in Portland, Oregon, Oldenburg has over 20 years of experience, most recently serving as a commercial lines insurance agent with Marsh McLennan Agency.
Riley Dearing
Jessica Goehring
Heather Etheredge
Anju Arora
Stephanie Beach
Paul Stachura
Keith Coghlan
Amber Cowan
Andy Oldenburg
Declarations
Pursuing Premiums
“The increase in direct premium in the first quarter of 2025 shows that insurers are continuing to pursue adequate premiums in order to establish more favorable underwriting results for the U.S. homeowners insurance line rather than having the marked improvement in 2024 prove to be a one-year phenomenon.”
— David Blades, associate director, AM Best, in a statement about the report “Improved U.S. Homeowners Results Challenged by January Wildfires.” According to the report, total U.S. homeowners’ direct premiums written increased by 10.7% in Q1 of 2025 over Q1 2024. In 2025, Q1 premium was almost $15 billion higher than it was just four years prior in 2021.
Renewable Funding Crunch
“We’re in an energy crunch. We should be doubling down on everything we can build right now. Making things more expensive is antithetical to that.”
— Joshua Rhodes, an electricity expert and research scientist at the University of Texas at Austin, discussing how power demand nationwide is expected to soar after decades of minimal growth. Texas has been rapidly adding renewable energy while it struggles to build gas-burning power plants. Data centers, crypto-mining operations, and factories mean energy demand could double in the next five years. Trump’s One Big Beautiful Bill kills tax credits for renewable projects starting in 2028, making them more expensive to build.
CVS Opioid Suit
“The national settlement agreement funds expenses in response to the opioid crisis at large, but it does not change the fact that the underlying lawsuits do not seek specific damages tied to individualized injuries.”
— Delaware Chief Justice Collins Seitz writing for a unanimous court ruling that CVS Health is not entitled to coverage from insurers, including AIG and Chubb, against thousands of lawsuits over its role in the nation’s opioid crisis. The Delaware Supreme Court concluded that governments, hospitals, doctors, and benefit plans that sued CVS sought damages for economic losses, not individualized “bodily injury” or “property damage” covered by CVS’s general liability policies.
Navigating Citizens
“We believe the core design of the new (EZLynx) clearinghouse platform delivers what we intended to provide agents, which was a smaller initial question set that allows an agent to obtain an initial eligibility decision faster…We will continue to seek improvements to provide a superior policyholder and agent experience without adding additional complexities to the initial application process.”
— Michael Peltier, media relations manager for Citizens, on the organization’s year-old, $36 million clearinghouse system. Roughly 21,000 Florida agents have used the software, with almost 98% of agents who have questions rating the company’s support as “awesome.”
Pot Shop Compliance
“I don’t sense that our council is enthusiastic about the law to legalize, but they’re accepting of reality…Our liquor stores never fail compliance tests, whether for tobacco or liquor. We feel we can do the same thing within the cannabis industry… We’ve had practice time basically to understand the products and understand the customer service side of it.”
— City Administrator Cal Portner talks about how Elk River, Minnesota, views the potential for government-run marijuana shops. Revenue potential from cannabis sales, and how it can be used in the community, is part of the appeal. Assuring compliance is also part of it, Portner said.
Hot Mess
“Once those leave the truck and hit the road, that’s all garbage, and it’s still pretty warm…I can tell you personally, hot dogs are very slippery. I did not know that.”
— Shrewsbury Fire Company Chief Brad Dauberman after a truckload of hot dogs spilled across a Pennsylvania Interstate 83. The crash briefly clogged the heavily traveled artery in both directions. State police said the tractor-trailer had an unspecified mechanical problem, causing it to push into a passenger vehicle. When the truck scraped along a concrete divider, its trailer ripped open, and the contents scattered. A front-end loader was used to scoop up the hot dogs and drop them into a dump truck.
News & Markets
Litigation Funder’s Plan to Invest in Law Firms Called ‘Bad Policy,’ With Big Impacts
By William Rabb
With more states adding or considering restrictions on third-party funding of lawsuits, one of the largest litigation finance firms is now planning to invest directly in some law firms.
“We are pursuing strategic minority investments in firms where we can support their growth and expansion plans, as a passive investor,” Travis Lenkner, chief development officer for Burford Capital, said in a statement in late August.
The company would not say which law firms it may be considering for investment.
The idea is “very troubling” and raises ethical concerns about where a lawyer’s loyalty would lie—with the client or with the outside stakeholders of the firm focused on profits and big verdicts, said William Large, president of the Florida Justice Reform Institute, an organization that has advocated for tort reform and prohibitions against ownership of law firms by nonlawyers.
The publicly traded Burford, founded in 2009, has helped finance a number of high-profile lawsuits in recent years, leading property/casualty insurers, business chiefs, and some lawmakers to argue that third-party funding leads to unnecessary lawsuits that drive up costs.
Funding investors have countered that financing litigation can make it possible for more plaintiffs to afford protracted litigation, which can cost millions of dollars over many years.
At least 16 states in the last five years have approved statutes that require disclosure of litigation-funding parties or licensing of or reporting by the financiers.
In Florida, which has seen a big impact on insurance costs and premiums from extensive claims litigation, a similar bill failed to pass the legislature last year. It would have required disclosure of funding parties and would have barred financiers from influencing the outcome of cases. Federal legislation in Congress also has gained little traction since it was introduced last year.
And most states’ statutes strictly forbid ownership of law firms by nonlawyers. Only Arizona allows direct non-attorney ownership of law firms, although Utah and Washington, DC, have relaxed some restrictions, Bloomberg reported.
Burford Capital believes it may have found a way around states’ prohibitions—through the use of a bifurcated arrangement involving managed service organizations, or MSOs: The lawyers in a law firm would handle the legal work through a lawyer-owned entity. The MSO would control the firm’s assets and sell
back-office services to the law firm for a fee, according to Bloomberg and the Financial Times news reports.
It’s uncertain if such an arrangement would be considered legal in most states, or if they would be challenged in courts or state legislatures. A ruling early this year by the Texas Bar’s Professional Ethics Committee appeared to give the nod to MSOs for law firms, under certain conditions: Law firms could not split their fees with the managing organization.
“A lawyer may own an equity interest in a company owned in part by nonlawyers so long as the company does not engage in the practice of law,” and ethics rules still apply, the opinion noted.
The ethics committee did not directly address the other side of the coin: When a nonlawyer invests in a law firm. But the opinion has been seen as opening the door for the unusual investment structure, at least in some states.
“While acting only as persuasive authority, Opinion No. 706 confirms that, when structured correctly, law firm MSOs are a viable option for lawyers, investors and service providers,” wrote Trisha Rich, a partner with Holland & Knight law firm.
Florida’s Bar rules do not appear to directly address MSOs or similar business structures.
continued on page 26
News & Markets
continued from page 24
“A lawyer shall not form a partnership with a nonlawyer if any of the activities of the partnership consist of the practice of law,” the rule reads. “A lawyer shall not practice with or in the form of a business entity authorized to practice law for a profit if: (1) a nonlawyer owns any interest therein, except that a fiduciary represen-
tative of the estate of a lawyer may hold the stock or interest of the lawyer for a reasonable time during administration; or (2) a nonlawyer is a corporate director or officer thereof or occupies the position of similar responsibility in any form of association other than a corporation; or (3) a nonlawyer has the right to direct or control the professional judgment of a lawyer.”
The Florida Bar and the Supreme Court in 2022 also declined to adopt a Bar committee recommendation to try a pilot program of nonlawyer ownership and fee splitting with nonlawyers. The court did not address the MSO-type of investment structure.
Whether it’s legal or not, any type of outside ownership arrangement is simply bad policy, Florida’s Large said. He argued that if allowed, it would threaten the bedrock of America’s justice system. Large, a lawyer himself, compared largescale law firm ownership by investors to the arrangements that led to the U.S. financial crisis of 2008: Lack of ownership and accountability over the millions of subprime mortgages that were bundled and sold off to investors.
Currently, most law firm partners are, in effect, owners of their firm and are held responsible for the firm’s decisions. But if an outside investor becomes the factotum owner, lawyers may eschew responsibility, encouraging a decline in independence and quality of legal representation, Large said.
Outside ownership of law firms “will adversely impact the stability of the practice of law in our state and lead to a slippery slope of problematic issues as more and more nonlawyer entities seek to gain some semblance of control over law firms in the state, with their focus on the bottom line of profitability as opposed to the needs of clients,” Large wrote in a 2021 note to Bar committee members who were contemplating the nonlawyer ownership pilot program.
Burford has a market capitalization of $3 billion, putting it in the realm of some of the largest private equity firms, the Times and Bloomberg reported. Insurance groups have said such heavyweight funding would land mostly on the plaintiffs’ side, fueling excessive litigation and large verdicts that would have an impact on loss adjustment expenses.
Burford said it understands the legal and ethical considerations of its plan.
“As the world’s leading legal finance provider, we understand the business of law and the importance of law firm culture and professional independence,” Burford’s Lenkner said in an emailed statement.
