Insurance Journal West 2026-03-23 by Insurance Journal

THE POWER OF

PARTNERSHIP

Brett J. Allen Insurance Agency owner Brett Allen and Smart Choice Virginia State Director Roger Gill

When you join the Smart Choice team, major league training and support is part of the no-fee signing bonus. This agency owner, and former college Division I pitcher, has taken the training he received and has turned it into a game-winning strategy. Brett quickly wrote over $1 million in premium through Smart Choice, was named 2025 Agent of the Year for VA and is on his way to scoring Leadership status – which means he will earn 100% commission.

“I attribute a lot of my success to the support I’ve received from Smart Choice. In the early days, I needed a lot of guidance, and I called my State Director and asked him how to get business on the books. Roger was ready for that question. In fact, he had an entire development plan ready for me! Growth comes easier with mentorship and guidance. As long as you listen to your trusted advisors, you’re going to be all right.”

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March 23, 2026 • Vol. 104 No. 4

Contents

News & Markets

Special Report

Idea Exchange

Buyer’s Market: Low Terrorism Insurance Pricing Despite Rising Instability

Meta Loses Insurance for Defense in Major Social Media Addiction Litigation

Study: AI May Be Tempering Insurer Hiring

Special Report: Restaurants & Bars: Liquor Sales, Risk Transfer & Other Trends

Special Report: A Tip on Vendors: Contractual Risk Transfer

Closer Look: Preparing for an AI Native Future

Closer Look: Carriers Using AI for Claims but Adoption Is Fragmented, Report Shows

6 Opening Note

4 | INSURANCE JOURNAL | MARCH 23, 2026

10 Figures

11 Declarations

Is It Covered?: The Additional Insured Illusion

US Terrorism and Political Violence Market Outlook: Capacity, Exposure and Emerging Threats

Minding Your Business: Business Planning in a Snap: Part Two

Rise of the Analytical Agent

Spotlight: Soft Market Hits Yachts, Boat World

Departments

Commercial and Private Pilot Disability Options

26 Business Moves

Closing Quote: It’s All in the Details: Contractual Clarity in the Lumber Industry

27 My New Markets

28 People

INSURANCEJOURNAL.COM

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Opening Note Write the Editor: awells@insurancejournal.com

Chairman of the Board Mark Wells | mwells@wellsmedia.com Chief Executive Officer Joshua Carlson | jcarlson@insurancejournal.com

Stressing Out Over the Right Risks

ADMINISTRATION / CIRCULATION

o you feel more stressed today than last year? More than half of U.S. business leaders, some 60%, report feeling “more stressed” than they were last year. Even so, 54% of those business leaders expect their business to survive and, better yet, thrive in 2026. That’s according to mutual insurer Sentry’s 2026 C-Suite Stress Index survey. Sentry’s survey of 1,250 business leaders revealed a significant disconnect between what risks business leaders worry about the most and the ones that could put their companies out of business in a single event. Executives named supply chain or logistics challenges (45%), economic pressures (44%), uncertainty around tariffs and trade (39%), rising employee healthcare costs (38%), and labor shortages (38%) as the biggest threats to their companies in 2026. While many executives are focused on perceived threats, many might be overlooking key risks that could close their businesses for good, Sentry found. Fewer than 1 in 5 (17%) executives included lawsuits among their top risks heading into 2026, despite 69% saying they believe that a single multi-million-dollar verdict would likely put their company out of business. More than two-thirds (67%) of the executives said recent increases in litigation and multi-million-dollar verdicts are a growing problem in their industry, while 66% view third-party litigation funding as a problem. Nearly all of those surveyed (93%) have seen their own companies impacted by lawsuits in the past five years, with about half reporting higher insurance premiums or rising legal costs directly related to litigation. Thirty-seven percent said they had to hire additional employees to manage litigation demands. Sentry noticed a similar disconnect when it comes to severe weather and other natural catastrophes. Half of the executives surveyed (50%) believe the next major weather event or natural catastrophe could force their company to close entirely, but only 32% put natural catastrophes among their top threats for 2026. “Increasingly, policyholders are making the connection between weather and business continuity,” said Brett Hoopingarner, national sales director – direct writer and life & annuities at Sentry. “Our policyholders are starting to look at whether new suppliers—and even competitors—can fulfill orders if they go down due to a major weather event. We also are seeing executives extend business income and expense coverage to 12-24 months rather than only 6-12 months to help them survive should a catastrophe hit.” Nearly all executives surveyed (98%) plan to re-evaluate their company’s insurance policies this year, while only 17% said they are fully confident their insurance coverage is adequate. This is where agents and brokers can help.

‘Increasingly, policyholders are making the connection between weather and business continuity.’

The Sentry Insurance Survey was conducted by Wakefield Research among 1,250 U.S. executives between Dec. 4 and Dec. 16, 2025, using an email invitation and an online survey. In order to participate in the study, respondents had to belong to an organization with at least 10 full-time employees and to be either the owner of the company or hold one of the following titles: CEO, CFO, or CRO (Chief Risk Officer). Andrea Wells

V.P. of Content

6 | INSURANCE JOURNAL | MARCH 23, 2026

Chief Financial Officer Terry Freeburg | tfreeburg@wellsmedia.com Circulation Manager Elizabeth Duffy | eduffy@wellsmedia.com Staff Accountant Sarah Kersbergen | skersbergen@wellsmedia.com

EDITORIAL

V.P. of Content Andrea Wells | awells@insurancejournal.com Executive Editor Emeritus Andrew Simpson | asimpson@wellsmedia.com National Editor Chad Hemenway | chemenway@insurancejournal.com Southeast Editor William Rabb | wrabb@insurancejournal.com South Central Editor/Midwest Editor Ezra Amacher | eamacher@insurancejournal.com West Editor Don Jergler | djergler@insurancejournal.com International Editor L.S. Howard | lhoward@insurancejournal.com Content Editor Allen Laman | alaman@wellsmedia.com Assistant Editors Jahna Jacobson | jjacobson@insurancejournal.com Kimberly Tallon | ktallon@carriermanagement.com Columnists & Contributors Contributors: Joseph Ferraro, John Kennealy, Kyle Rogers, Anurag Shah, Joshua Watson Columnists: Catherine Oak, Bill Wilson

SALES / MARKETING

Chief Marketing Officer Julie Tinney | jtinney@insurancejournal.com West Sales Dena Kaplan | dkaplan@insurancejournal.com Romeo Valdez | rvaldez@insurancejournal.com Kelly DeLaMora | kdelamora@wellsmedia.com South Central Sales Mindy Trammell | mtrammell@insurancejournal.com Southeast and East Sales (except for NY, PA, CT) Howard Simkin | hsimkin@insurancejournal.com Midwest Sales Lisa Whalen | (800) 897-9965 x180 East Sales (NY, PA and CT only) Dave Molchan | (800) 897-9965 x145 Advertising Coordinator Erin Burns | eburns@insurancejournal.com Insurance Markets Manager Kristine Honey | khoney@insurancejournal.com Sr. Sales & Marketing Coordinator Laura Roy | lroy@insurancejournal.com Marketing Director Derence Walk | dwalk@insurancejournal.com

DESIGN / WEB / VIDEO

Graphic Designer Chris Johnson Web Team Lead Josh Whitlow | jwhitlow@insurancejournal.com Ad Ops Specialist Jeff Cardrant | jcardrant@insurancejournal.com Web Developer Terrance Woest | twoest@wellsmedia.com Web Developer Jason Chipp | jchipp@wellsmedia.com Digital Content Manager Ashley Cochrane | acochrane@insurancejournal.com Videographer/Editor Ashley Waldrop | awaldrop@insurancejournal.com

ACADEMY OF INSURANCE

Director Patrick Wraight | pwraight@ijacademy.com Online Training Coordinator George Jack | gjack@ijacademy.com

SUBSCRIPTIONS:

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or visit ijmag.com/subscribe Insurance Journal, The National Property/Casualty Magazine (ISSN: 00204714) is published 18 times annually by Wells Media Group, Inc., 3570 Camino del Rio North, Suite 100, San Diego, CA 92108-1747. Periodicals Postage Paid at San Diego, CA and at additional mailing offices. SUBSCRIPTION RATES: $17.95 per copy, $27.95 per special issue copy, $195 per year in the U.S., $295 per year all other countries. DISCLAIMER: While the information in this publication is derived from sources believed reliable and is subject to reasonable care in preparation and editing, it is not intended to be legal, accounting, tax, technical or other professional advice. Readers are advised to consult competent professionals for application to their particular situation. Copyright 2026 Wells Media Group, Inc. All Rights Reserved. Content may not be photocopied, reproduced or redistributed without written permission. Insurance Journal is a publication of Wells Media Group, Inc. POSTMASTER: Send change of address form to Insurance Journal, Circulation Dept, PO Box 708, Northbrook, IL 60065-9967 ARTICLE REPRINTS: Contact (800) 897-9965 x125 or visit insurancejournal.com/reprints

News & Markets

Buyer’s Market: Low Terrorism Insurance Pricing Despite Rising Instability By Chad Hemenway

errorism insurance pricing in the U.S. is hovering at an all-time low—a surprising reality at a time when geopolitical tensions, domestic extremism, and global instability dominate headlines. It comes down to the age-old dynamic of supply and demand, according to Peter Bransden, head of crisis management, North America, at Willis. “Terrorism insurance has been a profitable line of business for insurers,” Bransden told Insurance Journal. “There has not been a market-moving loss in the U.S. in 25 years.” Bransden said U.S. standalone terrorism insurance capacity has increased to more than $2 billion, with additional support from London. Competition has intensified between emerging and incumbent insurers, and prices have decreased. According to WTW’s U.S. Terrorism Insurance Index, U.S. placements in the fourth quarter of 2025 saw an average price reduction of 10.4%. 8 | INSURANCE JOURNAL | MARCH 23, 2026

Fourteen insurers now operate in the U.S. terrorism insurance market, with over 25 individual underwriters dedicated to the class, said WTW. However, the pricing environment doesn’t necessarily reflect a decline in the threat. “Not all of the costs involved in mitigating or facing terrorism violence are being transferred in a traditional terrorism policy,” Bransden said. Traditionally, terrorism coverage is plugged into a physical-damage property policy, but the modern landscape has evolved beyond property damage to include human casualties, preparedness and response, liability, medical costs, and reputational exposures from attack sources such as civil commotion, riots, cyber, nuclear, biological, or radiological that may have been deemed esoteric or uninsurable. The profitability in the marketplace has allowed it to innovate to meet these risks, and clients are encouraged to used the favorable pricing environment to bolster terrorism and political violence coverage. Options in the marketplace do not

require a terroristic motivation, which can be used for active-shooter events, for example. “Don’t fall into the trap of just capturing the savings and thinking that it’s business as usual,” Bransden said. Risk managers should use the savings to buy coverage that reflects the threats of today, he added. Advanced analytics can help organizations better quantify exposure and tailor limits accordingly. “Make sure you’re not just transferring balance-sheet risk but are also utilizing the insurance market to bolster security preparedness and crisis response,” he said. Another factor shaping the conversation is the pending 2027 expiration of the federal Terrorism Risk Insurance Act (TRIA). While few in the industry expect TRIA to lapse—and Congress has already begun work on an extension—contingency planning is underway. Standalone capacity remains robust, and sunset clauses are available for long-term projects to address potential federal backstop changes, Bransden said.

