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May 19, 2025 • Vol. 103 No. 8

Contents Idea Exchange

Special Report

News & Markets

Insured Losses Could Hit $145B in 2025, Driven by Rising Claims From Secondary Perils

Closer Look: Diversification, Risk Modeling Top of Mind for Carriers as Cyber Liability Market Softens

New Report Shows Rise in Cargo Theft, With Three States Leading the Way

Taking a Step Back: Why It’s Important to Take Time to Unwind In an Industry That Never Stops

Minding Your Business: Perpetuation Planning – Part Two

Special Report: Risk Management Considerations When Having Family Fun

14 New York High Court

Unleashes Expanded Liability for Pet Owners

Dog Bite Claims Soar in Frequency and Cost: Report

Is It Covered?: Auto Coverage Under a CGL Policy

Cyber Market Continues to Expand as Rates Adjust, Says Guy Carpenter

Distracted Drivers Are Overconfident; 20% Still Texting While Driving

Leaning into Uncertainty and Managing Risk

Special Report: New Risks Emerge As Hollywood Goes Virtual and Hunts Tax Credits

Spotlight: Pairing Parametric and Standard Insurance Will Become More Common: East Carolina University Students

Spotlight: Trouble Brewing? 6 New Risks for Winery and Brewery Clients

44 46

An Agent’s Guide to Expanding into Commercial Lines

Navigating the Landscape of Agency Agreements

Closing Quote: Industry Recruitment: Lessons Learned

Spotlight: When Harassment Follows You Home: Managing EPL Risk in a Remote Work Era

Departments 6 Opening Note 4 | INSURANCE JOURNAL | MAY 19, 2025

10 Figures

11 Declarations

16 Business Moves

18 People

27 My New Markets

INSURANCEJOURNAL.COM

Every day, we create unique risk solutions for unique businesses.

When it comes to insurance for midsize and large businesses, we get it. We do it for all kinds of industries, tailoring our policy solutions from traditional to specialized coverage. With our experience in underwriting, innovative service, and claims, we are your one-stop shop. Connect with your underwriter at The Hartford.

The Hartford Insurance Group, Inc., (NYSE: HIG) operates through its subsidiaries, including underwriting company Hartford Fire Insurance Company, under the brand name, The Hartford®, and is headquartered at One Hartford Plaza, Hartford, CT 06155. For additional details, please read The Hartford’s legal notice at www.TheHartford.com. © January 2025.

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

ADMINISTRATION / CIRCULATION

Drivers Keep Shopping

uto insurance rates are finally leveling out, but drivers still continue to shop for better deals. According to a new J.D. Power 2025 U.S. Insurance Shopping Study, the rate of U.S. auto insurance premium price increases slowed to less than 2% at the end of 2024, down from 13% at the beginning of the year. However, the percentage of customers shopping for insurance year over year jumped to 57% from 49%. The 57% of shoppers reported for 2024 is the highest shopping rate ever recorded in the 19-year history of the study. Shopping rates were higher in Q1 2024, in line with record-high insurance rates. As price increases slowed throughout the year, shopping rates increased. “Auto insurance rate taking reached multi-decade highs in the first quarter of 2024, which put record numbers of customers into the market shopping for lower-priced policies as the year progressed,” said Stephen Crewdson, managing director of insurance business intelligence at J.D. Power. “As rate activity began to fall in the second half of 2024, many shoppers were successful at finding lower-priced policies,” Crewdson said. “That combination of increased shopping and less rate taking created a bit of a snowball effect for much of the year, but we are seeing signs that shopping rates are starting to normalize.” One-third (33%) of customers who are actively shopping for an auto policy are hoping to save by bundling their auto policy with a homeowner’s policy. It’s a plus for insurers, as customers who bundle insurance have longer tenures with their insurer (7 years on average vs. 5.5 among those who do not bundle). Crewdson said that a potential concern for the industry right now might be the increased interest many consumers are showing in embedded insurance providers, like auto dealers, financing companies, and manufacturers. More than one-third (37%) of auto insurance customers say they are interested in embedded insurance sold directly through the automobile dealer or manufacturer. Interest in embedded policies is highest among Generations Y/Z (47%), and those who say their primary reason for shopping their auto policy is service (48%). Drivers are also putting their hopes in reducing auto insurance costs through UBI programs this year, where 17% of insurers offered UBI programs using telematics software to monitor an insured’s driving style and assign rates based on safety and mileage metrics. Offerings are up from 15% in 2024 but down from 22% in 2023. The J.D. Power U.S. Insurance Shopping Study is based on responses from 12,720 insurance customers who requested an auto insurance price quote from at least one competitive insurer in the previous six months and captures advanced insight into each stage of the shopping funnel. The study was fielded from April 2024 through January 2025.