News & Markets
Mercury Seeks 6.9% Rate Increase Based on New Cat Modeling Regulation
Mercury Insurance submitted a filing based on California’s new regulation enabling catastrophe modeling to be included as a factor in ratemaking.
The filing is reportedly the first to use the Verisk Wildfire catastrophe model, which is designed to help estimate the
impact of future catastrophic wildfire events.
The Verisk Wildfire Model for the United States was reviewed through the new Pre-Application Required Information Determination Procedure. The California Department of Insurance reviewed the model in July.
Once approved, the Mercury filing will allow the carrier to grow its footprint in higher wildfire risk areas, according to the company.
The rate filing calls for an overall average rate increase of 6.9%, which the company said reflects increased inflationary cost pressures and exposure related to catastrophic events such as wildfires.
According to Mercury, the rate increase won’t be allocated evenly across all policyholders, with residents in higher risk areas possibly getting larger increases and customers in lower risk areas could seeing decreases.
Mercury also plans expand existing discounts for homeowners who take steps to reduce wildfire risks, such as clearing vegetation, upgrading vents or using fire-resistant construction materials.
Rising rates and lack of availability have driven the state into a homeowners insurance crisis, pushing people in the insurer of last resort, the California FAIR Plan, and into surplus lines. The pain inflicted on California’s property market has grown steadily in the last few years after a series of devastating wildfire seasons—CalFire data show that seven of the state’s 10 most destructive wildfires have occurred in the last 10 years. That trend has been followed by numerous carriers pulling back from writing new policies in the state and seeking large rate hikes.
Several big carriers, including State Farm, Allstate, Farmers, and Mercury, reported paying more than $1 billion in claims from the wildfires.
Catastrophe models are accepted as a part of ratemaking in all states. The Verisk Wildfire Model is already approved by the Nevada Division of Insurance.
‘New Normal’ Sets in as Pace of Insurance Agency M&A Becomes Clear News & Markets
By Chad Hemenway
Insurance agency mergers and acquisitions during second-quarter 2025 were up 11% over the prior quarter, but M&A activity for the first half of the year is down 8% compared to last year, according to investment banking and financial consulting firm OPTIS Partners.
OPTIS Partners’ M&A database counted 319 deals in the U.S. and Canada as of June 30—on pace for 758 deals in the latest trailing 12 months. Since the last quarter of 2023, the pace has been 750-800, which is a “new normal,” said Steve Germundson, a partner at OPTIS Partners.
“We expect about 750 to 800 deals annually going forward,” he said. “Larger firms will continue to look for bigger transactions to fuel needed growth, and the number of buyers will shrink as some of yesterday’s active buyers become tomorrow’s sellers.”
U.S. agencies accounted for 305 deals, while 14 transactions were for Canadian brokers.
The Chicago-based firm said property/ casualty insurance agencies are the primary sellers, accounting for 209 transactions.
OPTIS tracks four types of sellers: P/C agencies, agencies offering both P/C and employee benefits, employee benefits
agencies, and all other sellers.
In its Q1 report, OPTIS said it expected
more large privately owned agencies to be sold in 2025.
Private equity-backed/hybrid brokers continued to dominate deal activity, with 73% of all transactions in the first half of the year.
“Since the start of the pandemic, they’ve done about 70% of the total number of deals in each quarter,” said OPTIS managing partner Timothy J. Cunningham. “They’ve got the money and are willing to spend it for the right acquisition.”
Among this group, BroadStreet Partners led with 39 deals in the first half, followed by peers Hub International (27) and Inszone Insurance Services (18).
Privately held brokers completed 62 acquisitions in the first half of 2025 while publicly held brokers reported 19 deals.
Special Report: Surplus Lines
Whatever line of business, the surplus lines industry continues to play a critical and more prominent role in the property/ casualty market.
“It’s pretty incredible to have watched what the E&S business has become today from the days when I started in this business almost 40 years ago,” said industry veteran John Jennings, CEO and one of the founding members of Jencap Group. “It is a major segment of our business, and it is an incredibly agile system within the insurance industry, that has performed extremely well and has filled many holes over
the last 10 years, with some impressive growth.”
Matt Lynch, president of binding at Risk Placement Services Inc., recalled his days in college where he earned an insurance and risk management degree. Back then the excess and surplus lines sector encompassed just one chapter in an insurance textbook.
“Now they dedicate entire courses on the E&S market,” he said. “Fifteen years ago, the E&S sector was just 10% of the industry. Right now, it’s about 20% to 25%.” That’s exciting for RPS, he added. “We’re really bullish on this marketplace and are excited about the
Economy and Surplus Lines
Global growth is slowing as U.S. tariff policy reduces trade and heightens geopolitical uncertainty. That will lead to decelerating growth in insurance premiums.
According to Swiss Re, global GDP growth (adjusted for inflation) is expected to slow to 2.3% this year and 2.4% in 2026, Swiss Re Institute said in its report titled “World insurance in 2025: a riskier, more fragmented world order.”
Concerns regarding tariffs involve the effect on property and vehicle insurance claims. Also, factors such as any weakening in economic conditions and inflationary pressures that could potentially cause longterm stock market volatility could pressure insurance companies’ combined ratios—including the surplus lines companies—and erode policyholders’ surplus,
AM Best noted in its Market Segment Report on the sector.
Paul G. Smith, corporate senior vice president at H.W. Kaufman Group/Burns & Wilcox, said changes in the economy affect the insurance market in several ways.
“One, the cost of goods to rebuild a house, to build a new house, to build a building, goes up,” he said. Or the ability for commercial insureds to maintain sufficient inventories of supplies can be hindered because of some of the tariffs.
“It also impacts investments into the growth of organizations, expanding your facility, trying to gain more market share.” The economy has an impact on just about everything, whether it’s commercial or personal insurance, he said.
For example, a recent conversation with a policyholder led to a disclosure about budget concerns in risk mitigation efforts. “They were commenting that they have
opportunities ahead.”
According to AM Best’s Annual Surplus Lines Report, in 2000 the E&S sector accounted for just 3.6% of total property/casualty premium; today that market share stands at 12.3% in 2024. When singling out property/casualty commercial lines premium, that figure jumps to 25.7% market share.
The reason: The world is a risky place.
“The complexity of risks today and what those risks will become in the future secures market prominence for E&S,” said Neil Kessler, CEO of Specialty and Benefits at CRC. “Look, I don’t think the
world’s getting less risky. So, as the complexity continues to increase and the options on the admitted side continue to decrease, you’re going to need people, specialists, to help navigate the non-admitted part of the world. And that’s where we excel.”
Demand for Specialty Coverage
In today’s market, the demand for specialty coverage and expertise remains strong even as property insurance, professional liability, and cyber insurance see new capacity and more competition in the continued on page 30
a budget for risk mitigation with respect to fire protection for a warehouse, but with the uncertainty surrounding the financial climate that we’re in right now, they had to put the brakes on making some changes to their fire suppression system. That has an impact on insurance.”
Neil Kessler, CEO of Specialty and Benefits at CRC, said the economy drives how much demand there is for insurance. “And insurance is priced off underlying things that are tied to the economy, whether it’s payroll receipts, or the exposure pool, the economy can definitely have an impact on the industry.”
Plus, after several years of insurance price increases in many industries, any economic challenge facing commercial policyholders is a concern.
“There have been years of, in certain lines, subsequent increases in pricing, and
I think there is fatigue out there,” Kessler said. The insurance industry can help, he said. “People are open to having conversations about what’s really driving cost increases, and if we can get to the root cause of those things, we can try to have some impact. That’s a smart way for the industry to think.”
Even with the economic concerns facing some industries, the U.S. remains the strongest economy in the world, Smith said.
“The majority of insurance premium comes out of the United States … so insurers, reinsurers, etc., whether they be in London, Switzerland, the UAE, they all want a piece of the U.S. marketplace,” he said. “So, as long as our economy remains robust, and our very litigious society in the U.S. continues, there will be a need for more and more insurance and the need for risk transfer.”
Special Report: Surplus Lines
continued from page 29
specialty market.
That pattern of the insurance market cycle is different than the past, said Sam Baig, president of Amwins Brokerage. “Traditionally, when markets have become more competitive, you see a slowdown in submissions, but we’re not seeing that,” he said. “We’re actually seeing elevated submission activity.”
Other wholesalers interviewed for this story say they are experiencing the same, and they do not expect that trend to slow in 2026.
“We continue to see strong submission count increases, strong policy count increases,” Kessler said. Of course, market factors influence rates and pricing, but even while softening prices in areas such as property saw significant declines this year, he said there continued to be a strong demand when measuring policy count growth.
Tim Turner, CEO of Ryan Specialty and chairman of RT Specialty, said that Ryan Specialty is seeing double-digit increases in premium and expects that will continue through 2025. Ryan Specialty anticipates the organization will write more than $30 billion in premium by the end of 2025. “I think that the surplus lines market will continue to grow. It will continue to take additional market share from the admitted market,” Turner added.