The ‘Gray Zone’

Peter Bransden, head of crisis management, North America, at Willis, said recent developments in the Middle East heighten and complicate political violence risk that organizations face at home and abroad. “So long as the conflict continues and expands, organizations operating in the area will face increased vulnerability to loss,” he told Insurance Journal. “The political violence and terrorism market remains open, though we expect to see at least a short-term rating impact for exposures in and around the areas affected.” Complication may arise if there is an expansion of acts of ‘gray zone’ aggression. These attacks often do not fit within neatly defined covered (or excluded) perils in traditional insurance policies, Bransden said. “This is again why it is so important that organizations take advantage of the breadth of coverage available, ensuring they have protection (even if sub-limited) for ‘full political violence,’ to remove any post-loss ambiguity regarding what their policy will pay for.” INSURANCEJOURNAL.COM

Meta Loses Insurance for Defense in Major Social Media Addiction Litigation By Andrew G. Simpson

Delaware judge has ruled insurers do not have a duty to defend Meta Platforms in the thousands of lawsuits that allege its Facebook and Instagram platforms harm children. Superior Court Judge Sheldon K. Rennie ruled Meta’s insurance companies are not obligated to provide its defense because the allegations against the company describe deliberate and intentional acts rather than accidents or occurrences that would trigger coverage under the commercial general liability policies. The judge also found that Meta would not be prejudiced by a Delaware coverage ruling at this time. Thousands of suits have been filed on behalf of children who used Meta’s platforms, as well as by more than a thousand school districts and 43 states. The lawsuits have been consolidated into two actions in California. Known as the Social Media Litigation, the complaints allege Meta intentionally designed addictive algorithms and features on Instagram and Facebook that allegedly cause young users to suffer mental health issues, including anxiety, depression, and eating disorders. Hartford, Chubb, and more than 20 other insurers sought a declaration in Delaware, Meta’s state of incorporation, that they owe no duty to defend Meta in the Social Media Litigation. In Meta’s view, the design choices it made constituted accidents and are thus covered by its insurance because it did not intend to cause the alleged resulting harm, such as addiction or depression. However, insurers successfully argued that the complaints do not need to allege Meta intended to cause harm, just that Meta intended to engage in certain conduct, and the conduct resulted in harm. Because the harm allegedly flowed directly from deliberate design choices, the insurers argue the “accident” requirement of the insurance policies is not met. Meta asked that any ruling about insurINSURANCEJOURNAL.COM

ance coverage be dismissed or delayed until after the litigation is completed. It maintained that California law dictates coverage litigation must be stayed pending resolution of the underlying action when the coverage litigation turns on facts to be litigated in the underlying action. The insurers said California law does not mandate a stay in this case because the court is not making factual determinations regarding Meta’s intent, causality, or knowledge. Judge Rennie agreed with the insurers. “The conduct alleged in the Social Media Litigation—even when viewed through the lens of negligence—describes deliberate acts rather than accidents under the policies. Because the court’s determination regarding Meta’s intent is based strictly on the face of the underlying complaints, it does not “overlap” with the factual truth of the allegations to be litigated in California,” the judge ruled. The ruling applies only to the duty to defend, and not to indemnification, which could require discovery into the facts. Meta has 30 days to appeal the matter to the Delaware Supreme Court. Meta, which tried but failed to have the coverage case heard in California, has not yet responded to the decision. Insurance policyholder attorney Tae Andrews of the firm Calfee, Halter & Griswold LLP is disappointed but not surprised by the Delaware court ruling. “In short, this is nothing new but continues the Delaware state courts’ trend of hollowing out the duty-to-defend standard from what should be a broad standard into a much narrower and difficult one for policyholders,” Andrews, who was not involved the Meta case, told Insurance Journal. Andrews pointed to a 2022 opinion in which the Delaware Supreme Court held that Chubb insurers had no duty to defend the Rite Aid pharmacy against suits

brought by Ohio counties over the cost of responding to the opioid epidemic because the underlying actions only sought recovery of economic losses. For insurers, the ruling could be a major victory setting a precedent that claims like those in the social media addiction litigation do not trigger defense or indemnity coverage under standard policies. The court rejected Meta’s claim it would face potential prejudice in the underlying litigation if the ruling on defense coverage was not stayed. To the contrary, such a stay would prejudice the insurers, the court found. “An insurer’s duty to defend must be assessed at the outset of a case. Just as the insured is entitled to a prompt defense if coverage is possible, an insurer is entitled to a prompt exit when there is no potential for coverage. Delaying this determination through a stay would force insurers to fund a defense they do not legally owe,” the opinion added. “Insurers have accurately stated the analytical framework,” wrote Judge Rennie. “Under the relevant policies, the insurers’ duty to defend is triggered only by suits seeking damages caused by an ‘accident.’” Under Section 230 of the Communications Decency Act, internet companies are largely shielded from liability for material their users post to their sites. As part of their argument, the plaintiffs maintain the 1996 law does not shield the firms from responsibility for their designs and algorithms. MARCH 23, 2026 INSURANCE JOURNAL | 9

Figures

The sales increase seen by electric car charger provider ChargePoint Holdings Inc. in the last quarter of 2025, even as new EV sales fell nearly 40% compared to Q4 2024. There are now roughly 5.8 million electric cars on U.S. roads. With drivers increasingly relying on public charging, companies are racing to install more stations.

$138

$117

Million

The amount New York City paid last year to settle police misconduct lawsuits in cases ranging from the violent arrests of protesters in 2020 to bad police work that led to wrongful convictions in the 1980s.

The per-car amount some Louisiana drivers will receive from a State Farm dividend. The insurer will issue dividends to Louisiana drivers totaling $136 million following stronger-than-expected underwriting performances nationally. State Farm writes approximately 30% of the personal auto insurance market in Louisiana.

99% The increase in Kansas storm claim amounts in 2025 over 2023, with 82,000 claims totaling $879 million in insurance claims in 2025.

2,000 The approximate number of companies, including FedEx, Costco, and L’Oreal, that have sued for tariff refunds in the U.S. Court of International Trade, with more litigants likely. The Supreme Court ruled in February that the use of emergency tariffs exceeded President Donald Trump’s authority, and many businesses are now girding for a months- to years-long fight to get their money back.

10 | INSURANCE JOURNAL | MARCH 23, 2026

INSURANCEJOURNAL.COM

Declarations

Truck Vs. Train

“A tightening truckload market has the potential to support domestic intermodal volumes and pricing, particularly on shorter average length-of-haul routes where competition with over-the-road trucking is typically most intense.”

— BMO Capital Markets analyst Fadi Chamoun on the potential shift from truck to rail shipping. U.S. railroads are moving to recapture freight from truckers as tightening trucking capacity and rising road-haul rates bolster rail’s competitive position. Union Pacific Chief Financial Officer Jennifer Hamann recently told investors the industry leader expects about 75% of new business growth to be “coming off the highway.”

Construction Camps

“There’s not a whole lot out there. So, you have to provide your own housing to get the workers.”

—Charles McCarthy, president of mission-critical projects for Suffolk Construction, a major data-center developer. As data-center development explodes, competition for water and power supplies is pushing construction further into rural areas without the infrastructure to support hundreds or thousands of temporary workers needed to build warehouses of computer servers. Developers are leaning on sprawling temporary villages known as “man camps.” Employment in construction trades is expected to grow 6% from 2024 to 2034, according to the Bureau of Labor Statistics. INSURANCEJOURNAL.COM

Agritourism Uptick

Red Light Runner Reduction

— Jeremy Staun, vice president of farm sales and underwriting at Nationwide, discussing the risks of transforming a working farm into an agritourism destination. Overlooked exposures can include parking lot liability, temporary structures like tents or stages, and volunteers that aren’t always considered in risk planning, Staun said.

— Mike Flynn, New York City Department of Transportation commissioner, on the city activating red light cameras at 50 new intersections each week for the next five weeks, reaching 600 intersections by the end of 2026. The city’s red light camera program has operated for 30 years, and NYC DOT reports a 65% decline in T-bone crashes and a 49% reduction in rear-end collisions at camera-monitored intersections.

AI Infill

Fighting Tariffs

“Across the country, I’d say we’re seeing a noticeable uptick in farmers turning to agritourism for something to stabilize their revenue strategy. Especially with some economic pressures.”

“What AI inference is going to do is create low-latency applications of AI in markets like Chicago and Denver and Miami and Orlando. There will be low-latency, inference-based data centers in Manhattan, for sure. They will be in London and Singapore. They’ll be everywhere.”

— Pat Lynch, executive managing director for CBRE’s Data Center Solutions. Disused downtown buildings have become attractive locations for smaller data centers. The strategy offers a way to reuse empty buildings. For intensive data users, they’re an attractive option for so-called AI inference, highly trained systems that put a premium on speed, or so-called low-latency requirements.

“These cameras have reduced red light running 73% in the intersections where they are installed, and we will pair this heightened enforcement with ambitious street redesigns to make our streets safer.”

“Make no mistake about it, President Trump’s signature economic policy is historically unpopular and is costing Americans, our business, and us as states hundreds of billions of dollars. It cannot continue just because a few of Trump’s lawyers have found a way to twist words and craft a legal argument.”

— Oregon Attorney General Dan Rayfield, saying that President Donald Trump’s latest tariffs are an attempted “end run” around working with Congress, as the U.S. Constitution requires. A group of 24 U.S. states sued Trump’s administration in early March, legally challenging newly imposed 10% global tariffs, alleging that the president cannot sidestep a U.S. Supreme Court ruling. MARCH 23, 2026 INSURANCE JOURNAL | 11

News & Markets

Study: AI May Be Tempering Insurer Hiring By Allen Laman

he share of insurance companies planning to maintain their current staff size over the next 12 months has reached a 15-year high, while just 7% of insurers plan to reduce headcount in 2026, according to a new study. Aon and The Jacobson Group’s Q1 2026 Insurance Labor Market Study found that 43% of industry respondents expect to hold staffing steady. That figure is up 10 percentage points from January 2025. Jeff Rieder, head of benchmarking for Aon’s strategy and technology group, shared those findings during a February webinar. He pointed to several possible factors behind the trend, including a historically profitable 2025, strong investment performance, and companies fully experiencing productivity gains from recent technology system investments. “And the last thing that may be also driving this is with the advancements in artificial intelligence, what this could indicate is that companies are, we’ll say, somewhat pausing on hiring plans to see just how artificial intelligence will be adopted within the organization,” Rieder said, “and how this is going to improve certain functions.” Job openings in insurance and finance have declined significantly since peaking in 2022. According to the U.S. Bureau of Labor Statistics, the annual average

12 | INSURANCE JOURNAL | MARCH 23, 2026

number of openings in 2025 was 281,000, while December’s total fell to 138,000. That marked the lowest monthly level in the past decade. “I really do think that this might be kind of the indication of how AI is starting to influence a lot of these activities in terms of how companies are thinking about hiring,” Rieder said when presenting the numbers. Aon and The Jacobson Group’s study also found that 49% of property/casualty companies plan to increase staff over the next year. The survey covered approximately 10% of the insurance industry’s employee population. Participants were primarily from the property/casualty sector (77%), followed by life and health insurers (19%) and reinsurers (3%) Automation improvements requiring fewer staff were the most common reason cited by companies reducing headcount. Involuntary turnover across the broader insurance industry rose 0.6 percentage points year over year, which Jeff Blair, senior vice president of executive search and business development at The Jacobson Group, attributed in part to technology advancements and M&A activity. Based on recent years’ data, Rieder estimated that roughly half of the 4.4% involuntary turnover rate could be attributed to performance management, with the other half possibly reflecting organizational right-sizing.

At the same time, 12-month voluntary turnover declined 0.4 percentage points from January 2025. Based on his conversations with insurers—particularly property/ casualty carriers—Blair said companies are focusing on retention programs and keeping employees. “I hear a mantra of ‘I’d rather pay a stay bonus than a sign-on bonus,’” Blair said. “I don’t know to what extent that’s having an impact, but I think those sort of behaviors can definitely have a positive impact [on retention].” Rieder added that the rise of better insurance industry incentive programs in the past decade or so has improved voluntary turnover, as have enhanced benefits programs. Promotional increases are likely to range from 3.8% to 4%, he added, while merit increases are projected to be between roughly 3.3% and 3.5%. These trends show that the “pendulum is definitely going back in favor of the insurance employer, for now,” Rieder said. That shift may portend well for turnover “but could be more difficult as new entrants into the industry try to get in with lower hiring expectations.”

Other Notable Survey Findings

Only 2% of respondents to Aon and The Jacobson Group’s survey expect revenue to decrease in the next 12 months, while 72% foresee increased revenue and 26% anticipate flat growth. Property/casualty industry headcount grew by 0.81% from January 2025 to January 2026. That was “significantly less” than the anticipated rate of 1.42%, Blair said. Personal lines P/C companies are the most optimistic about revenue growth, with 90% expecting increases, compared with 68% of commercial lines carriers and 64% of balanced lines companies. Technology, claims, and underwriting roles are expected to see the greatest job growth across the insurance industry over the next year. Compliance, analytics, and underwriting are the areas where companies are most likely to add experienced staff, while operations and claims roles are most likely to add entry-level positions. INSURANCEJOURNAL.COM

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very business has a unique narrative, often intertwined with the personal experiences of its founders. Insurance Journal has had the privilege of encountering and appreciating countless captivating stories within the industry. Over time, we have observed the growth and transformation of the companies belonging to our readers and advertisers.

As a leading provider of industry news and information, we acknowledge that we cannot showcase every corporation that we come across. Our role as journalists also adds a layer of complexity to the process. Therefore, we have created this exclusive supplement to allow our clients and their associates to share their stories, in their own words. We hope that you find this supplement both intriguing and educational. The team at Insurance Journal sends our best regards.

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MARCH 23, 2026 INSURANCE JOURNAL | 13

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PIA Texas Stronger Together.

Business Moves Operations Manager Ann Marie Coyle leading the team at Monarch’s field office.

West

Aspire, PolicyOne

National

CRC Group, Euclid Transactional

CRC Group, a major wholesale insurance distributor headquartered in Birmingham, Alabama, acquired Euclid Transactional. Terms were not disclosed. New York City-based Euclid Transactional is a managing general agency that specializes in underwriting transactional insurance. Jay Rittberg is managing principal. Euclid will be a part of the CRC Underwriting division. It operates offices across North America, Europe, and the Asia-Pacific regions.