‘One-third (33%) of customers who are actively shopping for an auto policy are hoping to save by bundling their auto policy with a homeowner’s policy.’

Andrea Wells V.P. of Content 6 | INSURANCE JOURNAL | MAY 19, 2025

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: Larry Chasin, Jason Ernest, Nelson Kefauver, Michael McKenna, Karli Moore, Mark Robinson, liver Travieso Columnists: Tony Caldwell, 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 Administrator Alberto Vazquez | avazquez@insurancejournal.com Marketing Director Derence Walk | dwalk@insurancejournal.com

DESIGN / WEB / VIDEO

V.P. of Design Guy Boccia | gboccia@insurancejournal.com 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:

Call (800) 897-9965

or visit ijmag.com/subscribe Insurance Journal, The National Property/Casualty Magazine (ISSN: 00204714) is published 20 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 2025 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

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News & Markets Insured Losses Could Hit $145B in 2025, Driven by Rising Claims From Secondary Perils By L.S. Howard

lobal insured losses from natural catastrophes hit $137 billion in 2024, following the 5%-7% annual growth rate that has been the norm in recent years, according to Swiss Re analysis. If this trend continues, global insured losses will approach $145 billion in 2025, mainly driven by secondary perils such as severe convective storms (SCS), floods, and wildfires, said the Swiss Re sigma report titled “Natural catastrophes: insured losses on trend to USD 145 billion in 2025.” While loss severity for nat cats is rising globally, North America accounted for almost 80% of global insured losses in 2024, due to the region’s exposure to severe thunderstorms, hurricanes, floods, wildfires, and earthquakes, the report said. “As has been the case in recent years, in 2024 most of the global insured losses were driven by secondary perils, in particular severe convective storms in the U.S.,” Swiss Re said, noting that the deadly fires in Los Angeles in January point to another year of high losses from secondary perils. Global economic losses from catastrophes were $318 billion—the highest since 2017 ($448 billion in 2024 prices). “Around 43% were covered by insurance, highlighting the continued existence of large protection gaps in many parts of the world, including in advanced economies,” the report said. The 2024 insurance protection gap was $181 billion, up from $177 billion in 2023.

8 | INSURANCE JOURNAL | MAY 19, 2025

Peak-Loss Years

Despite the high price tag from secondary perils, Swiss Re warned, it is primary perils (tropical cyclones and earthquakes) that remain the biggest contributor to insured losses overall. Swiss Re pointed to the five so-called “peak loss” years that have occurred in the last 30 years (1999, 2004, 2005, 2011, and 2017), when annual losses were way above trend. In 2017, Hurricanes Harvey, Irma, and Maria drove global insurance losses to 111% above trend. Swiss Re cautioned that the period of quiet since then did not slow the underlying growth of risk, noting that its natural catastrophe models point to a 1-in10 probability that global insured losses could reach as high as $300 billion in 2025, creating the next peak loss year. Peak loss years, “due to either the accumulation of many loss events or those from a few individual large events, should not be considered a freak occurrence,” Swiss Re said. “History repeats, and it’s not a question of if but when the insurance industry will face the next peak loss year.”

Los Angeles Wildfires

Although 2025 began with record insured wildfire losses of approximately $40 billion in Los Angeles, Swiss Re explained that the fires on their own will not cause a notable deviation from the annual loss growth trend for natural catastrophes (of 5%-7%). “Of the total losses, insurance claims for residential property were at least $30 billion,” said Swiss Re, estimating this will likely generate a loss ratio of around 200% for homeowners’ insurers in California. “Assuming an around 50% base load, the loss ratio is heading toward 250%. The last time the loss ratio was of similar magnitude was in 2017 (201%) and 2018 (176%), when wildfires in California triggered record losses for that time,” the report added. “We estimate that two-thirds of payouts to cover the fire losses will come from primary insurers, one-third to be paid

by reinsurers. The scale of losses was so large that many excess-of-loss reinsurance covers were triggered. The reinsurance share of loss would have increased further with an even bigger loss.” In years when losses are close to trend, Swiss Re said, primary insurers cover the majority of property claims, but when major disasters strike and losses rise well above trend, “reinsurers step in to cover more than half of the losses in excess of trend.”