“The E&S or non-admitted marketplace is here to stay,” said Paul G. Smith, corporate senior vice president at H.W. Kaufman Group/Burns & Wilcox. “Over the last five years, the market has proven its value by creating the correct rates [and] the correct policy terms and conditions that the admitted marketplace struggles to find in this very difficult environment that we’re in,” he
Surplus Lines Market in Review
After surpassing the $100 billion threshold mark in direct premiums written for the first time in 2023, the surplus lines market grew by another 12.3% in 2024 to just under $130 billion, according to the recently released AM Best Market Segment Report.
While the degree of growth was lower on a year-over-year basis in 2024 than in 2023 (12.3% in 2024 compared to 17.4% in 2023), 2024 marks the seventh consecutive year of double-digit growth, Best noted in the report.
The larger percentage of property/casualty business
served by the surplus lines industry is here to stay. Some of the risks that have entered the surplus lines market in recent years are more than likely going to be “stickier” in terms of them staying in surplus lines, David Blades, associate director, AM Best Rating Services, told Insurance Journal.
One area of the market that has helped maintain premium momentum in surplus lines are the growing number of “niche distributors” such as managing general agencies and program administrators focused exclusively on specialty business, Blades added.
said. He added that the role the surplus lines market now plays is vital in providing solutions for clients, capital providers, and the changing or emerging exposures that new and specialty risks face.
Market Outlook
E&S specialists see a varied market, with plenty of niche opportunities in 2026.
While property insurance rates softened in some regions throughout 2024, other regions are still finding challenges, RPS’s Lynch noted. “We’re still seeing rate increases in some spots. If you think about habitational, it’s still a distressed situation.”
So, while there’s opportunities for rate decreases on certain risks, other lines of business are continuing to struggle to find options.
Turner said social and human services, which encompasses everything from
hospitals to nursing homes to assisted living to allied health facilities, are other areas experiencing tough market challenges today. “That segment of business is just getting harder by the day,” he said.
Another newer sector experiencing “niche firming” is public entity and municipality business. “Those risks are pouring into the E&S market now,” he added. Also, anything that’s long-tail, high-hazard casualty is going to stay in E&S, he added.
Amwins’ Baig said that just about anything with wheels tends to be challenging, especially in the excess liability space.
“Fleet exposures, tough construction, hospitality accounts—they’re all under pressure,” he said. “You’re seeing increases of 10% to 15% across our California portfolio when it comes to excess liability, with a much more difficult
“Insurers looking to provide solutions for difficult risks that continue to become more complex have necessitated broader partnerships with wholesale insurance brokers, MGAs, program managers, and other entities,” the report said.
“Moreover, it has increasingly involved the delegation of an underwriting authority and other responsibilities to utilize these relationships most advantageously.” Those relationships with niche distributors are aiding the surplus lines market and helping to sustain the premium growth.
According to data from U.S. surplus lines service
and stamping offices in 15 states, mid-year premium reached $46.2 billion from the 3.7 million items filed so far in 2025. These figures represent a 13.2% increase in premium and a 12.4% rise in items filed compared to the same period in 2024, the 2025 Midyear Report revealed. “The U.S. surplus lines landscape in 2024 and through the first half of 2025 continues to reflect a competitive market characterized by insurers seeking to grow market share in lines of coverage while focusing on risk classes to fit their risk appetite,” the report said.
market with people reducing their line sizes and being more selective on the accounts.”
“But the property market is competitive as ever,” Baig added. “There’s an abundance of capacity, pressure, downward pressure on rates and premium levels, and an expansion of terms and conditions.” Of course, there are outliers depending on the class of business and the performance of an account, he added. But in general, he sees property rate reductions.
Another area of the market that continues to be competitive is cyber liability and professional liability. That may change soon, he predicts. “We think professional liability is close to bottoming out, especially in D&O and cyber,” Baig noted. “You’re starting to see those rates flatten and less pressure.”
For now, the cyber and directors and officers markets remain soft, with rate declines in the single-digit to low-double-digit range, according to a recent Aon report, “Q2 2025 Global Insurance Market Insights.” Aon noted that in these lines, some clients can secure higher limits or find better terms at no additional cost.
Marsh also reported similar trends in its Global Insurance Market Index released in July, noting that financial and professional lines rates in the U.S. remained flat on average in the first half of 2025. Marsh noted that cyber insurance rates in the U.S. decreased 3% during the same time, which marked the ninth consecutive quarter of rate reductions.
Pricing Outlook
While surplus lines
professionals may face some headwinds from insurance pricing fatigue, E&S brokers predict another busy year for specialty lines in 2026.
Ryan Specialty’s Turner said change is imminent in the property insurance world in 2026. Softening rates in property could be one storm away from a market change in the other direction, he said.
“We’re getting close to the bottom in Tier 1 property, and we think that change is on the horizon.” It’s much more up and down than casualty business, he said. “Global warming will continue to have an impact on these catastrophic losses, and the property losses in aggregate will continue to mount and grow; there will be larger losses coming.”
Casualty pricing is a different story. “In general, the casualty market in E&S will remain firm through 2026, and especially in the 10 to 20 verticals that most of that business travels through,” he said.
“We’re all witnessing this acceleration of loss cost adjustment factors,” Turner said. Claim frequency and severity are record-breaking, and those trends continue to be affected by the overall U.S. litigation climate, he added.
“On certain classes of casualty business, you have to keep raising prices and tightening terms as a result of that,” he said. “All the big insurance companies, the head of the claims, they’re under probably the most pressure of anyone in the industry right now because they can’t litigate. They can’t go to trial as much as they’d like to because of [the risk of] nuclear verdicts. They’re everywhere.”
Nuclear verdicts, defined
as jury awards exceeding $10 million, rose by 52% in 2024, according to a recent Sedgwick report, “Liability Litigation Observation and Trends.” Thermonuclear verdicts, those that exceed $100 million in jury awards, increased 81.5%
between 2023 and 2024.
“It’s become very difficult to achieve a level of fairness in the judicial environment; it’s lopsided,” Turner said. “I definitely see it as the biggest factor in casualty in North America.”
Young Wholesalers on Finding Success
What advice would you give to a new recruit entering the wholesale insurance business?
“Make sure you are constantly learning,” said Jake Luddy, RT Specialty. “Even from the not-so-good experiences.
“When I think of the setbacks that I have had—whether it’s a meeting that didn’t go as well as you would’ve hoped, or a deal that didn’t go as smoothly as you would’ve hoped—use those as learning lessons. I’m definitely better off for having those ‘lesson learned’ experiences.”
What has been most helpful to you in career?
“Networking has been super important, especially when I first started,” said Michelle Savarese, senior vice president, RT Specialty — Property. “This is a relationship-based industry, so making sure you’re forming those connections and relationships and being transparent to your underwriters and markets, I think is critical,” she said. “I have also been fortunate to have a great mentor in my career, so when I started, I was in the office every day, listening to conversations, hearing people talk on the phone, and having face-to-face contact and creating peer relationships, which I think helped a lot.”
Would you recommend the wholesale brokerage world as a career path for other young people?
“Yes, I think it is the best kept secret in the job market,” said Connor Lalley, AVP, Broker, at Jencap Specialty Insurance Services. “It’s recession proof, and while I can only speak about the wholesale side, I love how you kind of become your own company within the company, or your own boss,” he said. “And I love that the way that you form a book of business is really through relationships; there’s no ceiling … And I love how it’s nonstop. It keeps me on my toes.”
Jake Luddy
Michelle Savarese
Connor Lalley
Closer Look: Reinsurance
Reinsurers Have Made Major Structural Changes to Improve Profits. Will Discipline Last?
By L.S. Howard
Reinsurance underwriting remains disciplined, with terms and conditions and attachment points largely intact, despite signs of rate moderation, according to an AM Best report.
During the January 2023 renewals, the global reinsurance market saw a significant recalibration, which marked “a decisive shift in how risk is priced, shared, and retained,” said AM Best in “Reinsurers’ Disciplined Capital Deployment and Underwriting Remain Key Foundations,” published on August 14.
“Across property catastrophe lines in particular, reinsurers implemented meaningful changes: higher attachment points, tighter terms and conditions, and acrossthe-board rate increases,” the report said, noting this reset continued into 2024 renewals and has established a more durable market structure characterized by reduced earnings volatility and stronger margins.
Indeed, the report added, the underwriting discipline employed by reinsurers over the past two-plus years has significantly improved their “ability to navigate this transitioning market.”
“Reinsurers’ risk-adjusted capitalization levels remain robust, reflecting retained earnings and disciplined capital management, and the strong underwriting profitability is being augmented by a surge in investment income given elevated interest rates,” said Michael Lagomarsino, senior director, AM Best, in a statement accompanying the report.
The question many observers and market practitioners are now asking is whether the structural improvements seen in the reinsurance industry over the past several years represent a lasting shift, or will there be a return to soft market conditions when the industry isn’t able to cover its cost of capital.
“The lessons of past cycles suggest caution, but reinsurer sentiment has ensured tighter exposure management and
market discipline in the current cycle,” the report said. “The absence of a flood of new company formations during this hard market may also reflect an emerging structural discipline that distinguishes the current cycle from past boom-bust episodes.”