Southeast

King Risk Partners, Lewis Insurance

King Risk Partners, headquartered in Gainesville, Florida, acquired Georgiabased Lewis Insurance, an independent agency that writes personal and commercial coverage in the Southeast. Lewis, founded over 30 years ago, is owned by Jason Lewis. The move expands the agency’s personal and business lines offerings.

NFP, Trinity Risk Advisors

NFP, an Aon company and property/ casualty insurance brokerage, launched a captive management practice with the acquisition of Charlotte, North Carolinabased Trinity Risk Advisors. Alan Wise, president of Trinity Risk, leads the new practice and reports to Meg McSherry, managing director of property/casualty for NFP’s Atlantic region. 26 | INSURANCE JOURNAL | MARCH 23, 2026

Universal North America Becomes One Alliance North America Insurance Co.

Universal Insurance Co. of North America, admitted in Florida with offices in Sarasota and Orlando, as well as in Fort Worth, Texas, is now known as One Alliance North America Insurance Co. Miguel Barrales remains president, and Rafael Cedeño Camacho is chairman of the board and CEO.

Aspire acquired California-based PolicyOne from One Inc. As part of the transaction, 21 PolicyOne employees are joining Aspire. Aspire plans to continue its long-standing relationship with One Inc. through the use of its PremiumPay and ClaimsPay services. Rancho Cucamonga, California-based Aspire is an auto insurance provider working through a network of independent brokers. PolicyOne is a supplier of electronic design automation services for the insurance industry.

Specialty Program Group LLC, Proper Insurance

After 45 years under the name The Plateau Group, the Tennessee-based multi-line insurer is now Lumos Insurance. The rebranding is the culmination of a multi-year modernization effort on corporate governance and capitalization. The firm is focused on specialty property/ casualty programs, credit protection, warranty programs, and senior-oriented life and supplemental health products.

Specialty Program Group LLC acquired Proper Insurance, headquartered in Bozeman, Montana. As part of the transaction, Michael Grimland has been named president of Proper. Grimland has been with Proper Insurance since 2017 and previously served as director of operations. Proper provides insurance coverage for short-term rental properties. SPG is a specialty platform headquartered in Chicago, Illinois, with a portfolio of specialty insurance operations spanning underwriting management, digital solutions, wholesale and specialty retail brokerage and insurance services.

Midwest

SullivanCurtisMonroe, Stepco Insurance Agency

The Plateau Group Becomes Lumos Insurance

Higginbotham, Monarch Solutions Inc.

Higginbotham acquired Monarch Solutions Inc., a firm that supports high-net-worth individuals with insurance-related strategies that are intended to provide tax savings and estate liquidity. Monarch is based in Chicago, Illinois, and has a Dallas, Texas office. Monarch founder and now Higginbotham Managing Director Kevin Klaas is based at Higginbotham’s headquarters in Fort Worth, Texas, with

SullivanCurtisMonroe acquired Stepco Insurance Agency. The Stepco group will join SCM’s Pasadena, California, team. Stepco was founded in 1962. SCM is a locally managed insurance brokerage firm offering industry-specific coverage services for commercial property/casualty, risk management, surety, employee benefits, and personal lines insurance. Based in California, SCM has offices in Orange County, Los Angeles County, and Inland Empire. INSURANCEJOURNAL.COM

My New Markets Builder’s Risk - National and Coastal Offered

Market Details: Alchemy Insurance

Solutions LLC offers a competitive Builder’s Risk program that's available in all 50 states—featuring a dedicated rate/ quote/bind platform and direct underwriter access. Target market: Single Shot, Reporting, and Blanket Forms; Residential 1–4 Family New Construction; High-Value Residential New Construction; Frame Construction – up to $10M; Higher limits for other construction types (subject to underwriting review); Light Commercial Projects; Remodeling and Renovation of Existing Residential Structures; Mid-Completion Projects; Policy Forms & Sublimits; ISO Builder’s Risk Coverage Form – Inland Marine; New Construction – Replacement Cost Coverage (RCV); Remodeling & Renovation; RCV on remodeling/renovation value; Actual Cash Value (ACV) on existing structure. Property in Transit – $10,000–$25,000. Property at Temporary Locations – $10,000. Soft Costs – $5,000–$20,000 (Examples: interest, taxes, architect fees, insurance expenses). Ordinance or Law Coverage. Coverage A Included. Coverage B & C – $15,000 blanket limit. Has pen. Available Limits: See above. Carrier: Admitted and non-admitted. States: All 50 states and the District of Columbia. Contact: Matthew Waxman, Matthew. Waxman@alchemyins.com, 717-481-3277

Personal Auto and Renters Insurance Quote & Bind

Market Details: A tech-driven personal

auto insurance company. Smartphone technology monitors driving habits and provides personalized coverage rates. Pricing primarily based on actual driving behavior, tracked through a highly rated company app. An excellent option for drivers with safe driving habits who want affordable, transparent coverage managed through a modern app. Savings for good drivers; 24/7 Roadside assistance included with every policy; A+ rating from the Better Business Bureau. The company also offers renters where customers can save by

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bundling auto insurance with renters. Available Limits: Not disclosed. Carrier: Admitted. States: Alabama, Arizona, California, Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Mexico, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia, Washington, West Virginia, and Wisconsin. Contact: Marty Ascher, m.ascher@ newageins.com, 516-488-2500

Hard-to-Place Property

Market Details: XS Specialty LLC offers

diverse solutions for hard-to-place property risks that are avoided by the standard insurance marketplace. The company regularly tailors coverage to satisfy client’s property insurance needs. Manufacturing (Light to Moderate); Municipalities/Government Buildings; OL&T Commercial/Industrial; Precision Underwriters offers a complete solution Professional/Office Buildings; Vacant Buildings; Entertainment/Retail; Real Estate – Commercial & Habitational; Apartments; Mixed-use space; and Cannabis. Available Limits: Not disclosed. Carrier: Not disclosed. States: California, Colorado, Idaho, Montana, Nevada, Oregon, and Washington. Contact: XS Specialty, submissions@ xsspecialty.com, 503-892-7374

Marine - USL&H

Columbia. Contact: Nicholas Mladucky, nic@precisionunderwriters.com, 239-414-4704

Freight Forwarders

Market Details: Seaport Marine specializes

in global ocean and air cargo insurance. The company caters to the needs of exporters, importers, and forwarders, offering an accessible online program for convenient shipment insurance. Services include competitive pricing, diverse coverage options, and efficient support. Additionally, they offer Errors and Omissions (E&O) Liability Insurance, General Liability Insurance, and Ocean Transportation Intermediary (OTI) Bonds, providing extensive risk protection in various business operations. Has pen. Available Limits: Not disclosed. Carrier: Not disclosed. States: All 50 states and the District of Columbia. Contact: Bruce Bickoff, seaportinsure@ gmail.com, 949-351-5424

Last Mile Delivery/Car Sharing Commercial Auto Program Market Details: Last Mile Delivery

Program available nationwide except for NY and MA. Auto liability, Physical Damage & Cargo. Non-Admitted /Surplus Lines Paper. Available Limits: Not disclosed. Carrier: Non-admitted States: All 50 states and the District of Columbia except New York and Massachusetts. Contact: Shereen Hindi, shereen.hindi@ moter.ai, 424-322-9436

Market Details: Precision Underwriters

offers complete solutions for hard-to-place small- to medium-sized workers' compensation accounts. A sample of some of the workers' compensation markets that can be written include: Roofing, Towing, Marine - USL&H, Framing, Carpentry, Demolition, Mold Remediation, Night Clubs / Restaurants, Offices, and Artisan Contractors. Available Limits: Not Disclosed. Carrier: Not Disclosed. States: All 50 states and the District of

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Need a Market? Find It. FAST MARCH 23, 2026 INSURANCE JOURNAL | 27

People National

Amwins, headquartered

in Charlotte, North Carolina, named

Michelle Yuko and Joey Shapiro as

leaders of its new hospitaliMichelle Yuko ty practice. Yuko, executive vice president and property broker based in Satellite Joey Shapiro Beach, Florida, has nearly 20 years of industry experience, 14 of those years with Amwins. Shapiro, executive vice president and casualty broker based in Chicago, Illinois, joined Amwins in 2018.

KCC, headquartered in Boston, Massachusetts, hired Deanne Nixon as senior vice president. Nixon, based in Jacksonville, Florida, moved to Bermuda in 2006 with White Mountains Re (Sirius International), where she served as senior vice president and president of Sirius Capital Markets, and later as chief underwriting officer and then CEO of a Florida insurer. Mosaic Insurance, headquartered in Hamilton, Bermuda, expanded its North America and international transactional tax-liability teams. In the U.S., Heather Eskey joined the company as a senior vice president. Caleb Smith joined the New York office as a vice president in the tax-liability unit. Ze’ev Deutsch, who joined Mosaic’s New York office in 2022, was promoted to senior

vice president in the tax team. Vice President Roktim Kaushik also supports the New York-based team.

Specialty Program Group (SPG) LLC, headquartered in Chicago, hired Travis Carpenter as vice president

of business development for its infrastructure programs division. The infrastructure programs division includes alarm and security (Mechanic Group), builder’s risk and Travis Carpenter construction (Catapult), crane and rigging (New Heights), elevator contractors (National Elevator Solutions), and excess habitational (SUIS).

The Hartford, headquartered in Hartford, Connecticut, named Pete Hill as chief underwriting officer of its small business unit. He replaces John Russo, who was named chief underwriting officer for The Hartford’s global specialty wholesale and international business. eReinsure.com Inc., headquartered in Charlotte, North Carolina, hired Kyle Domire as vice president of North America sales. Domire, based in Salt Lake City, Utah, joins eReinsure from the brokerage division of parent company Amwins. He previously served as assistant vice president at Worldwide Facilities LLC. Burns & Wilcox, headquartered in Farmington Hills, Michigan, transitioned several of its professionals into new leadership positions:

28 | INSURANCE JOURNAL | MARCH 23, 2026

Sam Carson, formerly vice president, operations, is now vice president and managing director with responsibilities for the Burns & Wilcox offices in Chicago, Illinois, and Milwaukee, Wisconsin. O’Neil Franso, who previously served as vice president, human resources, will move to vice president, operations. Rahmad Bauldrick and Laura McCormick, formerly associate vice presidents and regional practice group leaders for professional liability, were both promoted to vice president. Additionally, Burns & Wilcox shared the promotion of several associates: Kris Guasch, underwriter, personal insurance, is now associate managing director in Fort Lauderdale, Florida; Jenna Zalud, manager, personal insurance, has been named associate managing director in Milwaukee; Ashley Poe, commercial lines manager, is the associate managing director in Charlotte, North Carolina. Pinion Insurance, a newly formed technology-enabled specialty insurer headquartered in Hamilton, Bermuda, appointed Kyle Selvig

as U.S. chief Kyle Selvig underwriting officer. Based in Jacksonville, Florida, Selvig joins after almost 10 years at Fortegra, where he most recently served as vice president, commercial underwriting. Property information and analytics provider Cotality appointed former USAA chief

executive

Wayne Peacock as an

independent member of its board. Wayne Peacock Peacock spent 36 years with USAA, becoming CEO in 2019.

EPIC Insurance Brokers & Consultants, headquartered

in San Francisco, California, appointed

Miranda Rodriguez

to the newly created role of program Miranda Rodriguez development leader within its national real estate practice. Based in Charlotte, North Carolina, Rodriguez has over 15 years of industry experience, previously leading specialization for Willis Tower Watson’s residential segment within its real estate industry vertical.

AXA XL, headquartered in Stamford, Connecticut, appointed Greg Carnazza as head of construction property in its Americas region. Based in Atlanta, Carnazza joins AXA XL from AIG, where he most recently served as head of underwriting, U.S. Builders Risk. Marsh, headquartered in New York City, hired Dereck Wischmeyer as senior advisor within its global digital infrastructure industry practice. Wischmeyer Dereck Wischmeyer has over 12 years of specialized legal and commercial expertise in the digital INSURANCEJOURNAL.COM

infrastructure and data center ecosystem.

Chubb, headquartered in Whitehouse Station, New Jersey, named Brent MacLean as division president of ESIS Inc., a leading third-party administrator and wholly owned subsidiary of Chubb. He succeeds Jim Shevlin, who is retiring after 24 years at Chubb. Before joining ESIS, MacLean served as CEO of CompIQ Solutions.

East

The Vermont Department of Financial Regulation

announced the gubernatorial appointment of Christine Brown as deputy commissioner of its captive insurance division. Brown joined the captive insurance division in 2003 as an examiner, becoming division director in 2022.