Rebalancing Portfolios
For example, many reinsurers have proactively rebalanced their portfolios “toward higher-quality cedents and reduced or withdrawn from high-risk casualty lines such as U.S. commercial auto, general liability, excess casualty, and umbrella,” the report continued.
“Property capacity is increasingly tailored to treaties with stricter underlying terms, and reinsurers are maintaining discipline despite signs of rate moderation.”
The proof can be found in reinsurers’ first-half results when the majority of global reinsurers maintained strong performance, despite global natural disaster-related insured losses of at least $100 billion, said the report, quoting Aon’s latest estimates.
AM Best pointed to the strong underwriting performance in 2024 of the “Big Four” European reinsurers, which reflects the positive impact of the structural changes made since January 2023—in the form of higher attachment points, tighter
terms and conditions, and across-the-board rate increases.
Swiss Re, Munich Re, Hannover Re, and SCOR posted a discounted combined ratio of 86.4 under IFRS-17 accounting, AM Best confirmed. (Combined ratios below 100 indicate underwriting profits.)
A similar picture occurred in the U.S. and Bermuda, where the composite reporting under U.S.-GAAP accounting delivered an undiscounted combined ratio of 89.5.
“These results confirm that underwriting profitability has not only rebounded but is being sustained in the current reinsurance cycle,” AM Best continued.
“The improvements were driven by enhanced performance in property treaty portfolios, supported by disciplined capacity deployment and a focus on exiting working layers.”
Assuming there are no further large catastrophe events during the second half of 2025, the report said, “the combination of disciplined underwriting, rate adequacy, and robust investment income should deliver full-year operating results exceeding the cost of capital.”
Casualty Reinsurance
Casualty reinsurance, on the other hand, has added some complexity to the sector’s outlook by providing topline growth
while introducing greater underwriting uncertainty, the report indicated.
“Concerns regarding adverse development in U.S. casualty books persist for global reinsurers,” AM Best said, noting that the segment remains cautious about casualty accumulation.
“While the majority of reinsurers have reported favorable prior-year development over time as ongoing casualty reserve strengthening has been offset by strong favorable development on property and specialty lines of business, the industry remains challenged by unpredictable jury awards, broader interpretations of liability, and a lack of meaningful tort reform.”
Threat of adverse development has led reinsurers to respond “with price increases, stricter terms, and targeted capacity reductions,” but structural problems remain unresolved, said AM Best, explaining that capacity has not been withdrawn in many jurisdictions to the extent necessary to force political or legal reform, which assures that volatility will persist.
“Long-tail exposures continue to be a drag on earnings through adverse reserve development, even as reinsurers become more selective in allocating capacity,” AM Best said. “While many of the concerns around social inflation and loss reserves have focused on soft market accident years of 2015 through 2019, substantial adjustments made on more recent accident years in 2024 provide further cause for concern.”
AM Best confirmed that it maintains a positive outlook for the global reinsurance segment despite persistent headwinds such as social inflation, climate change, and growing geopolitical tensions and trade disputes (which have increased uncertainty surrounding volatility in financial markets, claims costs, supply chain disruptions, and risk assessments and pricing).
“The structural and cyclical factors underpinning the market continue to justify the positive outlook, which speaks not just to performance but also to the resilience and adaptability of the global reinsurance segment in a time of transition.”
The report pointed to four structural
factors that support its positive outlook:
• Risk-adjusted capitalization remains robust in terms of retained earnings and disciplined capital management.
• Underwriting profitability remains strong, augmented by a surge in investment income due to elevated interest rates.
• Market conditions continue to support
favorable pricing, despite signs of localized softening.
• Reinsurers have made considerable advances in risk management, by strategically prioritizing artificial intelligence (AI) and data-driven underwriting, which has reinforced underwriting discipline and strategic selectivity.
Just
Nautilus.
Spotlight: Senior Care
A Look at Senior Care Liability Claims
The average indemnity payments paid for senior care facilities have more than doubled over the past 10 years, according to Liberty Mutual/Ironshore’s inaugural Senior Care Claims Study, which examined senior care claims reported under Liberty Mutual/Ironshore Healthcare policies over the past 12 years. Legal system abuse has substantially increased average claim costs, driven by aggressive legal strategies employed by plaintiffs’ attorneys, the study says.
underwriter and director of risk management, discuss a few of the study’s findings with Insurance Journal. To read the full study, visit: https://business. libertymutual.com/ insights/key-insightson-senior-livingsafety.
In this abbreviated interview, Liberty Mutual/ Ironshore’s Dennis Cook, healthcare president, and Lynette Perkins, executive
The study showed that the average indemnity payment across all senior care facilities—independent living, assisted living, and skilled nursing—has more than doubled over the past 10 years, surging to $226,028 in 2024. Was that surprising? What’s driving that trend?
Dennis Cook: The level of the increase in severity is somewhat surprising. The industry
has seen it … Indemnity payments that used to be at, say, $200,000 or $100,000 grow to be more at like $400,000 and higher. It is also seeing a big increase in the excess losses, which is also concerning. The industry had probably about 10 years where we didn’t see that many excess losses, but now we’re seeing them, and we’re seeing them from legal system abuse. … The frequency of severity is an industrywide trend, but we are seeing it in our book, too. … But in general, we see indemnity payments across all industries going up from a casualty business perspective. It’s a little bit of social inflation, and I do believe that litigation funding is really driving the bulk of it.
The most prevalent cause of loss in your book is resident falls, accounting for over 45% of claims. What are some of
the things that you recommend from a risk management point of view to prevent falls? Lynette Perkins: It’s really a multifaceted approach. First and foremost, delve into the root cause of that fall. That begins with the fall risk assessment. So, it’s identifying the fall risk to begin with, implementing person-centered, resident-centered, individualized fall risk interventions, assessing those for effectiveness, and maybe changing those … and really diving into what’s the root cause of the fall. Look at the physical environment, look at a medication regimen. Maybe there’s been an overall decline and we need to reassess the fall risk. Take a multifaceted approach, and it must be an individualized approach as well, which supports the regulatory requirements. … It starts all the way from the interviewing process to
Dennis Cook
Lynette Perkins
onboarding, making sure that all staff, even temporary staff, go through an onboarding process that emphasizes the facility’s policies around fall management, and safety in general, including abuse or neglect prevention. And there must be annual re-education for the existing staff, and in between there, you have to have a mechanism for auditing and monitoring to help mitigate risk and maintain that culture of safety.
How do you look at safety from an underwriting perspective?
Perkins: We, of course, look at publicly reported data for nursing homes, we have survey reports readily available for us. If there is a concerning survey finding, we may ask for
a policy or a process around that finding to make sure that whatever the deficiency was or the incident that occurred that they have implemented a quality assurance and process improvement program, which is an essential part of any senior living facility—having the ability to review quality indicators and outcomes and then make changes based on those. … We do weigh very heavily on the quality and reputational findings as part of our research.
Some senior care facilities may be experiencing added pressure as changes to federal Medicaid and/or Medicare funding evolve. How do reimbursement concerns affect risk?
Cook: We pay close attention to
the financials of facilities and how reimbursement is coming in as part of the underwriting process, especially over the last few years because [facility] retentions have been increasing. We have to pay close attention whether a facility or the operator can take on and satisfy the deductible, or SIR [self-insured retention], that they may take on. We are very careful about that because getting that reimbursement from the facility or operator for the retention can be a difficult process. There’s a lot of bankruptcies and receiverships in this space, and that comes because they’re relying on the government for their reimbursement, and it doesn’t always come in a timely fashion.
Any advice for agents and brokers when approaching a market for a senior care facility risk?
Cook: My first piece of advice is always to build a relationship with the market. Introduce your client, the facility operators, so that we get a better understanding. It’s hard to underwrite from just applications and what you get online. When you talk to clients and get to know them and hear their strategic plans and where they can use help, that helps in the underwriting process. … And if we can sit down with the client and hear what they want to do from a risk management perspective, then we can help in building out a strategy that helps the facility and provides residents with a better quality of life.
GOT RISK?
LET A WSIA MEMBER HELP YOU MANAGE IT.
Some decisions are too precarious to take on alone; you need a partner to help you create the right solution for your client’s risk, while minimizing yours. And, it’s cost-effective.
A Conning, Inc. analysis concludes that wholesale distribution does not increase the cost to the insured. That’s a safe decision.
Idea Exchange: Home and Auto
Death and Insurance (Not Taxes): Part One
Death has been on my mind recently.
Partly for work reasons, but mostly for personal reasons.
By Christopher Boggs
Please understand that I’m neither morbid nor morose about death; I’m writing this from a pragmatic perspective.
No one likes to think about death, and even fewer talk about death. But death is a reality that cannot be perpetually avoided—regardless of the supplements taken, cardio done, or miracle cleanses endured.
Beyond life insurance, few consider the insurance implications of death.
A few months ago, my wife’s parents died in quick succession—13 days apart. As you might guess, this created a whirlwind of emotions and activity. And because of what I do, these events triggered questions around insurance—specifically homeowners and auto coverage.