SAN Group (SAN), head-

quartered in Hampton, New Hampshire, hired Sherri Warcholic as regional vice president for Connecticut Sheri Warcholic and Rhode Island. Warcholic previously spent more than a decade with Liberty Mutual/Comparion Insurance as a lead sales representative.

RCM&D, headquartered in

Baltimore, Maryland, hired Courtney DeCroes as surety division director. DeCroes leads strategic initiatives and oversees the division’s operations. She previously served as director of surety at Gallagher and Assured Partners.

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Duck Creek Technologies, headquartered in Boston, Massachusetts, appointed Jose Lazares as chief product officer. Lazares leads Duck Creek’s global product organization.

business process improvement. He is a retired Green Beret who previously worked with the Tennessee Department of Environment and Conservation.

Ames & Gough, headquartered in Washington, D.C., appointed Thomas Marchetti as president and Matthew Gough as CEO. Gough, who was elected as president of Ames & Gough in Thomas Marchetti 2020, now turns that role over to Marchetti. As CEO, Gough will focus on the firm’s strategy and future initiatives while continuing to work directly with many of the firm’s largest clients.

Hilb Group, a major insurance brokerage based in Virginia, named Rob Nesselt as its Southeast platform leader. Nesselt recently was commercial lines head at Risk Strategies’ Atlantic region, and before that was with Marsh McLennan.

Southeast

Steve Byrd joined Alliant Insurance Services, headquartered in Irvine, California, as senior vice president within its employee benefits group. Based in North Carolina, Byrd previSteve Byrd ously served as area vice president, health and welfare consulting, at Gallagher.

The Tennessee Department of Commerce and Insurance named Michael Barber director

of the Consumer Insurance Services section. Barber joined TDCI in 2018 as a consumer insurance investigator, then worked as consumer insurance services manager. Peter Roth joined the department as director of

The American Equity Underwriters named Jason Lake senior vice president and

director of loss control. Lake has been a senior loss control manager with AEU since 2013 and has now moved to AEU’s headquarters Jason Lake in the port city of Mobile, Alabama. Lake succeeds Jimmy Burgin, who plans to retire in July after 30 years with AEU.

Midwest

Holmes Murphy announced its expansion into North Dakota with the hiring of Mark Julik. Julik joins Holmes Murphy with a wealth of insurance and construction industry expertise, shaped by more than 18 years at Marsh McLennan Agency. Before MMA, Julik spent nearly five years at Gallagher.

West

Delos Insurance Solutions,

headquartered in San Francisco, California, made several promotions and appointments within its leadership team.

Co-founder

Shanna McIntyre

will move from chief data officer to become chief strategy officer.

Shanna McIntyre

Andrew Notohamiprodjo

was promoted from head of data to chief data officer.

Valencia Jones joins

as head of Delos’ brokerage distribution Andrew Notohamiprodjo from Nationwide, where she was associate vice president of sales. Jones is responsible for leading the Delos field and internal sales managers and overseeing large brokerage and aggregator relationships. Alexandra Howe is Delos’ new director of carrier and enterprise relationships. She joins from Goosehead Insurance, where she was the carrier performance manager. Lorenzo Houston has joined as compliance manager from SageSure, where he was director of personal lines.

NFP, headquartered in New York City, hired Michelle Ross as vice president, head of property/ casualty broking, for its West region. Michelle Ross Ross was previously NFP’s California broking leader. With over 30 years in the commercial insurance industry, Ross previously served as a commercial lines and marketing leader at Brown & Brown.

MARCH 23, 2026 INSURANCE JOURNAL | 29

By Andrea Wells

30 | INSURANCE JOURNAL | MARCH 23, 2026

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Special Report: Restaurants & Bars

rom the rising costs of food and beverage products and the ongoing challenges in the hospitality labor market, restaurants and bars throughout the U.S. must overcome substantial challenges to keep serving their customers. Also, establishments that rely upon liquor sales must contend with the fact people are drinking less. Consumer demand remains solid, but customers’ spending power is restrained. The National Restaurant Association’s (NRA) recent State of the Market report found more than 7 in 10 consumers would use restaurants more often if they had added disposable income. The NRA report showed that 9 in 10 food establishments cited food, labor, insurance, energy, and swipe fees as significant cost challenges. These undercut profitability, but insurance specialists say a softening insurance market is helping by providing at least one line item where costs should decrease. “I’ve been in the industry now for about 15 years—I owned an agency in St. Louis for many years, and now I’m on the MGA side—and I’ve never seen the market soften this quickly,” said Brennen Grone, executive vice present, sales, at Rainbow, a San Francisco-based managing general agency specializing in restaurants as well as beauty and wellness focused businesses.

Liquor Liability

Regardless of whether the market is hard or soft, the risks remain significant—and increasingly extend beyond liquor liability to include entertainment exposures, firearms, employment practices, cyber, and other emerging threats. According to Grone, liquor’s still somewhat a hard insurance market, especially for establishments that generate more than 40% of their sales in alcohol. “But I see a lot more competition for establishments where alcohol sales are 40% and under,” which is new, Grone added. “We weren’t seeing the same competition a year ago.” Liquor remains an area where rates vary the most state by state in the bar, tavern, and nightclub space, said Connor Farquharson, manager of commercial INSURANCEJOURNAL.COM

insurance for Burns & Wilcox. As of 2025, 43 states and the District of Columbia have some form of a dram shop law in place, which increases the risk of litigation against bars and restaurants for serving or selling alcohol to minors or intoxicated people. However, these laws vary significantly by state and shape the way the insurance market responds to the risk.

‘One other thing I would tell all bar and restaurants owners is to have strong controls in place for overserving alcohol and for assault and battery, and agents need to make sure that their submission to the broker, to the underwriter, includes those things.’ Overall, the liquor liability market remains challenging, Farquharson said, especially for bar, tavern, and nightclub establishments. He added that he sees a lot of sublimits placed on assault and battery and sexual abuse and molestation coverage. “In Texas, liquor liability is still a very, very tough marketplace,” he said. Many cases in the state make it to jury trials, letting the courts figure out what’s covered. Whereas in other states such as Louisiana and Nevada, dram shop laws are more defined when it comes to an overserving liquor claim, Farquharson said. In South Carolina, long-awaited liquor liability and tort reform measures were passed in 2025 and officially took effect Jan. 1. Since 2018, state law had required $1 million in liquor liability coverage for most bars and restaurants, a requirement that led to huge insurance premiums and reportedly drove many establishments out of business. South Carolina has been the most difficult state to write liquor coverage for years, but the reform measures should help, Farquharson said.

The new state law lowers the coverage requirement for most places where alcohol is less than 40% of total sales. The law also says that for incidents involving DUIs, a business cannot be held liable for more than 50% of the plaintiff’s damages, as opposed to 100% under the previous law. In addition, the law allows establishments to lower their liquor liability coverage by requiring only an aggregate limit of $1 million if the bars and restaurants stop selling alcohol at midnight, provide training to servers, and other measures. More established bars and taverns with good loss history will find a much better liquor liability market, he added. “Once you get to three years in business with little to no claims, no assault and battery claims, and no overserving claims, that opens up the market,” he said. “One other thing I would tell all bar and restaurants owners is to have strong controls in place for overserving alcohol and for assault and battery, and agents need to make sure that their submission to the broker, to the underwriter, includes those things,” Farquharson advised. “It will make them a more attractive risk if they have strong controls in place and can show that they follow them.”

Reduced Alcohol

According to a 2025 Gallup poll, the percentage of U.S. adults who say they consume alcohol has fallen to 54%, the lowest point in Gallup’s nearly 90-year trend. Young adults had already become less likely to report drinking alcohol a decade ago, but that trend has accelerated, Gallup said in August 2025, with the rate falling from 59% in 2023 to 50% in 2025. Typically, insurance costs are higher for places serving more alcohol than food, but insurance is not reflecting the trend of people drinking less, according to David DeLorenzo, CEO and owner of Ambassador Group Insurance and Bar and Restaurant Insurance, based in Phoenix. Establishments’ receipts for alcohol sales have fallen significantly, but insurance costs have not. Arizona has always been a difficult

continued on page 32

MARCH 23, 2026 INSURANCE JOURNAL | 31

Special Report: Restaurants & Bars continued from page 31 market for liquor liability, and even lower alcohol consumption trends have not helped reduce the cost of insurance. “We’re looking at this system that has always been tough, but it’s getting even worse for places that serve more alcohol than food,” he said. DeLorenzo said the lower alcohol consumption trend is adding more profitability pressures on establishments that serve primarily alcohol. “So, this ability to make seven, eight million a year just off of bottle service is dwindling down to almost nothing, but yet the carriers have yet to really respond to the trend by considering it as any better of a risk,” he said. DeLorenzo has seen some bars and taverns with receipts down 40% to 50% in alcohol sales that are still paying the same dollar per thousand rate for insurance. “It’s to the point where it’s cost-prohibitive in many ways to get your traditional $1 million on assault and battery, $1 million liquor policy with no exclusions,” he said. Plus, he sees tightening assault and battery

32 | INSURANCE JOURNAL | MARCH 23, 2026

sublimits on every policy. “In fact, it’s hard to even get $1 million. You’re seeing sublimits of anywhere from $250,000 to $500,000.” In addition to more restrictive sublimits, insurers are demanding higher deductibles and implementing other exclusions on bars, taverns, and nightclubs. “You’re seeing firearms exclusions on all policies to where you’re having to carve that out and go find a weapons policy to cover that exposure, which is a real exposure in this day and age,” he said. “So, then you’re seeing places that are doing maybe $1.6 million in sales but still being charged almost $90,000 for insurance.” Entertainment adds another element of risk to the mix, said Lynn Bertram, vice president, commercial underwriting at XPT Specialty. “You may have this little brewery or tavern that starts out and is a pretty cutand-dried establishment,” Bertram said. “Then the next thing you know, they’re going to have a local entertainer come in

and play guitar on Friday and Saturday nights. And then maybe they’re going to have a dance floor. And then maybe they’ll have an event and they’ll sell tickets,” she explained. Those changes increase the risk from a liquor liability standpoint. “That’s where it gets challenging.” Bertram said it’s critical to know about that Saturday night entertainment or the occasional wedding event being hosted at the establishment. “I need to be able to tell the carrier that because with the market being somewhat restricted, sometimes those events will be excluded, and that’s the last thing I want to do—not cover the insured for that exposure,” she said. “They need to get all that covered.”

Ancillary Coverages

For the typical fast casual restaurant, underlying coverages on a package policy with minimal liquor sales are finding a competitive insurance market, according to DeLorenzo. “I can still insure a fast casual restaurant with very minimal liquor sales, that’s doing about $2 million in sales,

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for anywhere from $7,000 to $9,000 a year,” he said. “But when you’re looking at getting an umbrella to go over the liquor, or you’re looking at any of the ancillary coverages that I really feel a restaurant should purchase—not coverages that are just thrown in on these BOPs, like cyber, crime, EPLI, but real ancillary coverages that you want people to buy—costs certainly go up,” he said. But DeLorenzo stresses to all his clients that those coverages are needed “because those exposures are just as great as a slip and fall.” Employment practices exposures and cyber exposures from point-of-sale (POS) systems are serious risks for both restaurants and bars, DeLorenzo said. And “throw-in” coverages on BOPs are not enough, he said. “If POS systems go down and information’s lost, the POS company is not going to save them. … The POS company does not care about you. They’re going to go do what they need to do to make themselves whole. Meanwhile, you’re sitting there with no coverage,” he said. So, while restaurants with minimal alcohol sales might find a better insurance market today, with affordable pricing that meets their lease requirements, the exposures that come with cyber risk and employment practices should be covered with better standalone policies, DeLorenzo advised. The challenges facing restaurants and bars will not diminish opportunities to insure these risks. “Hospitality’s not going anywhere in the world of technology and AI,” DeLorenzo said. “It’s going to change the industry, it’s going to look different, but there’s always going to be needed ways to entertain and take care of people.” DeLorenzo advises agents that are in this space to stay current on emerging trends to be successful. “Start talking to underwriters and finding the companies that are following the trends,” he said. “Whether it’s social clubs, more event centers, pickleball, or theatre, you just have to follow what’s the next big thing going on. It’s still hospitality, and it’s still entertainment at the end of the day.” INSURANCEJOURNAL.COM

A Tip on Vendors: Contractual Risk Transfer

nother area to pay close attention to when insuring restaurants and bars is third-party contractual risk transfer with vendors. Paul Broussard, a risk advisor at Cavignac Insurance Brokers in San Diego, said a recent claim illustrates why it’s critical for restaurants to understand the terms and conditions of every contract they sign. Broussard said the restaurant had a fire that may have been caused by a negligent grease cleaning contractor for the restaurant’s Ansul system, a specialized, automatic fire suppression system used in commercial kitchens that discharges liquid or gaseous agents to extinguish fire. “A lot of these restaurants are signing agreements without actually taking a look at the actual terms and conditions,” he said. “You’re in the restaurant business, you know how to make food, but you may not necessarily know the ins and outs of preventing grease fires and know if the equipment is being serviced and cleaned properly.” In this case, the vendor hired to clean the grease may have been negligent because the system was not properly cleaned, he said. “And because they (the contractor) have the ability to control the risk and they have the processes and practices in place as that vendor, you need to be indemnified if for some reason they are negligent” when providing service, he said. “Our client is now in a situation where they have a mutual waiver of subrogation with their landlord, so the landlord’s insurance company is not necessarily going to go back on the restaurant for the negligence, but potentially other tenants within the building that have no contractual relationship with the restaurant are coming after them for loss of business income because of the fire,” he said. “So, whenever we talk about contractual risk transfer, we’re talking about transferring the risk to the person or organization that

has the ability to control the risk.” In this case, the grease cleaning contractor had the ability to control the risk of cleaning properly, he said. While it’s important to make sure vendors have adequate insurance limits, and that the restaurant is listed as an additional insured, the contract terms must offer protection as well. “There’s a lot of things that you have to make sure that you’re doing because unless it’s really required in the contract agreement, most of the blanket endorsements that they send you have no meaning because it has to be requested in a contract agreement,” he said. “Yes, you’re getting a certificate of insurance, but are you extended additional insured status on their coverage? Are you being identified in the contract?” he asked. “It’s certainly important to involve your broker whenever you have a master vendor agreement … You want to make sure you get the terms and conditions redlined to give you some sort of protection.” The restaurant now has a covered property claim because their equipment and their property were damaged but potentially has no recourse from the service contractor, depending on the contract and depending on the amount of limits that the contractor carries, he said. “And now you also have these liability claims coming after the restaurant.” David DeLorenzo, CEO and owner of Ambassador Group Insurance, also advises restaurants and other agents to do thorough reviews of vendor contracts to understand where the vendor’s insurance may or may not come into play. “Because sometimes they’re just trying to pass the buck and the responsibility over to the little guy,” he said. “So, if you’re serious about writing hospitality, and you really want to help your clients, and you’re not reading contracts every day and you’re not doing claims every day, find a third party that can help.” MARCH 23, 2026 INSURANCE JOURNAL | 33

Closer Look: Artificial Intelligence Preparing for an AI Native Future

By Kimberly Tallon

rtificial intelligence is becoming a core competency for insurers that want to stay competitive in the face of geopolitical volatility, shifting claims patterns, persistent cost pressures, and rising customer expectations. But to unlock AI’s full potential, carriers first need to navigate shifting workforce dynamics, modernize outdated legacy systems, and overcome their tech-scoping problem, said panelists during a recent webinar from Federato.

Unlike other technology trends like cloud or mobile that really only transform one area, AI is “about fundamentally rethinking business models and creating new opportunities, and it affects everything across the value chain,” said Mark Breading, partner at ReSource Pro. He said “the internet of 30-plus years ago maybe is the closest parallel.”

AI Can Distribute Expertise

The insurance industry is in “the early stages of a generational transition,” said Federato CEO and Co-founder

34 | INSURANCE JOURNAL | MARCH 23, 2026

Will Ross. Workforce dynamics are shifting as senior-level executives retire, causing a “turnover of decision-makers,” he said. This means newer employees are being asked to handle increasingly complex underwriting tasks they may not be ready for. Karlyn Carnahan, head of Insurance, North America at Celent, agreed, noting that a lot of the basic work trainee underwriters started on has been automated, leaving more complex decision-making. “If you have a new workforce coming in that doesn’t have

the 20 years of expertise, there is this question of how do we assure that the right decisions are being made. This is where I think AI serves as a huge augmentor,” she said. AI can play a major supporting role by guiding newer underwriters—“but that AI then has to be built on the expertise of the organization,” she said. “Some of the skill sets that we’re going to need will be quite different in the future,” Carnahan added. “We’re going to need people who understand how to design prompts in a way that what I call a INSURANCEJOURNAL.COM

‘boss agent’ can break that up into a variety of steps, which means we still need people who understand the steps and the logic. And we will need a framework for managing the agents and for managing the governance.” Instead of performing very repetitive tasks like entering data, she believes “people are going to be more supervising some of these AI-driven workflows. This is going to accelerate decision cycles dramatically because AI can adjust the data and run the simulations and autonomously INSURANCEJOURNAL.COM

do work like drafting policies.” “One of the other aspects of this workflow is that the knowledge becomes more distributed,” Carnahan said, which “reduces the dependency on any individual person” and allows their experience and expertise to benefit everybody “because the AI can learn from that.” AI can use that knowledge to help carriers avoid repeating historic cycles of losing underwriting discipline in soft markets, she said. While insurers typically shed business during a hard market cycle, as the market softens, carriers tend to “get a little bit stupid and start bringing it all back in,” she said, even if they “don’t necessarily have the skill set or the data to be able to appropriately underwrite it.” “We lose our discipline,” she said, “and we believe that we’re smarter than we are.” AI may be able to help break that pattern, Carnahan said, because it can pull together massive quantities of data so underwriting “isn’t dependent on one human being’s knowledge of a very obscure part of the market.”

Legacy Infrastructure Is a Barrier

Legacy systems pose a major barrier for carriers looking to leverage the full potential of AI, the panelists said. The problem is that legacy systems are often data silos, Carnahan said, especially some of the older solutions. These systems “don’t necessarily talk to each other,” she said, which causes fragmentation, leading to duplication of effort and data. “There’s just a lot of

challenges with the legacy systems today,” she said. “Don’t get me wrong, they do the basic that they’re supposed to, exactly as they were designed. They manufacture policies; they manufacture claims checks; they produce bills exactly as necessary, but we need more than that today.” “A policy admin system is very good at manufacturing a policy; it’s not good at underwriting,” she said. “There are still all these things that underwriters do outside of a system.” That makes it very difficult for others to access that knowledge and use it at the strategic level. Carnahan also noted that because “these systems are hard to configure or code, changes take months and are often expensive.” Legacy systems are a drain on resources, Breading agreed. “When you have half of the IT budget that’s consumed just to maintain these core systems, that in itself is a problem… It makes it difficult to get to market fast with changes or new products, and then it constrains your resources for other, more innovative projects that you want to pursue.” Carriers have also made a habit of layering new systems on top of old ones, the panelists said. “The older legacy systems took so long to get implemented that once you were in the process, you didn’t want to derail that implementation,” Carnahan said. “We have these carriers that are burdened with many policy admin, billing, and claim systems, and the cost to sunset them and to roll them

all in is sometimes difficult to cost justify, and so they end up leaving them there.” “That’s where we get to this issue of these rigid data models that are in silos and difficult to integrate, often with batch processes. Finding the way to integrate the workflows, to integrate the data, to integrate the overall process can be really challenging,” she said.

‘If you have a new workforce coming in that doesn’t have the 20 years of expertise, there is this question of how do we assure that the right decisions are being made. This is where I think AI serves as a huge augmentor.’ Breading noted that “most of these systems were designed based on the traditional mindset of the industry, being very conservative… [with] sequential processing and a static set of requirements.” But “we’re in a very dynamic world,” he said, with access to real-time data and a fast-moving technology landscape. “So, the whole mindset of the design and how they were architected doesn’t really fit with today’s world.” Breading said there’s been incremental modernization

continued on page 37

MARCH 23, 2026 INSURANCE JOURNAL | 35

Closer Look: Artificial Intelligence Carriers Using AI for Claims but Adoption Is Fragmented, Report Shows By Don Jergler

xcitement about adopting artificial intelligence technology is palpable in the insurance industry, but the reality is that while most carriers use AI, few use the technology at more than a small scale—and the vast majority of adjusters say AI needs human oversight. A new report out from Sedgwick, “Future-ready property claims: Leveraging technology and AI for a strategic advantage,” estimates that between 58% and 82% of insurers use AI tools in their operations, but just 12% say they have fully mature AI capabilities and only 7% say they have achieved scalable AI success. The report paints a picture of accelerating AI adoption in the industry, but with carriers

at vastly different points in the process: some are still dabbling and experimenting, while others are scaling AI across operations. David Guaragna, managing director, Sedgwick Property Americas, explained the dichotomy. “People look at insurance claims as a monolith, and if you think about it, different carriers specialize in different lines, and there’s just so much complexity across the insurance space,” Guaragna said. “And if you look at that different complexity, the data associated with those different lines is extremely challenging and it’s approached different ways. So, to think that everyone’s going to move at the same speed and the different processes with which they collect that data and the different systems involved—whether it

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be the property space requiring estimates, in the auto space requiring different estimating platforms—they’re relying on different partners and different systems. I do think that they’re going to move at different speeds based on the need for that data.” Despite significant AI investments, fragmentation is limiting AI’s impact in such a way that any value being realized is from individual claim steps, according to the Sedgwick report. Nearly two-thirds of carriers say there’s a gap between their AI vision and their reality. As a result, carriers “have a fragmented technology experience” in which different tools and vendors support different parts of the claims process, according to the report. “With so many tools involved in the claims process,

carriers’ data is often inconsistent, incomplete, or siloed across systems, which weakens AI outputs and decisions,” the report states. A new analysis from Goldman Sachs shows a divide between “boardroom hype and macroeconomic reality,” which was covered recently in Fortune. “We still do not find a meaningful relationship between productivity and AI adoption at the economy-wide level,” stated senior U.S. economist Ronnie Walker in an analysis of fourth-quarter earnings. According to the Sedgwick report, using AI to handle low-severity claims has led to 80% faster processing times for some carriers. Speed and cutting costs appears to be behind the adoption of an AI claim assistant now taking auto damage claims calls at Travelers. The service, developed using OpenAI model capabilities and APIs, uses advanced language and speech recognition technologies. Travelers reported in February that the capability is initially being used with customers who are calling to file an auto damage claim. Tim Parker, a long-time claims professional and host of The Adjusters Diaries podcast, is consulting for Google’s Gemini AI information platform. Based on his work with Gemini, he’s seeing a prime use of AI as a source of information for claims professionals. “If you look at the types of questions that are coming in, they’re all claims-related questions,” Parker said. INSURANCEJOURNAL.COM

Frequent questions center on users who say they are “running a loss report for XYZ company,” and they need to know how much a carrier will pay for certain reconstruction costs or other basic information about property damage. “I look at the questions that stumped the AI and I provide the correct answers, so people that are building out the code can begin to understand it,” Parker said. “We see the insurance company deploy AI through Apple and Android platforms that will allow the insurer to, on specific losses, write their own estimate, and if there’s a question, they’ll send

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over the last 20 to 40 years where carriers are “trying to bolt-on and adapt some of the newer technologies, the newer capabilities into this traditional core.” The problem is that trying to bolt an AI chat interface onto legacy framework doesn’t really work because the underlying technology is too slow and fragmented, Ross said. You can tell the chatbot to go rate a policy with certain criteria, he said, but “if the product definition of the underlying core system was built on a certain era of technology, the time it may take to get that rate back will be depending on 14 different API calls to get to that rate and a seven-minute time frame to turn that around.” That isn’t practical when people are used to instant results from a Google search.

Tech-Scoping Problem

Carnahan said she’s seen tremendous success in AI, but she’s noticed that carriers INSURANCEJOURNAL.COM

not an adjuster but they’ll send a contractor out to review it and then send it up through an [AI] program.” Companies are using tools like scrubbing platforms, in which AI can look at the information and tell the company whether they need to send the claim to a human to make a judgment call, Parker said. The report also shows that 75% of claims professionals believe AI needs human oversight. Guaragna believes the report indicates what many in the claims profession already know: people are needed in all but the simplest of claims.

“AI will enable adjusters to be more efficient. It’s a tool to be more efficient and more productive, but we will need the human touch, especially in claims where you’ll always need that empathy with policyholders,” he said. “A claim is always a challenge for a claimant no matter what type of claim it is. Whether it be a personal lines property claim or workers’ compensation claim, there needs to be a human element involved with the understanding that there is a human-tohuman need to understand

often stumble when it comes to scope. Some carriers are thinking too small, she said, “using AI on very limited aspects, and so they’re not getting the kind of returns that you would expect them to get. Or the opposite, they’re thinking so big that it becomes unwieldy and almost impossible to govern or measure.” Neither one of those approaches works, she said. Instead, “carriers need to be thinking very carefully about what it is they’re actually trying to achieve and make those use cases big enough to matter but not so big that that they fail because they’re trying to boil the ocean.” Ross agreed that there’s a tech-scoping problem. He said he’s been pushing customers to scope their projects more toward the middle, not just by line of business, so that you have an answer when senior leaders start asking about the bottom-line impact for the organization.

‘We have these carriers that are burdened with many policy admin, billing, and claim systems, and the cost to sunset them and to roll them all in is sometimes difficult to cost justify, and so they end up leaving them there.’ “You want to have an answer for, ‘What’s the next corner I’m going to turn capability wise, and then what is the scale of impact I’ve had?’—and it needs to be big enough that they can see the next phase and the next phase,” he said.