Her parents had a house, personal property, automobiles, and land. Although
they were both gone, the exposures to property loss and liability claims didn’t die with them. The house and personal property were subject to the same property exposures; the land still had the potential to result in injury to third parties leading to charges of negligence; and the autos continued to present both liability and physical damage exposures.
Until ownership of these assets could be transferred either through probate or trust, these insurance exposures continued for the estate—and possibly the heirs.
How, if at all, are these continuing exposures managed by the deceased’s homeowners (HO) policy and personal auto policy (PAP)? Questions to consider include:
• Do the coverage forms extend coverage to anyone other than the deceased named insured(s)?
• Are there any potential coverage gaps?
Both the HO and the PAP address death and insurance protection, but each is unique in how they respond. In this two-
part series, we will review both policies in light of our prior two questions. Part one will address the homeowners policy. In the next issue of Insurance Journal, part two will address the personal auto policy
Homeowners Policy
Death and some of its insurance implications are addressed in the final paragraph of Insurance Services Office’s (ISO’s) Homeowners (HO) policy.
Paragraph G. within the Sections I and II Conditions expand or extend insured status following the death of named insureds. Coverage is not altered by this condition; who is covered following death is altered by this condition.
If the named insured or resident spouse (if not also a named insured) dies, Paragraph G.1. expands protection to include the deceased insured’s legal representative.
Protection extended to the legal representative is limited. The policy language extends protection to the legal representative to cover damage to property
and only premises liability.
Property is not defined within this condition. The presumption is that coverage extends to the real and personal property of the named insured(s) now under the care, custody, and control of the appointed legal representative.
Liability coverage is limited to premises liability. Premises is not defined within this condition-based grant or extension of coverage, but a reasonable assumption is that this premises liability extends only to those premises falling within the policy’s definition of “residence premises,” which includes the premises listed in the policy and all structures on that premises.
A potential coverage gap is created by this language. Note again that coverage is extended to the appointed legal representative. Appointment of a legal representative is not immediate. Several weeks may pass before a legal representative is appointed or approved.
How does the policy respond between the time of the named insured’s death and the appointment of the legal representative?
Is any property or liability loss covered during this period?
Paragraph G.2. manages this time period by expanding the definition of “insured” following death of a named insured or spouse (if not also a named insured) to include:
• A resident of the insured’s premises who already falls within the policy’s definition of “insured”; and
• Any person who has proper and temporary custody of the insured’s
property—until a legal representative is appointed.
Resident Insured
Any person who resides in the house and is otherwise defined as an “insured” by the policy retains status as an “insured” as long as: 1) the policy is in effect in the name of the deceased insured(s), and 2) the person lives in the house.
Residents who are granted insured status during the lifetime of the named insured(s) and continue protection as insureds under this condition include:
• Resident relatives regardless of age;
• Non-relative residents under 21 in the care of the named insured or a resident relative; and
• A former resident relative who moved out to attend school and is less than 24 years old.
Property and liability coverage otherwise provided by the policy is extended to these resident insureds as long as the policy is in force. But property coverage may be limited to the property owned by the resident insured—which may not include the real property.
Person(s) with Temporary Custody
Someone gains temporary custody of the named insured’s property upon death. But insured status is granted only to that person or those persons having proper custody of the named insured’s property. Proper is not defined in the form, so its application is subject to interpretation.
A reasonable interpretation of proper
custody likely limits protection to a person or persons who are related to or have customarily cared for the named insured. Many times, this is the same person who is ultimately appointed the legal representative, but that may not always be the case.
Note that coverage for this extended insured is limited to only property losses. No liability coverage is extended to these temporary caretakers.
HO Conclusion
ISO’s HO policy appears to adequately address the various homeowners’ exposures still existing following the death of named insureds, at least to the point where other coverage arrangements can be made.
Carrier underwriting guidelines, estate plans (such as trusts), and other external factors may or will ultimately affect coverage placement, but short-term insurance issues seem reasonably managed by the HO coverage form.
In the next issue of Insurance Journal, part two of this two-part series will address how a personal auto policy may respond after the death of a named insured.
Boggs is president of Boggs Risk & Insurance Consulting (BRIC). During his nearly three-and-ahalf-decade insurance career, Boggs has authored over 2,000 insurance and risk management-related articles and written 15 books on insurance and risk management. His professional background includes work as a risk management consultant, loss control representative, insurance producer, claims manager, journalist and columnist, quality assurance specialist, and insurance coverage product manager.
Idea Exchange: Claims
From Oily Rags to a Break Room Microwave: Combatting Overlooked Risks in High-Severity Industries
While the risks in a highseverity industry may seem apparent, it is the small details that can lead to the most disastrous losses when they are overlooked. For brokers serving high-severity niches, recognizing and addressing the easily overlooked risk exposures is critical to effective risk management.
By Sean T. Briscoe
At Pennsylvania Lumbermens Mutual Insurance Company (PLM), we’ve seen countless high-cost losses that stemmed from seemingly small risk exposures. Let’s take a look at a few types of claims we have seen recently that could have been prevented with better attention to risk mitigation.
Oily Rag Explosions. Improperly storing oily rags remains one of the most destructive and avoidable risks in lumber operations. Oily rags, whether used in wood finishing operations, on heavy machinery, or for cleaning up, can spontaneously combust. If such rags are not safely stored, they can spread fires throughout a facility—especially with sawdust and other flammable material nearby.
Storing oily rags in UL 300-certified containers will contain any combustion and prevent the spread of fires. This is a fairly simple solution that only costs about $75 to $150.
Break Room Blazes. While break rooms easily can be overlooked in risk assessments, aging appliances have been the cause of million-dollar losses for lumber businesses. It could be a humming refrigerator that sets fire over the weekend or an internal wiring failure in an old microwave that sparks overnight. When small appliances are neglected, they can become major liabilities.
Appliances that are outdated or show signs of malfunctioning should be replaced.
‘Every level of the organization, starting with leadership, should be trained on the impact of daily safety concerns and how to prevent costly problems, particularly in high-severity industries.’
When appliances are not being used, they should be unplugged at the end of the day. One lumber business we spoke to had all their appliances plugged into outlets that were connected to a switch. That way, the last person to leave could cut power to all the appliances, except for the refrigerator, by turning the switch off.
Electrical Infernos. Makeshift electrical setups are another common contributor to large losses. Too often, lumber businesses rely on the long-term use of extension cords and overloaded surge protectors instead of seeking out safe, permanent solutions.
Although these setups may seem harmless, they have been the cause of disastrous fires in lumber businesses. At PLM, we advise against using extension cords or surge protectors as a permanent power source, suggesting insureds hire a certified electrician to install additional outlets if needed.
Building a Culture of Safety
Consistent, intentional housekeeping is the best way to prevent such small concerns from turning into disastrous outcomes and promoting a culture of proactive safety. When employees do not fully understand risks such as stacked oily rags, improvised electrical setups, and outdated break room appliances, it is easy to ignore the humming refrigerator or the frayed outlet strip. Every level of the organization, starting with leadership, should be trained on the impact of daily safety concerns and how to prevent costly problems, particularly in high-severity industries.
A high-severity business’s safety plan should include these small but impactful risks. When documented and discussed regularly, team members will better understand what is at stake and be equipped with tangible, effective tools to address the business’s risks.
Break room policies, electrical equipment inspections, and maintenance standards should be outlined in a formal safety plan and reviewed on a regular basis. Incorporating these items into training and safety briefings ensures they
are easily accessible and not forgotten or overlooked.
Broker’s Role in Raising Awareness
While some companies are highly safety-conscious, others adopt a more reactive “we’ll get to it later” mentality. Insurance brokers have an opportunity to highlight the often-overlooked risks to insureds before a claim occurs.
Brokers can emphasize the potential impacts of a claim by sharing examples of claims resulting from preventable issues. Explaining how the business was impacted in terms of interruption and costs associated can help them view these risks as a business continuity concern. If a business is unable to fulfill commitments or bring in new business because of a claim, customers may seek out a competitor. A fire may not just damage a facility; it can cost a business in terms of market share.
A specialty insurer who understands the nuanced risks high-severity businesses
face can be an invaluable resource in educating insureds. For example, at PLM, our close familiarity with wood-related operations means we are well-versed in how seemingly minor issues, like break room appliances or oily rag disposal, can result in catastrophic outcomes.
In high-severity businesses, the most dangerous exposures aren’t always the ones that seem obvious. Oily rags, aging kitchen appliances, and overloaded outlets may seem like mundane concerns, but they’re capable of burning down a business. For brokers, educating clients on these exposures is essential. Because once the fire starts in high-severity niche business, the damage has likely already been done.
Briscoe is the vice president of loss control at Pennsylvania Lumbermens Mutual Insurance Company (PLM). PLM is the nation’s oldest and largest mutual insurance company dedicated to the wood products, lumber and building materials industry.