Near-Term Priorities

Looking ahead, carriers need to focus on modernizing product definition to speed quoting, Ross said. If the bind-and-issuance process

that someone’s going through a challenge in that process,” Guaragna said Other findings in the report include: • 82% of carriers use AI for routine tasks (data extraction, automated customer interactions). • Intake automation has reduced average claim processing times from 10 days to 36 hours.

still takes a while, that isn’t really a problem, he said, but the quoting process needs to happen fast. That means you need access to your rating and forms attachment logic. “If that part of the product definition is living in a legacy enough architecture that you can’t get to that speed outcome for the quote, then I think you’re in a world of hurt,” Ross said. Carnahan agreed that product definition needs to be housed in a more modern way. She also stressed the importance of understanding workflow and processes. “If you don’t understand in the first place how you do your work, it’s difficult to have a vision of where you’re going to be applying the AI in the future,” she said. Tallon is an assistant editor for Carrier Management, a publication of Wells Media Group serving property/casualty insurance carrier executives, and Insurance Journal Magazine.

MARCH 23, 2026 INSURANCE JOURNAL | 37

Spotlight: On the Water Soft Market Hits Yachts, Boat World By Andrea Wells

he insurance market for yachts is good with rates staying flat or even slightly decreasing. Competition in this highly specialized market is growing as more capacity opens up, according to specialists in the space. “All the carriers are trying to grow right now,” said Noah Wheeler, senior broker, marine, for Burns & Wilcox. “We’re seeing rates decrease on both property and liability, so most of my liability renewals, as long as the exposures remain the same, I can pretty confidently expect flat [renewals].” Wheeler said he’s even seen a few accounts with decreasing rates at renewal. “The days of automatic 10% to 15% increases are definitely behind us,” he said. Rob Carron, Aon Private Risk Management’s superyacht

practice leader, sees the same softening trend on his accounts, which primarily includes clients who own superyachts valued at $10 million and higher. “For clean risks, meaning no claims, underwriters are giving flat to very small percentage increases this year,” Carron said. That’s a change from the past several years. “Back in 2018 and onward, we saw some hefty increases following losses due to big hurricanes,” he said. “We saw constriction in the market, capacity shrunk, and changes in underwriting requirements,” he said. “But now we’re starting to see more capacity enter the market.” Carron said the market for yachts valued between $5 million and $10 million is seeing more capacity as well, even in the South Florida area where wind coverage dried up a few years ago. “Markets are starting to enter back into South Florida and the Southeast areas, those more hurricane-prone areas.” Both Wheeler and Carron said the less active CAT seasons over the past two years have helped carriers’ books, driving better results for the yacht market. But tighter underwriting is likely

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to remain. Changes made to underwriting terms and conditions will likely remain. “The underwriting around some of these vessels and requirements in terms of hurricane plans is really emphasized now even on the larger yachts,” Carron said. That can include requirements regarding where the vessels are docked during hurricane season.

‘The underwriting around some of these vessels and requirements in terms of hurricane plans is really emphasized now…’ “Awareness of where the yachts are during hurricane season in the hurricane-prone areas, and whether they’re in a shipyard during that time and unable to move [should a hurricane develop],” are important considerations now, he said. “There’s just a greater emphasis on that today.” Other risks such as piracy and war risks have always played a role when yachts move into certain international waters, Carron said. “Especially when we have yachts that are transiting in the Red Sea and the Gulf of Aden, there’s an

increased piracy risk there, and those areas may have piracy excluded for those transits,” he said. “So, clients that would need to transit those areas may have to buy back that excluded area coverage subject to certain requirements being met,” he explained. Those requirements might include heightened onboard security, other security measures, and purchasing kidnap and ransom coverage for crew members. Carron said as war risk in the Middle East continues to evolve, there may be other changes ahead. “What we’re seeing now is that capacity still remains there, but underwriters are taking it on a day-by-day basis.” The softening insurance market can also be seen in the smaller vessel area. Wheeler said after the 2021 hurricane season, almost no carrier would write wind coverage for personal watercraft in Florida. That is no longer the case. “After COVID there was a boating explosion—a lot of boat sales,” he said. “We started writing a ton of personal watercraft (which traditionally was through the standard markets). “But this year we’re finally starting to see some of that business slowly moving back to standard markets,” Wheeler said. “We’re seeing a lot more wind options in Florida, a lot more carriers popping up with new yacht programs.” But that is what the excess and surplus lines market is for, he added. “Now, I’m still going to stick to what we do best, which is commercial marine and marine construction.” INSURANCEJOURNAL.COM

Idea Exchange: Disability Commercial and Private Pilot Disability Options

he high standards and responsibilities bestowed on a professional pilot cannot be overstated. Every time a plane lifts off from the By Joseph Ferraro tarmac, the weight of the world rests on the shoulders of the person in the cockpit; a great many souls are literally and figuratively in their hands. The stress is enormous, and the FAA is the ever-present guardian at the gate. This is why even a minor medical issue can lead to indefinite grounding—and why the financial impact of a sudden loss of license can be devastating for both individual pilots and employers. It’s this vulnerability that forces such stringent medical requirements as a way to mitigate the physical and mental health risks in aviation, including illness (heart attacks, strokes) and accidents (eye injury). Statistics show that the leading causes of pilot grounding are cardiovascular issues such as heart attacks, arrhythmia, or strokes; neurological disorders like brain injuries or seizures; vision or hearing loss; and accidents such as falling down stairs, automobile accidents, eye injuries, and so forth. And make no mistake: the sudden loss of license has a direct impact on a pilot’s income and career trajectory because you need flying privileges in order to work. There’s no ancillary income while that pilot is grounded, because even if they are not flying, they cannot earn from any flight instruction or transport jobs. It can also disrupt seniority and benefits, as well as accelerate early retirement, which is common in medical disqualifications after age 50. So, how can pilots who can no longer fly make sure they are protected on the ground? The solution is loss of license disability insurance. While traditional disability insurance offers limited coverage in the event a pilot is disabled, as it includes limited “own occupation” definitions, loss of license disability insurance is tailored INSURANCEJOURNAL.COM

specifically to cover the occupation of a pilot. Professional pilots have to meet strict health standards set by the FAA to keep their license. Even if a pilot isn’t officially considered “disabled,” they can still lose their license if their health doesn’t meet those rules. For instance, a pilot with high blood pressure that exceeds FAA limits may be grounded—even if they feel perfectly fine and are capable in day-to-day life. Lastly, traditional options do not always include the limits required to protect their full income. The key features of loss of license disability insurance are that it covers up to 65% of earned income; offers elimination period options of 90, 180, and 365 days; benefit periods are tailored to age; and coverage can target individuals as well as group multi-life policies. So, who are the ideal candidates for coverage? • Commercial pilots employed by airlines, charter companies, or private aviation firms • Cargo pilots • Test pilots • Air ambulance pilots • Firefighter pilots • Private pilots with high income from aviation work • Flight schools or aviation companies with large pilot rosters Here’s a perfect example of how things can go south quickly: A pilot carrying a box

down the stairs slipped and fell, sustaining a lower back injury and a torn meniscus in his right knee. He developed inflammation and severe pain when putting weight on his right knee. An MRI confirmed a torn meniscus and osteochondral lesion. The doctor advised no flying and rest for five months, which resulted in a loss of license. Even after he was deemed fit to fly, it was another seven weeks before his license was reinstated. This reinstatement process can sometimes take several months in complex situations. The insurance paid loss of license benefits until his license was reinstated, which provided the funds to pay his mortgage and provided for his family during this recovery period. But it’s not only the pilot who benefits from the coverage. There are group guaranteed issue options for employers, as well as protected payroll obligations and talent retention. The underwriting process is streamlined, requiring just a medical certificate, FAA license, and income verification. The cost of being grounded is more than financial—it’s career-threatening. If an injury or illness forces your client to bail out, make sure you give them the financial parachute they need for a safe landing. Ferraro is a partner at Exceptional Risk Advisors, a Lloyd’s of London Coverholder, advising clients on high-limit specialty life, accident, and disability products. Email: Joseph.Ferraro@exceptionalriskadvisors.com. MARCH 23, 2026 INSURANCE JOURNAL | 39

Idea Exchange: Is It Covered?

Logic & Language and Forms & Facts

The Additional Insured Illusion

n my September 2025 column, I wrote about certificates of insurance as a prequel to an October Academy of Insurance webinar I By Bill Wilson did on certificates, with a little bit about additional insured (AI) issues involving certificates. On April 2, 2026, I’ll be doing a follow-up and more detailed webinar on AI issues for the Academy titled “The Additional Insured Illusion (and 40 | INSURANCE JOURNAL | MARCH 23, 2026

Other Feats of Contractual Risk Transfer Magic),” with a little bit about certificate issues, specifically a brand new and important change in the ACORD 25 form that I’ll touch on at the end of this article. This begs the question, why am I doing these webinars now? If we go back about 20-25 years when I was with the Big “I” national agent association, a huge amount of my time was spent answering questions about certificates of insurance (COI) and additional insureds (AI…not to be confused with artificial intelligence) issues. This led to the development of

a series of articles on these issues, and ultimately a white paper, along with dozens of webinars and seminars. I worked on these issues for several years, while our state associations worked with regulators and legislators, to introduce legislation, regulations, and insurance department directives in about 90% of states to address marketplace issues. As a result of these collective efforts, by the time I retired in 2016, it seemed that calmer waters prevailed. Move forward 20 years and we now have a new generation of agents, INSURANCEJOURNAL.COM

underwriters, adjusters, risk managers, attorneys, contractors, etc., who are dealing once again with many of the same issues that we thought were resolved decades earlier. I have been getting the same questions I got 20-25 years ago, and I see them almost daily in business social media websites like LinkedIn. To illustrate, here is a question from a Texas agent: “In the past, we have not been individually adding Additional Insured endorsements, relying on them being an indemnitee in the ‘insured contract’ wording of the CGL or BOP policies, which gives them AI status without endorsing that on the policy.” Clearly, this agent does not understand the significant difference between being an indemnitee and/or an AI under a liability policy, nor are they familiar with legal requirements regarding AI status in their state.

‘Belt and Suspenders’

Having status under both categories provides a “belt and suspenders” risk management approach. It’s not only usually a good idea, it’s often the law. I had similar questions from South Dakota and New York agents, suggesting that this misunderstanding could be widespread. Another agent said that their insured general contractor requires all subs to sign hold-harmless agreements in his favor, so he questions why the general contractor needs his own liability policy. In this case, the agent confuses indemnification with coverage, not as an additional insured but under his own insurance coverage. Your commercial insureds likely have assumed potential liability under many types of contracts, from construction to leases and HOA bylaws to loan agreements and various types of hold-harmless and indemnity agreements in other contracts. So, it is critical to understand what types of coverages are provided by insurance forms with regard to status as an indemnitee or insured. As I write this month’s column, it is likely that you insure a contractor or business owner who has just entered into a contract under which he or she INSURANCEJOURNAL.COM

is already in default because they did not understand the liability they were assuming. For example, one contract states, “Contractual liability insurance shall apply to all indemnity agreements.” No insurance policy I’ve ever reviewed fully covers the indemnity agreements found in most contracts. Other issues involve the exact language of the additional insured endorsement being used. There are literally hundreds of non-ISO AI endorsements in the marketplace. Some of them only cover vicarious liability, but that fact isn’t clear in the form because the term “vicarious liability” is not used. Some of these endorsements also provide only excess coverage, not the “primary and noncontributory” coverage requested by so many contracts, especially in the construction industry.

‘No insurance policy I’ve ever reviewed fully covers the indemnity agreements found in most contracts.’ Downsides

Even though AI status is requested in so many contracts, there are downsides to being an additional insured under someone else’s policy. The most well-known reasons include sharing of limits, loss of claim resolution or litigation control, complications in defending claims across multiple policies and insurers, etc. In addition, there can be unanticipated situations where being an additional insured under someone else’s policy can adversely affect coverage under one’s own policy. In the webinar, I’ll give specific examples of where this has happened in both CGL policies and in property policies covering buildings insured under triple net leases. Finally, as I mentioned earlier in this article, ACORD recently made a major change in the ACORD 25. In the new December 2025 (12/25) edition, the ACORD 25 says, “LIMITS SHOWN ARE INCLUSIVE OF AMOUNTS REQUESTED BY THE CERTIFICATE HOLDER AND MAY NOT REFLECT

POLICY LIMIT AMOUNTS IN EXCESS OF THOSE REQUESTED.” My interpretation of this statement is that ACORD is saying that the limit shown may only reflect the limit required by the contract the insured has entered into and not the full policy limits. For years, the ACORD 25 Forms Instruction Guide (FIG) under, for example, the Occurrence Limit field has said, “Enter limit: The general liability, each occurrence limit amount.” In other words, in this field you would enter the actual occurrence limit provided by the policy. The reason is that the COI certifies the policy, not compliance with a contract. For example, your insured has a CGL policy with a $2 million occurrence limit and enters into a contract requiring a $1 million occurrence limit. Your insured doesn’t want the other party to know they have more insurance available than required by the contract (even though there is likely an unlimited indemnification requirement). As I read the new ACORD 25 language, it is acceptable to show only the $1 million limit required by the contract on the COI. A potential problem is that most states now have statutes, regulations, or DOI directives that instruct or arguably imply that the agent must show the actual policy terms on the COI. Again, the purpose of a COI historically has been to certify policy coverages and limits, not compliance with a separate third-party contract. This issue will be addressed during the webinar. Are you comfortable that your staff recognizes these issues from the standpoint of properly insuring your customers and assisting them in compliance with the contracts they enter into? If not, consider signing them up for the April Academy of Insurance webinar at: www.ijacademy.com. Wilson, CPCU, ARM, AIM, AAM is the founder and CEO of InsuranceCommentary.com and the author of six books, including “When Words Collide…Resolving Insurance Coverage and Claims Disputes,” which BookAuthority has ranked as the #1 insurance book of all time. He can be reached at InsuranceCommentary@outlook.com. MARCH 23, 2026 INSURANCE JOURNAL | 41

Idea Exchange: Terrorism US Terrorism and Political Violence Market Outlook: Capacity, Exposure and Emerging Threats By Joshua Watson and Kyle Rogers

he U.S. terrorism and political violence (PV) insurance market is evolving amid rising risks. An uptick in active-assailant attacks, domestic extremism, and civil unrest is reinforcing flexibility, agility, and resilience as insurers navigate an increasingly complex world. While 2025 data indicate volatility and increases in active assailant incidents, the exposure remains a persistent feature across commercial, educational, and public sector risks. From January–September 2025, there were approximately 341 mass shooting incidents (three or more casualties) across the U.S., resulting in more than 300 fatalities and 1,500 injuries, according to a report from the Department of Homeland Security. Despite a 50% decline in FBI-defined “active shooter” incidents (25 in 2024 compared to 50 in 2023), the five-year mean remains elevated at 44.6 incidents per year (2020–2024). Meanwhile, average casualty counts have increased from 8.9 per event (2020) to 11.2 (2024), reflecting higher lethality rates, the FBI reported. The increase in severity escalation, rather than frequency alone, has been the key underwriting concern—particularly for entities with high occupancy densities and limited egress infrastructure. As a result, insurers are working closely with brokers to educate insureds about their active assailant policies and help strengthen their risk management protocols.

Coverage and Capacity Response to Active Assailant Incidents

The market response has focused on wording precision and capacity differentiation, including: • The refinement of trigger language distinguishing “malicious attack,” “active assailant,” and “terrorism” events. • Broader sub-limits for non-damage business interruption (NDBI), crisis response costs and specific, industry-focused coverages (e.g., school bus route protection). 42 | INSURANCE JOURNAL | MARCH 23, 2026

• Retention structures increasing from 25%–40% since 2023 on most standalone active-assailant products. Carriers have also responded to this growing risk by partnering with brokers, insureds, and third-party providers to increase risk mitigation. This includes providing risk overviews by crisis management professionals, prevention training and premium credit for active preventative measures, as well as AI-trained video monitoring, detection, license plate reader cameras, and other technologies.

‘Political violence exposures have escalated sharply due to political polarization and election-linked volatility.’ Political Violence Risk: Polarization and Capacity Stratification

Political violence exposures have escalated sharply due to political polarization and election-linked volatility. Election-related violent threats surged 300% during the 2024 campaign cycle, and attacks against government facilities and public institutions have increased by 45% year-on-year, according to Federal Bureau of Investigation data. The Department of Homeland Security (DHS) recorded more than 1,200 domestic violent extremist incidents in 2024—a 73% increase from 2023, and the highest since national tracking began. These incidents have risen mainly because of increasing political polarization, heightened rhetoric during election cycles, and the proliferation of extremist ideologies across the country. Meanwhile, ideologically targeted violence now constitutes 68% of domestic terrorism cases. For PV risks, insurers are working with brokers and insureds to decrease their profile by using measures akin to active assailant such as increased monitoring, prevention training, and enhanced wording to provide not only direct

coverage if an event occurs but also access to pre-event crisis management.

Reinsurance and Primary Market Dynamics

While headline capacity remains available, reinsurer selectivity has heightened. Primary carriers are encountering: • Narrower wordings with emphasis on explicit insurrection, riot, or civil commotion triggers. • Reinsurance treaty language requiring TRIA alignment for terrorism backstop eligibility. • Geographic rating differentials up to 40% between urban centers and rural exposures. Average premium movements are tracking between +15% and +25% across PV classes through 2026, with aggregate limits tightening 10%–15% year-on-year, due to capital preservation strategies that are being imposed by insurers to protect profitability.

Terrorism Risk: Emerging Exposures and Challenges

As of 2024, domestic terrorism accounts for approximately 75% of all FBI terrorism investigations. The highest frequency segment remains in lone-actor incidents, which exhibit short-duration, high-intensity loss characteristics and minimal prior indicators. Domestic terrorism’s rise in the U.S. has been largely associated with a rise in increased partisan divide, political fracturing, and far-right and far-left actors. While incidents related to Islamist extremism continue to decline (ISIS- and Al Qaeda-related plots are down 35% from 2020 levels), transnational criminal cartels have emerged as a distinct insured peril, after they were designated as terrorist entities by the current administration. This specific reclassification expands exposure mapping across the southwestern United States and introduces coverage ambiguity in traditional terrorism forms. Insurers are addressing coverage INSURANCEJOURNAL.COM

ambiguity in traditional terrorism forms through enhanced wording precision and explicit trigger language refinement. The market is responding by clearly distinguishing between “terrorism,” “active assailant,” and “malicious attack” events within policy language, ensuring that emerging threats—such as the recent reclassification of transnational criminal cartels as terrorist entities—fall within defined coverage parameters. This includes developing broader definitions that capture lone-actor incidents and hybrid attack scenarios that don’t fit the Terrorism Risk Insurance Act’s (TRIA) foreign terrorism certification requirements, while simultaneously requiring reinsurance treaty language to align with TRIA eligibility standards for backstop protection. Insurers are also collaborating with state regulators and industry organizations to establish standardized policy language that reduces definitional gaps, particularly for domestic extremism and INSURANCEJOURNAL.COM

ideologically motivated violence.

The TRIA Mechanism

TRIA remains the central market backstop. Its key structural thresholds include: • An industry aggregate trigger: $200 million. • Federal participation: 85% of insured losses above insurer deductibles. • An aggregate liability cap of $100 billion per annum. Since TRIA was established in 2002, no event has triggered federal reimbursement, raising market skepticism regarding liquidity timing and definitional hurdles. Renewal uncertainty beyond December 31, 2027, is already factored into midterm reinsurance placement strategies, especially for high concentration risks such as major metropolitan areas, critical infrastructure, and high-profile commercial properties. However, insurers are proactively preparing for this transition by strengthening their resilience frameworks using robust

catastrophe modeling that incorporates hybrid threat scenarios, diversified reinsurance strategies that reduce dependency on TRIA backstop mechanisms, and enhanced capital reserve positioning. Carriers are also collaborating with federal agencies and industry stakeholders to advocate for early legislative clarity and ensure market continuity beyond 2027—positioning themselves to maintain stable capacity regardless of the outcome. The market trajectory points toward continued innovation, with bundled terrorism and active-assailant solutions, parametric supplements, and enhanced risk intelligence forming the foundation of next-generation coverage. Through preparedness, resilience, and strategic adaptation, the industry is well-equipped to provide stable protection amid evolving threats in 2026 and beyond. Watson is Senior Underwriter – War and Terrorism, and Rogers is Senior Underwriter – Terrorism and Political Violence at Markel International. MARCH 23, 2026 INSURANCE JOURNAL | 43

Idea Exchange: Minding Your Business Business Planning in a Snap: Part Two

lanning ahead requires an understanding of where you are now, how you got there, what works, and what doesn’t. After that, a road map to the future can be drawn. To help with your agency’s business planning efforts, try developing a one-page business plan by reviewing five areas. By Catherine Oak Part one of this two-part article series reviewed the first two areas in developing this one-page business plan: book of business and sales (see the February 23 issue of Insurance Journal magazine). Part two will review the last three areas: financial performance, employee productivity, and market relationships.

Financial Analysis

The beginning of the year is a great time to check the agency’s financial performance. It is relatively easy, and it will

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need to be done for taxes anyway. For the financial review, income statements and balance sheets are needed. Don’t forget to obtain the summary accounts receivable and accounts payable reports. First, look at the changes in revenue and expenses compared to prior years. Have they gone up or down? What is the percentage of the change in each category? If there are major changes, what is the reason? Sometimes the change is because of a non-recurring event or a discretionary item. The real problem is if the situation has gotten progressively worse over the years. Subtle changes each year can add up to a big change. Is the agency spending more or less for each expense than its peers? Make sure that the peer group used is a fair comparison. Use a benchmark that is for agencies of similar size, book composition (personal lines, commercial lines, life, health), size of account, and if possible, geographic region. If the agency is significantly different from its peers, why is it so, and should there be any adjustments made to the operation? What is the bottom line? Is the agency profitable? A good rule of thumb is the total return for the owners and producers (compensation, perks, and profit) in an agency should be at least 50% of the revenue. Next, look at the following balance sheet ratios: trust ratio (cash plus receivables divided by company payables), collection ratio (receivables divided by premium payables), and the current ratio (current assets divided by current liabilities). Review the aged receivables report. How good are the agency’s col-

lection practices? Many firms are moving more to direct bill to avoid collection hassles, but then they should not follow up on late payments. Collections are the carrier’s role for direct bill. In the Financial Review box of your one-page business plan (see February 23 issue), write down the total revenues and expenses for the agency for 2025. Also, write down the total compensation to the owners (salary, commission bonuses, perks, etc.). Next to those numbers write down your projections for the next two years. Below that list, write down two or three problem areas for the agency that you have noticed with the analysis, such as poor collections or higher-than-average rent expense. These will be the issues that need to be resolved by the end of the year.

‘It is important to begin the review with the big picture. Calculate revenue per employee, per account manager, and per owner/ producer.’ Productivity Analysis

The next area to look at is employee productivity. The following information is needed: • An employee list, including the percentage of time each employee (and owners) spends on production, service, administration, and management. • Compensation for each employee. • Commissions and number of accounts each account manager handles. It is important to begin the review with the big picture. Calculate revenue per employee, per account manager, and per owner/producer. Keep in mind not to use the job titles but the percentage of time that the employees spend in each category. If a producer spends a third of their time doing traditional service work, then they count as 33% of an account INSURANCEJOURNAL.COM

manager role and 66% as a producer. Next, narrow the scope down to commissions per account manager and accounts per account manager. This should be broken down by line of business if the account manager handles more than one line. Compare the account managers to each other and the agency’s performance to its peers. There may need to be some subjective adjustments. For example, an account manager may have had to move a book of business from one carrier to another. Also, some types of business may be more complicated and service intensive than other types, and this could affect performance in an account manager’s book, such as if they handle a large number of contractors versus BOP packages. In the box marked Employee Productivity, vertically list the current revenue per employee, average commission, and number of accounts handled INSURANCEJOURNAL.COM

by the account managers by line of business (commercial lines, personal lines, etc.). Besides those numbers write down the projected goals for next year. Below that, list two or three action items that need to be accomplished to reach those goals. This could include new computer software or more training for the account managers, for example.

Market Relations

If the current hard market continues to soften, the carriers may make some changes, such as changing profit-sharing agreements, tightening up or loosening some underwriting, or pulling out of certain markets. Today’s agent or broker needs to have a clear understanding of what the carriers can do for them and how that might fit into the overall agency plan. Run a list of all the carriers with volumes, commission rates (or com-

missions), loss ratios, and contingents received. Analyze how the agency’s book of business stacks up with the existing markets. Compare all the carriers and their products against what the agency has with the top five or 10 industry groups the agency writes. Some of the questions that should be asked include: • Will volume commitments be met, and how will it be done? • Are there new markets the firm should seek out? • Is the volume spread too thick or too thin? • Is the agency maximizing profit sharing agreements? In the box marked Carrier Relations, list the five most important markets (not necessarily the largest) and the agency’s volume with them. Write realistic agen-

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Idea Exchange: Minding Your Business continued from page 45

cy production goals for the next year besides those numbers. It is best if planning is done before the carriers dictate what they expect from the agency. Next, list one or two markets that the agency could use. Write down on one side of those names the dates that those carriers

will be approached. Finally, list two or three markets the agency has outgrown and should get rid of.

personnel changes, workflow issues, or management issues.