Idea Exchange: The Competitive Advantage
Mirror Tests and Absolute Exclusions
Independent insurance
By Chris Burand
agents are facing considerable and relatively new errors and omissions (E&O) exposures, as well as growing exposures from long-time variables. When speaking to audiences, I’ve found a large proportion of agency executives and personnel are unaware of these increasing exposures.
The hard market is exacerbating the situation. Hard markets cause a significantly higher percentage of policies to be moved from carrier A to carrier B at any given renewal. The E&O standard of care most applicable in this situation (standards vary by state and the following is fact specific, so do not consider this legal advice) is the Mirror Test.
The Mirror Test is used to check whether the new policy with the new carrier mirrors the expiring policy. If not, it is the agent’s responsibility to advise the insured of the coverages that are different, especially the coverages lost. I’ll repeat this: IT IS THE AGENT’S RESPONSIBILITY to notify, preferably in writing, of the coverages that are different and/or lost.
The case law on this subject is extensive, longstanding, and well-established. It does not matter if the policies are with admitted or surplus lines. It is the agent’s responsibility.
With surplus lines carriers, the Mirror Test also applies to renewals even if the policy renews with the same carrier. In surplus lines, no one generally must notify the insured of reductions in coverage at renewal—EXCEPT the retail agent. I know many retail agents rely on their broker or, in some cases, even their carrier to advise them if coverage is being reduced. That kind of relationship benefits the agent, but agents should never depend on that notification because no one has any legal responsibility to tell you they are reducing coverage.
The Mirror Test is arguably an impossible test to pass with a score of
100%, maybe not even 90%. Policy comparison is too complex and too time-consuming to be perfect, especially given today’s workloads. At the least, agencies need to be able to demonstrate they made a good faith effort, even if they are not perfect.
Absolute Exclusions
One, unfortunately, great example of why this is so difficult involves what are known as “absolute exclusions.” These exclusions are challenging to identify and understand. The use of absolute exclusions by carriers varies significantly, making it difficult to compare one form to another. Furthermore, these exclusions border, if not cross, the line of what might be considered unethical. The vast majority of people I know in this industry are not searching for policy language that contains unethical clauses. This makes it less likely they’ll find these exclusions.
In general, absolute exclusions are defense coverage exclusions. An example might be a financial auditor hired to investigate a company’s accounting. At some point during or following their work, the company experiences a cyber event, and all the company’s vendors are sued.
As a vendor, the financial auditor is sued for failing to identify the company’s cyber weaknesses. This is a ridiculous suit, but the auditor must still respond to it. When they respond, they notify their insurance carrier. The carrier denies any coverage. After all, the auditor had nothing to do with cyber, so there is no liability and no
claim. But the auditor needs legal defense. The absolute exclusion, however, states that because cyber auditing is not one of the financial auditor’s professions, they have no defense coverage.
In other words, the auditor only has defense coverage for the specific professional services provided and nothing else. That “nothing else” is one big gap. I recently read another case involving pollution. A dry cleaner was in a strip mall. A pollution claim was filed against the cleaners, and evidently, they did not have sufficient coverage to satisfy the plaintiffs. The plaintiffs then sued all the other stores in the strip mall and the strip mall owner for causing the dry cleaner to
pollute. When a neighboring store filed a claim, the carrier denied it. There was no pollution coverage since the insured did not have any business activities that would pollute anything. The insured did not need actual pollution coverage, but they required defense coverage for allegations of pollution.
These are relatively simple examples in terms of absolute exclusions. Absolute exclusions are significant in agency E&O policies. The number of such exclusions varies between maybe zero and 14, according to Fred Fisher (and for everyone who wants to know more about absolute exclusions, read his deep analysis in the white papers he published at IRMI and/
or listen to his presentations at www. ijacademy.com on Insurance Journal’s Academy of Insurance). Some of these absolute exclusions are more complex.
One popular agent’s E&O policy has an absolute exclusion for criminal acts. At first, this looks innocent. After all, what policy provides coverage for criminal acts (other than some extremely well-written cyber policies that recognized the idiocy of how cybercrime laws have been written)? The form states that coverage is excluded for criminal acts “based upon, arising out of, or in any way related to, directly or indirectly, any willful or criminal violation of any statute, rule, or law.”
The problem from the agent’s perspec-
tive is this: The exclusion is not limited to the agent’s acts. For example, if an agent’s client has a claim for a criminal act and the agent did not offer the client such coverage, resulting in an E&O claim against the agent, the agent would likely NOT be covered.
In other words, the absolute exclusion is not because the agent committed a crime but potentially because a client committed a crime, or even when the clients’ own customer is the perpetrator!
Additionally, as a side note, violating a rule is not always a true criminal act; therefore, this is an overly broad exclusion.
In these more complex situations, which often exist with the ERISA, Securities, Employment Practices, and various cyber exclusions, the issue is often where the agent could have sold the insured a policy that covered their actions but didn’t.
Instead, the agent failed to secure such coverage, which would then result in an E&O claim. In these cases, the agent wouldn’t have any coverage because their insured’s underlying actions are effectively excluded. The only protection for agents is to sell the client the coverage they need, so they do not incur an E&O claim.
Carriers seem to be inserting more and more exclusions that are difficult to notice, let alone explain, making the importance of the Mirror Test grow even more critical. The most common absolute exclusions can be found in professional liability and cyber forms, but they may also be creeping into other forms. These are extremely important exclusions to identify, address, and discuss with clients when moving from one form to another.
Burand is the founder and owner of Burand & Associates LLC based in Pueblo, Colo. Phone: 719-4853868. E-mail: chris@burand-associates.com.
Idea Exchange: Is It Covered?
Logic & Language and Forms & Facts Random Thoughts About Certificates of Insurance and Related Topics
The contracts your insureds enter into often create an additional workload for your staff, as well as an increased opportunity for agency errors and omissions (E&O) claims and lawsuits from both your customers and their business partners. On October 9, I’ll be presenting a webinar for Insurance Journal’s Academy of Insurance called “Forward Into The Past: Certificates of Insurance, Additional Insureds, and Other Contractual Risk Transfer Issues.”
This webinar examines the issues and disputes that invariably arise from your customers’ contractual promises and obligations. By providing scores of real-life examples, emphasis will be placed on how to recognize the issues, understand their potential impact on all parties, how courts are interpreting these controversies, and how to respond to claims and suits arising from the issues. I hope you’ll consider registering for this program.
By Bill Wilson
Since mentioning on LinkedIn a couple of months ago that this webinar was in the planning stages, I’ve been inundated with questions that would be of interest to webinar participants. These inquiries form the basis for this month’s column. The webinar will be more structured and focused, but in the meantime, let me address some random thoughts that have come up while piecing together the webinar content.
Forward Into The Past
To register for the Academy of Insurance webinar, Forward Into The Past: Certificates of Insurance, Additional Insureds, and Other Contractual Risk Transfer Issues, visit: https://bit.ly/4lR1slq]
Belts and Suspenders
A business partner potentially can be covered under someone else’s CGL policy as an indemnitee and/or an additional insured (AI). I find that many agents do not understand the distinction or the ramifications of this type of “belt and suspenders” approach that reduces the risk of there not being coverage.
For example, under an ISO AI form, the AI is not covered for its sole negligence, but defense is provided outside of policy limits. On the other hand, as an indemnitee under any available contractual liability coverage from another’s ISO CGL policy, the indemnitee may be covered for its sole negligence, but defense costs are included within the policy limits.
An analogy might be renting a car. In most instances, I usually recommend buying the rental company’s loss damage waiver even though the renter has auto physical damage coverage. Each of these approaches cover something the other doesn’t. Belt and suspenders.
Dealing With Onerous COI Requests
The first step in addressing COI requests that are inappropriate, impossible, and/or illegal is recognizing the ones that are inappropriate, impossible, and/or illegal. Keep in mind that there is usually no downside to the requestor asking for specific language on a COI, however outlandish or in conflict with policy language, unless the state has a law, regulation, or DOI directive
prohibiting this practice.
It is imperative that agency staff be able to identify such language, understand why it shouldn’t be included on the COI, and explain why to the requestor. In addition, the agency should actively engage in educating customers about how to negotiate such requests from the contracts they review.
What Can/Should Be Entered in the ACORD 25 ‘Description of Operations’ Field?
Rule #1 here is to limit any verbiage at all in this field or any kind of attachments or supplements to the COI. Needless to say, that’s easier said than done, but many states now have legal limitations on what
can be said on a COI—especially information that conflicts with the coverages spelled out in the policy for which the COI is issued.
While the October 9 webinar will include scores of examples of improper COI language, the bottom line is that you can say just about anything on a COI that isn’t illegal, a misrepresentation of policy terms, or a violation of an agent’s authority. In fact, you can put language on a COI that IS illegal…if you’re interested in a career working in a prison laundry.
Should
Agents Send Copies of COIs to Insurers?
In a word, yes. There is case law (e.g., Marlin v. Wetzel and Erie v. National Grange) that supports this practice in the event there is an E&O claim against the agency or insurer. And there is value to the insurer from the standpoint of quality controlling the representations made by their agents to others, in many cases in violation of agency/company agreements, if not state law.
I have suggested to insurers for years that they review COIs being issued by their agents. In many cases, they will find contract compliance statements and assertions made on COIs that potentially create liabilities for themselves, agents, and insureds that wouldn’t otherwise exist.
Should Agents Send Copies of AI Endorsements or Other Policy Forms to AIs and Others?
There is case law (e.g., Brooks Brown Ins. Agency v. Harden) that supports the premise that “an insured has a duty to take certain steps for its own protection such as reading their policies, certificates of insurance, or any cancellation notice in their possession.”
Instead of trying to paraphrase policy language or use language on a COI that arguably conflicts with what the policy says, with the named insured’s permission, it is usually better to simply provide a copy of the relevant insurance contract language.
This is especially true given that all AI endorsements are not created equal. In
addition to the handful of industry-standard AI forms promulgated by ISO, there are many dozens—probably hundreds—of proprietary AI endorsements that differ dramatically from ISO forms.
Admittedly, this can be difficult to negotiate given that many AIs are more resistant to receiving policy forms than insurers are in receiving COIs.
What Are the Liability Implications of Adding AIs and Issuing COIs?
While being added as an AI to someone else’s policy has its advantages, it’s not always a good thing. If your insured has a big, beautiful insurance policy of their own, why would they want coverage under someone else’s policy to be primary where they may have little control over the resolution of the claim?
In addition, sometimes being an AI on a policy may result in a lack of coverage for a claim under specific facts and circumstances of the claim. I’ve blogged about this issue before.
One of the excuses made for not being vigilant about limiting information on a COI rests on the premise that a COI with disclaimers can’t override the policy itself. So, even if the information provided is wrong, the policy still governs. Unfortunately, there is ample case law (e.g., under the principle of detrimental reliance or promissory estoppel) that says otherwise.
These are just a few of the issues raised in response to the announcement of the October 9 Academy of Insurance webinar. These issues are not new, but they may be new to many in the industry today. It seems we have a new generation of agents, underwriters, risk managers, contractors, and business owners who need to move forward into the past…and that’s the goal of this upcoming webinar. Hope to see you there.
Wilson, CPCU, ARM, AIM, AAM is the founder and CEO of InsuranceCommentary.com and the author of six books, including the Amazon 4.8 star “When Words Collide…Resolving Insurance Coverage and Claims Disputes,” which BookAuthority ranks as the #1 insurance book of all time. He can be reached at Bill@InsuranceCommentary.com.
Idea Exchange: The Marketing Connection
Adapting to the Short Attention Span
How to Create Bite-Sized, Impactful Content for Insurance Audiences
Attention spans are shrinking across every industry, and insurance faces a unique challenge: explaining complex products in an age of instant gratification.
By Anita Nevins
When potential customers abandon your presentations after one slide or skip your comprehensive policy guides, they’re not rejecting insurance itself—they’re rejecting information overload. The solution lies in how you package your message.
The Content Consumption Shift
Digital consumption patterns show that people prefer “bite-sized” content formats, yet insurance content often requires deep focus to understand complex products, regulations, and benefits. This creates a mismatch between how we communicate and how our audience consumes information.
• Shorter content formats consistently see higher engagement rates.
• Visual content is processed significantly faster than text-only formats.
• Video content under 60 seconds performs better than longer formats.
The challenge isn’t dumbing down sophisticated insurance concepts. It’s making them accessible without losing their substance.
Start with the Core Message
Before creating any content format, identify your most important takeaway:
• What’s the one thing prospects must remember?
• What action do you want them to take?
• How does this solve their immediate problem?
Here’s an example of how to adjust your messaging:
coverage for data breaches, including notification costs, credit monitoring, regulatory fines, and business interruption losses, with limits up to $50 million.”
• Bite-sized: “Cyberattack? We cover notification costs, monitoring, fines, lost revenue. Up to $50M protection.”
Consider structuring content using an inverted pyramid. This ensures even viewers who drop off early still receive your key message:
1. Hook (first 3 seconds): The problem or benefit
2. Core value (next 5 seconds): Your solution
3. Supporting details (remaining time): Proof points and next steps
Keep It Scannable
• Use bold numbers for statistics.
• Limit text blocks to 15 words maximum.
• Employ consistent color coding (red for risks, green for benefits).
• Include plenty of white space to prevent overwhelming viewers.
Effective Video Formats for Insurance
• Explainer videos: Break down complex coverage types using simple animations. A 60-second video explaining umbrella insurance with visual metaphors outperforms a 10-page brochure.
• Client testimonials: Authentic, 30-second client testimonials focusing on specific outcomes.
• Behind-the-scenes content: Agents explaining policies, underwriters at work, or claims adjusters helping clients.
Social Media Optimization for Insurance
Organize your social media content within these categories:
• Educational: Quick insurance tips and explainers
• News: Commentary on industry developments
• Social proof: Client success stories and testimonials
• Behind-the-scenes: Humanizing your company
• Community: Engaging with industry discussions
Implementation Strategy
1. Audit existing long-form content. Identify 10 of your top current content pieces (white papers, blogs, special reports, etc.) and pull out key messages from each.
2. Create bite-sized versions. Transform one piece into three formats: infographic, short video, and social media series. Test different messaging approaches and monitor engagement patterns.
3. Optimize and scale. Double down on your highest-performing formats. Create templates for consistent production and establish a content calendar for regular publication. Then track these metrics to gauge effectiveness:
• Engagement rate: Comments, shares, and saves
• Completion rates: For videos and multipart content
• Click-through rates: From content to your website or landing pages
• Lead quality: Are shorter content pieces attracting qualified prospects?
Catering to shorter attention spans doesn’t mean sacrificing the depth that insurance products require. It means respecting your audience’s time while delivering maximum value.
Nevins is the Founder and Co-CEO of Direct Connection Advertising & Marketing. She manages the company and is heavily involved in strategy and planning for the agency’s clients. Website: directconnectionusa.com.
INSURANCE INDUSTRY CHARITABLE FOUNDATION
Helping communities and enriching lives, together.
Insurance Industry Charitable Foundation (IICF) is a unique nonprofit that unites the collective strengths of the insurance industry to help communities and enrich lives through grants, volunteer service and leadership. IICF has awarded more than $50 million in community grants and contributed $12 million in volunteer service value over the past 30+ years.
Join us for the IICF Month of Giving Register as a team or individual volunteer and find projects near you at: volunteer.iicf.org
Since 1998, IICF has hosted the largest ongoing volunteer initiative in the insurance industry. This tradition continues with our month-long celebration of industry volunteerism in October.
IICF also offers year-round volunteering for sustained community involvement and impact. Join with thousands of your insurance industry colleagues as we come together and give back to our neighbors in need.
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Cyber Insurance for SMBs
Market Detail: Expand offerings with cyber insurance that’s smart, seamless, and tailored for SMBs. Cyber insurance can feel complex; K2 Cyber makes it easy with a straightforward application process that saves time and effort, making it easy to bind policies quickly in three minutes or less. Full cyber protection that’s as easy to sell as a BOP endorsement, offering robust coverage without the usual complexities. Policies include AI-driven protections, proven to prevent claims by enforcing risk prevention and readiness measures. Protect clients from business and personal cyber threats—no separate policies needed.
K2 Cyber is the first to fully integrate both into one policy. Available in all 50 states with coverage from top-rated carriers. Designed for clients generating up to $100 million in revenue, across most industries (excluding adult entertainment, gambling, and crypto), with limits up to $3 million. Cyber insurance is the fastest-growing insurance segment, and K2 Cyber gives you the tools to tap into this booming market. Has pen.
Available Limits: Up to $3 million.
Carrier: Non-admitted.
States: All 50 states and the District of Columbia.
Contact: Ray Lynch, ray@k2cyber.ai
Sexual Abuse & Molestation
Market Detail: PPIB offers stand-alone Sexual Abuse and Molestation (SAM) coverage, purpose-built to address the evolving liability exposures faced by businesses that interact with clients, customers, or third parties. With flexible limits, broad protection, and a streamlined application process, this policy is designed to respond to the reputational and financial risks that can arise, even from allegations alone. Program benefits include up to $1 million/ $3 million limits, low minimum premiums, excess liability, and coverages available in all states. Covered industries include independent contractors, construction, transportation, education, financial/ business offices, health clubs, day care centers, hotels/resorts, family, entertainment, manufacturers/distributors, retail stores, salons/spa, health care, sports
clubs, non-profit organizations, and more. Bringing added value with ePlace Solutions included with all policies: training for employees and management, recruiting and hiring tools, employee toolbox—24/7 access to SML prevention tools and expert SML advice to help prevent SML claims. Has pen.
Available Limits: $1 million/$3 million. Carrier: Professional Program Insurance Brokerage (PPIB).
States: All 50 states and the District of Columbia.
Contact: Susan Etter, info@ppibcorp.com, 415-475-4300
Longleaf Forestry Insurance Logging Equipment Program
Market Detail: Over 30 years of experience in the logging industry. Offering inland marine coverage for logging and forestry-related clients. Broad appetite. Fast quotes. Ultra Competitive Pricing. A carrier.