Why You Need to Do This

The Final Ingredient

The last box can be used to write out the goals for any other key area for the agency. This could include automation,

110 results for ‘agriculture’

Competition is keen. The changing market cycle continues to cause havoc, and agency value is at stake. This annual planning process and self-assessment is the key to success. If management does not know where they are, how can they possibly plan for tomorrow and know how to get there? Agencies without a plan are totally reactive to their environment and have little control over their future. This simple planning technique can be done in less than a day. Through delegation, if time permits, each box in this plan can be expanded into several pages of a complete business plan. The beauty of the one-page plan is that it can easily be referenced for reminders. Business plans need to be reviewed at least once a quarter. These goals should also be shared with middle managers, producers, and of course, the rest of the service and administrative staff. How can they help the firm reach its goals if they don’t know what they are? This is a common complaint from agency staff: They want the communication of goals and plans by management, and want to be rewarded individually if they assist the firm in getting there. Hold an off-site planning meeting at least once a year, and consider having an independent third-party facilitator assist in achieving this plan more quickly, letting others be involved in the brainstorming of the plan and helping the firm reach its goals. The man without a plan is simply lost, like a rudderless ship. Make a choice. Take the time to plan ahead and be successful. Oak is the founder of the consulting firm, Oak & Associates, based in California and Oregon. The firm specializes in financial and management consulting for independent insurance agencies, including valuations, mergers, acquisitions, sales planning as well as perpetuation planning. Phone: 707-936-6565. Email: catoak@gmail.com.

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Idea Exchange: Technology

Rise of the Analytical Agent

Building Stronger Insurance Agencies with Business Intelligence

oday’s agents are dealing with a pace of innovation that would boggle their predecessors’ minds. This data-centric era and uncertain economic landscape places pressure on agents to adapt to and incorporate the By Anurag Shah latest technology, with an urgent need to understand both how it works and what it can do for their businesses. But for the busy and fiscally cautious insurance agent, proven ROI is crucial. Data and business intelligence (BI) allow agents to run their businesses more efficiently. Still, skeptics ponder just how

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crucial data and BI will be for the future of our industry.

What’s the Hype About?

Data analytics and BI are benefiting agents and improving their businesses in four crucial areas: operational efficiency, strategic decision-making, expanding books of business, and enterprise value. Operational efficiency. This is where agents are seeing the most tangible daily benefit from data analytics and BI tools. Normal tasks such as simple policy updates or renewal processes can be automated, freeing agents to focus on more complex and potentially more profitable areas. Finding ways to automate

more perfunctory, non-executive tasks also creates opportunities for agents to focus on the client experience and further tailoring both solutions and outreach to those clients. Time focused on business development is increasingly critical, and creating a more streamlined and automated operation helps to elevate this priority. Strategic decision-making. BI tools can provide actionable insights informed by a business’s data, removing a good deal of guess work from decision-making. While it would be nice to always mentally maintain every detail and business aspect or consideration involved in daily business decision-making, technology can

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Idea Exchange: Technology continued from page 47

help store and process data parameters faster and more efficiently than a human, incorporating nearly every relevant agency detail. Expanding books of business. The insights from business intelligence tools can help agents analyze their books of business, identify areas for cross-selling to existing clients, and pinpoint niches that might be natural extensions of the agency’s current offerings or clientele. Enterprise value. As data analytics tools and BI help improve agency efficiency and decision-making, they also increase the value and competitive edge of a business. For example, imagine there are two similarly sized insurance agencies preparing to sell their agency; one is a data-driven agency, while the other operates more traditionally. The data-driven agency with the stronger handle on its metrics and KPIs will likely be seen as more efficient and scalable. More efficient operations, informed decision-making, and more valuable

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books of business are all dream outcomes for agents. Those independent agents who take a more analytical approach to their data and BI will have the advantage—but only if they are maintained effectively.

Starting at the Source: Data Management

Quality analytics and actionable BI insights depend on clean, well-maintained data for the most impactful results. I’m reminded of an agent who began using the precursor to SIAA’s AgencyIQ nearly five years ago. After experiencing some complications applying the BI tool, the agent was unhappy and ready to cancel the entire implementation. The agent agreed to allow our team to analyze the data. It was through this process we discovered they were inadvertently recording some data points in an inconsistent manner in their management system, leading to irrelevant insights. We repaired the errors and adjusted the client’s process. In short order, this agent began producing relevant, actionable BI insights. Today, that agent is still one of our users, as well as one of our biggest success stories.

As with most things in life and business, what you put into something is almost always as important as what you get out of it. Maintaining data is one of these areas, and it should be considered in three different stages: data creation and collection, data storage, and data analysis. Agents should know and control where their data comes from, including documents, email communications, agency management systems (AMS), customer relationship management (CRM), and elsewhere. From there, agents must grasp how their data is being stored for easy access as well as accuracy. The outcome of this data input and accessibility, when done properly, is actionable insights through business intelligence. With a thorough understanding of these three stages of data, agents can develop a strategy to strengthen the health and accuracy of their data. But it’s not a static process. It is important for agents to recognize their data strategies will evolve along with their businesses. As an agency adopts new technology, grows its books of business, or begins working with new partners, those data

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strategies will need to shift and adapt—just like the agent must adapt to new business needs and environments.

Overcoming Misconceptions

One of the biggest hindrances in the adoption of data analytics and business intelligence are misconceptions around deployment, safety, and real-world use. Let’s look at a few common misconceptions around data, technology, and BI. Data sharing is too risky. When someone is asked to share their data, there is usually some immediate pushback until a proven benefit becomes evident. Social media feeds and online shopping dashboards, for example, become more tailored to users based on their data, making the user experience more convenient. Data sharing can actually be a secure process, and those agents who work to understand how a potential BI tool acquires and stores data may find themselves much more comfortable.

‘The insights from business intelligence tools can help agents analyze their books of business, identify areas for cross-selling to existing clients, and pinpoint niches that might be natural extensions of the agency’s current offerings or clientele.’ Tools will replace people. The biggest argument against AI tools is the belief they will replace humans and take jobs. However, especially in an industry driven by people and relationships like insurance, human connection will always be a crucial asset. And like every industry that has faced technological advancements, people will always drive the process while adapting. As technology grows more efficient and complex, agents can reallocate time to focus on actions that better contribute to bottom-line growth like submissions, renewals, and building stronger relationships with clients, their communities, and other stakeholders. INSURANCEJOURNAL.COM

Bigger, more complex AI models are better. Agents do not need the biggest, most complex AI models and tools to see positive results. In fact, agents should strive to remove complexity to avoid excessive options. ChatGPT tools, as just one example among many, are built to consider several billion parameters in their outputs. While this makes them super powerful for wide-ranging, industry-agnostic applications, they might be overkill when used in conjunction with specific problems within an industry like insurance (as it pertains to independent agencies). There are numerous, business-specific models built for agents without the additional, unnecessary complexities that make these tools harder to understand and/or adapt to for daily use. Understanding misconceptions that surround discussion and implementation of data and BI tools will help agents better communicate the benefits of the tools and address uncertainty. Addressing employee concerns across the entire implementation process is just as important, if not more so, as getting the initial buy-in among producers and staff. Keeping lines of communication open and addressing concerns across the implementation stage and after is crucial to any agency’s success. These tools are only as impactful as the people using them.

Tech Works Better Together

Some agents may think, “I already have an AMS and a CRM that work well for my agency. Why do I need a BI tool, too?” BI tools work in tandem with the AMS and CRM to complete the data life cycle. An AMS and CRM are workflow tools rich in data that all too often goes unexplored or employed to the benefit of the agency. A BI tool will take that data and interpret it, sharing analysis, suggestions, and client-specific insights that can have a meaningful impact on the agency’s bottom line. While the agent and broker industry still has a long way to go to achieve widespread adoption and deployment of data analytics and BI, the agents who invest in such technology today will quickly out-

pace those relying on traditional strategies alone. Economic pressures and market conditions will continue to encourage change and adaptation, pushing agents to secure every competitive edge they can to retain clients and grow their businesses. By embracing analytics and BI now, agents will be better equipped to navigate the inevitable industry shifts the future has in store. Shah is chief data officer for SIAA – The Agent Alliance (siaa.com), a network for starting, growing, and evolving independent insurance agencies. The organization has over 5,200 member agencies writing more than $17 billion in total written premium.

March 23, 2026 Clear Blue Insurance Company B7 Tabonuco Street, Suite 912 Guaynabo, PR 00968 The above company has made application to the Division of Insurance to amend their Foreign Company License to transact Property and Casualty Insurance in the Commonwealth of Massachusetts. Any person having any information regarding the company which relates to its suitability for the license or authority the applicant has requested is asked to notify the Division by personal letter to the Commissioner of Insurance, 1 Federal Street, Suite 700, Boston, MA 02110, Attn: Financial Surveillance and Company Licensing within 14 days of the date of this notice.

Advertisers Index ALKEME www.alkemeins.com Applied Underwriters www.auw.com Florida Surplus Lines Service Office www.fslso.com Foremost Insurance Group www.foremoststar.com Leavitt Group Enterprises, Inc. www.leavitt.com Missouri Employers Mutual (MEM) www.mem-ins.com SPG / Monarch E&S Insurance Services www.specialtyprogramgroup.com PIA of Texas www.piatx.org SIAA www.siaa.net Smart Choice Agents Program www.smartchoiceagents.com

20, 21 51 22, 23 5 18, 19 S1, M1 14,15 24, 25 16, 17 2, 3

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Closing Quote It’s All in the Details: Contractual Clarity in the Lumber Industry

By John Kennealy

isk is unavoidable, but in today’s increasingly litigious landscape, it has developed into a serious threat for business owners. The lumber industry faces its own issues with the rising threat of long-tailed exposures. As more lumber and hardware supply businesses expand offerings to include installation services, those companies are encountering an increased frequency of construction defect claims decided in a court of law, putting reputational and financial futures on the line. When a hardware and building supply company completes installation services, they shoulder the risk of property owners claiming the quality or installation of materials failed to meet contractual standards, leading to damage or a threat to safety. Contracts, in part, are meant to serve

as a line of defense against construction defect claims, but vague language and a failure to clearly allocate risk pave the way toward potential disagreements that result in costly and time-consuming litigation. Without a contract to define work expectations and responsibilities, disputes over liability are inevitable. Door, window, and kitchen cabinet installations are some of the most common examples of construction defect claims, and while these cases are typically smaller, they hold the potential to develop into potentially significant losses.

Contractual Clarity

Contractual structure and clarity are key to effective risk transfer. Consider the following ways agents and brokers can best support insureds facing construction defect claims.

Inform insureds on risk mitigation. Agents and brokers should

work proactively to inform insureds about the factors causing construction defect claims and how best to mitigate risks associated with installation practices causing defects.

Ensure policyholders are using high-quality materials and share considerations to keep in mind when policyholders are vetting third-party contractors. Additionally, insureds need to know their contractual responsibilities as well as the reality that not all risks can be transferred.

Ensure contractual risk transfer.

Contract language must be airtight and prescribe responsibility clearly. It is imperative for insureds to transfer risk downstream or face the burden of potential losses. All contracts should be carefully structured to ensure risk is transferred to the workers completing the installation. Whether it is an in-house employee or a project contractor unfamiliar with the product being installed, contracts should reflect the structure of the relationship and clarify who is completing the work.

Understand local compliance.

The frequency of these defects and the severity of subsequent claims can vary by locality. States like Florida or California, where large-scale development projects occur more frequently, run a higher risk of installation issues occurring. Depending on the nature of consequential loss that has been sustained, jurisdiction rules may vary on what can be covered as damages, further escalating potential costs. This makes it even more critical for agents and brokers to stay aware of regional trends and regulations to ensure policies are compliant.

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supply companies should be scrupulous in vetting third-party contractors. If installation is performed internally, employees need to be trained in the proper handling of materials and use of tools. Any good partner should be willing to accept liability for their work, and if issues arise, policyholders should re-evaluate their partnership. Agents and brokers can work with policyholders to identify red flags and help verify contractors are properly insured. Construction defects may not be discovered until months or even years after the initial installation. Due to the longtailed nature of these claims, documentation connected to materials, installation, and third-party vendors can provide clarity on liability. Clearly defined, well-structured contracts can be helpful reference points during the claims process, allowing agents and brokers to keep claims from snowballing into costly payouts. While many construction defect claims may be low severity, their rising frequency could still spiral into drawnout legal proceedings that cause long-term financial and reputational harm on hardware or building supply companies. Agents and brokers can be an invaluable resource in educating business owners on contractual clarity and working with them to identify contract gaps before these incidents occur. Kennealy is vice president of claims at Pennsylvania Lumbermens Mutual Insurance Company (PLM). INSURANCEJOURNAL.COM

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