Inland marine program highlights: high in-house underwriting authority, earthquake and flood included, valuation at actual cash value, 90% co-insurance, minimum premium $500, broad underwriting appetite, 30-day coverage for newly purchased equipment, and ultra-competitive rates.
Available Limits: Not disclosed. Carrier: Lloyd’s of London, rated A by AM Best. Non-admitted.
New York, North Carolina, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Vermont, Virginia, Washington, West Virginia, and Wisconsin. Contact: Jeremiah O’Donovan, jeremiah. odonovan@specialtymarketmanagers.com, 877-298-1318
Firearms Business Insurance
Market Detail: Property and commercial general liability insurance for firearms dealers, wholesalers, ranges, trap and skeet fields, sporting clays, clubs, gunsmiths, ammunition manufacturers, reloaders, instructors, firearms manufacturers, and importers. The company has over 40 years of experience insuring the firearms industry. Endorsed by the NSSF. Has pen. Available Limits: $1,000 minimum premium; $10 million maximum premium.
States: All 50 states and the District of Columbia.
Contact: Joseph Chiarello, info@jcinsco. com, 908-352-4444
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Idea Exchange: Technology
Next-Gen Insurance: Powered by AI
Welcome to the next generation of insurance. Our industry stands on the cusp of an exhilarating technological revolution, primarily driven by artificial intelligence. Embracing next-generation technology is no longer a choice but a necessity for success.
By Anupam Gupta
Insurance-specific AI is the key to unlocking new possibilities, driving innovation, and creating lasting value for
agencies and their clients. It is ushering in a new era that promises a more efficient, responsive, and customer-centric insurance ecosystem, perfectly attuned to the needs of today’s digital-savvy consumers and insurance professionals. Three pivotal factors will enable agencies to succeed in this next generation of insurance: data, the insurance industry talent gap, and real-time connectivity to create seamless experiences.
Let’s explore those factors and how integrating AI will provide your agency with a clear road map to not only survive but
thrive in this new generation of insurance.
The Data Gold Rush
In today’s dynamic landscape, data is the new currency—because the power of AI depends entirely on the quality of the data it learns from. The good news is that your agency is ripe with data. But how do you gather it and make it usable?
Modern technology excels at making data more accessible. Agentic AI platforms can find and interpret both structured and unstructured data across systems, documents, and communications. By using AI-powered tools, your agency can automatically extract relevant information from policy documents, emails, PDFs, and legacy databases—much of which was previously inaccessible or time-consuming to sort through. This accelerates data discovery and feeds automated workflows that reduce the need for manual data entry. Your agency will see greater operational efficiency, fewer errors, and more time for agents to focus on high-value client interactions and strategic decision-making.
New Tools, New Blood
The insurance industry faces a significant talent gap, with many seasoned professionals nearing retirement. According to Accenture, less than 25% of the insurance industry workforce is under the age of 35, and within the next 15 years, approximately half of the workforce is expected to retire. Agencies need to find innovative ways to achieve more with fewer staff members while actively attracting new talent.
Technology serves as a powerful magnet for the next generation of insurance professionals. Millennials and Gen Zers have grown up with technology deeply ingrained into their personal lives and expect it to be integrated into their professional lives as well. They recognize it as key to growth in any industry and are drawn to forward-looking companies. Your agency will find it significantly easier to recruit these up-and-coming generations if you integrate technology into daily operations.
So, what kind of technology should you invest in to attract this new talent? These generations desire digital, connected experiences, making AI-integrated management systems with open architecture highly attractive. Such systems facilitate seamless data flow between different platforms and automate workflows, which is exactly what modern professionals expect. Integrated AI-driven training can even upskill and onboard new team members in half the time.
Beyond attracting new talent, this technology also profoundly benefits your existing talent by removing tedium from workflows, allowing them to accomplish more with less effort and concentrate on higher-value tasks.
‘Technology serves as a powerful magnet for the next generation of insurance professionals.’
Seamlessly Connected
The insurance industry has often been characterized by its inefficiency. Workflows have been largely paper-driven, time-consuming, and cumbersome, frequently requiring manual tasks across multiple systems, websites, portals, and physical forms. Transforming this landscape with automated workflows that span your agency, clients, and insurer partners is critical to your business success. But it requires connectivity between your technology platforms. This strategic shift toward connected, intelligent workflows
allow agencies to become smarter about capacity planning and to identify new opportunities to expand their books of business. Ultimately, this modernization results in a coherent system and streamlined workflows, which in turn creates a truly seamless and exceptional experience for all stakeholders involved.
Real-time connectivity, powered by modern technology, simplifies, accelerates, and enhances the insurance experience for prospects, clients, and internal teams alike. The AI-integrated management system with open architecture we talked about above, for example, allows you to connect to various platforms to achieve this. Consider AI-powered renewals and prospecting solutions that enrich commercial risk profiles by drawing on thousands of publicly available sources. These solutions can identify coverage gaps within existing policies and then deliver corresponding market placement insights to help teams submit business to carriers most likely to fit the customer’s needs. Producers and account managers can easily target new commercial lines prospects and identify cross-sell and upsell opportunities without time-consuming manual research.
Furthermore, AI integrated into your accounting workflows allows your accounting and finance staff to reconcile payments much more quickly. You can simply upload statements and leverage AI to extract data to match and reconcile policies and plans in your management system, creating step-change efficiency value for both direct bill and agency bill revenue processes.
Thriving with AI
These transformative forces of the next generation of insurance share one fundamental common denominator: modern technology. Next-generation technology is poised to unlock new value for your agency by equipping your people with better experiences, providing enhanced connectivity to your clients and partners, and equipping your team with the information and insights they need to work smarter. Your agency is sure to thrive when you embrace AI!
Gupta is the chief product officer at Applied Systems.
Closing Quote
A Wake-Up Call from Hawaii Why We Must Invest in Pre-Disaster Preparation
By Monica Ningen
‘We
need to flip that script and shift from a mindset of recovery to one of readiness.’
Iwas in Hawaii on vacation with my family when the tsunami alert came. It was issued following a powerful offshore earthquake—one of those moments where the routine hum of daily life is interrupted by sirens, alerts, and a sudden, sharp awareness of nature’s force. For many on the island, it was a familiar but unsettling drill. For me, it was a moment of clarity.
The tsunami never made landfall, thankfully. But the experience underscored something I’ve long believed, and something our industry has been sounding the alarm on for years: disasters are coming faster, harder, and more frequently. And too often, we wait for them to strike before we act.
Swiss Re Institute’s latest data supports what many of us in the reinsurance industry are seeing on the ground. In the first half of 2025 alone, insured losses from natural catastro-
phes totaled $80 billion—nearly double the 10-year average. Wildfires, like the ones that tore through Los Angeles County earlier this year, caused an unprecedented $40 billion in insured losses, making it the largest single wildfire loss on record. Severe thunderstorms added another $31 billion. And all of this happened before the peak of hurricane season. These figures are more than just statistics. They represent families displaced, businesses lost, and communities forced to start over. In the face of this growing threat, pre-disaster preparation and mitigation are no longer optional. They are imperative.
Be Prepared
In my role at Swiss Re, I’ve seen the cost of reacting versus the value of preparing. Investing in mitigation—whether it’s retrofitting homes, reinforcing infrastructure, or implementing effective land-use planning—is not only cost-effective, but it also saves lives. Studies consistently show that every dollar spent on prevention returns many times its value in reduced damages and faster recovery. Flood defenses, for example, can be up to 10 times more cost-effective than rebuilding after a major event. Yet, time and again, disaster funding follows the news cycle. Resources are poured into communities after the damage is done, while the ongoing work of preparation fails to capture headlines and secure necessary levels of investment. We need to flip that script and shift from a
mindset of recovery to one of readiness.
Industry’s Role
This is where the insurance and reinsurance industries can play a transformative role. Beyond providing capital and absorbing risk, we bring deep expertise in modeling, forecasting, and scenario planning. We can help communities understand their risk exposure and prioritize where mitigation can make the greatest difference. But we can’t do it alone. Governments must act with urgency to modernize infrastructure, enforce updated building codes, and discourage development in high-risk areas. Communities must advocate for safer planning and make investments that may not pay off today but will ensure stability tomorrow. And as individuals, we must take preparedness seriously— because the risks are real and growing.
While in Hawaii, I was reminded how fragile—and how precious—our sense of safety is. A tsunami alert strips away complacency and leaves you face-to-face with the reality of risk. That moment reinforced my conviction that preparedness isn’t just a policy priority; it’s a human one. We don’t have to resign ourselves to staggering losses each year. We have the tools, knowledge, and partnerships to change the trajectory. But we must act before the next alert, not after.
Ningen is the CEO, Property & Casualty Reinsurance US at Swiss Re.
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Luke Donald knows the game has evolved. As a winning Ryder Cup Captain, he chooses his players carefully.
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The Global Choice for Apex Underwriting Professionals.
Luke Donald Ryder Cup Captain, Team Europe 2023 & 2025 Former World Number One.