Homeowners’ Insurance

Homeowners in catastrophe-prone states are feeling the pain of rising premiums, as their insurers seek to return to underwriting profitability. In the U.S., homeowners’ insurers have seen their net incurred losses increase by 8% annually since 2018—a trend driven by a post-COVID surge in construction and claims costs. “The consequence of the latter is that homeowners’ insurers have seen several years of underwriting losses,” Swiss Re said. “After several years of underwriting losses, homeowners’ premiums only recently caught up with housing replacement costs. However, ongoing underwriting losses suggest that premiums are still not commensurate with the risk, and that further alignment is necessary to sustain insurance business.” The states with the highest exposures to natural catastrophes are also those where, in general, homeowners’ premiums are highest, the report said, pointing to five states—Florida, Texas, California, Louisiana, and Colorado—that account for around 50% of all natural catastrophe losses in the U.S. “Historically, Louisiana has suffered the highest natural catastrophe losses per policy, followed by Florida. These have mostly been on account of losses emanating from hurricane events,” the report said. “Homeowner premiums per household in the state of Florida are twice the national average,” the report noted. INSURANCEJOURNAL.COM

News & Markets Distracted Drivers Are Overconfident; 20% Still Texting While Driving By Jahna Jacobson

river overconfidence is leading to risky behavior. Nationwide’s latest driver survey found 20% of drivers text while driving, 15% use social media, 13% watch videos, and 11% read or write emails. Half of all drivers admit to eating or drinking while driving, and 13% get ready for work. Nearly half of the drivers surveyed (47%) believe the growing prevalence of built-in touchscreens and displays designed for navigation, communication, and entertainment contribute to driver distraction. “Far too many people believe they’re immune to distraction or that a ‘quick check’ won’t hurt,” said Casey Kempton, Nationwide’s president of personal lines. Roughly 9 in 10 consumers feel other motorists are using their phones more behind the wheel (92%), are driving faster (92%), are more aggressive (92%), and are more reckless (88%). Over a third of consumers agree driving is stressful for them, primarily because of others’

reckless driving, traffic congestion, and navigation. Seventy-two percent said they frequently see other drivers with road rage, 66% said other drivers irritate them, and 34% said other drivers give them road rage. Given these worries, only 15% of consumers rate other motorists around them as “very good” or “excellent” drivers, but 8 in 10 rate their own driving highly. Consumers are split on whether current distracted driving laws are effective at increasing safety on the road. Still, only about 4 in 10 consumers are aware of new distracted driving regulations or increased penalties for violations implemented in their state within the past two years. Technology such as dashcams may be one solution to deter distracted driving. Of the drivers surveyed, 94% agreed that

dashcams can provide valuable evidence in case of accidents or disputes during rides, but only 20% of drivers have cameras installed in their personal vehicles. About 13% of consumers have AI-powered dashcams in personal vehicles, but only 50% report they find the cameras helpful, versus 13% who find them distracting. Seven in 10 consumers said they would be likely to enroll in a program that offers rewards based on their driving behavior, especially if they could save on their auto insurance (50%) or earn rewards such as gift cards (23%).

New Report Shows Rise in Cargo Theft, With Three States Leading the Way

argo theft across the U.S. and Canada continued to rise in 2024, with three states making up the bulk of losses, a new report shows. Multimodal hubs in California, Texas, as well as around Chicago, continue to be top targets for thieves, according to the report, the result of a new collaboration with

INSURANCEJOURNAL.COM

GearTrack and CargoNet. The report also noted that Florida ports are seeing a rise in incidents. California, Texas, and Florida made up 54% of all the nation’s reported cargo thefts, according to the report. The top target commodities included food and beverages (up 115% month-overmonth), household goods (up 76%), and vehicles and accessories (up 36%). The report also noted that organized theft groups continue developing new and more sophisticated schemes. “Organized theft groups are developing new, innovative schemes—from non-delivery of loads to following freight trains

along delivery routes—and even forging documents for fraudulent pick-ups,” the report added. GearTrack, a supply chain management company, and CargoNet, a Verisk company, in March announced a collaboration that includes 24/7/365 cargo recovery support and investigation support. GearTrack customers can access Verisk’s theft and fraud risk management tools and analytics, including enhanced cargo theft and fraud intelligence alerts. The collaboration will also bring new cargo safety analytics and insights, with the upcoming release of the GearTrack Cargo Security Index, powered by Verisk CargoNet. The monthly report will provide a view of cargo theft trends across the U.S. and Canada. MAY 19, 2025 INSURANCE JOURNAL | 9

Figures

156 Million The number of Americans—nearly half of the U.S. population—now living in areas with unhealthy levels of air pollution, according to the 2025 State of the Air report from the American Lung Association. That number has increased by 25 million since last year’s report due to trends toward declining air quality as climate change-related extreme weather events like wildfires occurring more frequently.

10-15X The increase in demand for executive protection and safety assessments since the UnitedHealth executive shooting death on December 4, 2024, according to Glen Kucera, president of security services firm Allied Universal, which serves more than 80% of Fortune 500 companies. UnitedHealth spent $1.7 million on security for its top executives in 2024.

54%

The portion of the nation’s cargo thefts that occur in California, Texas and Florida, according to a new report from GearTrack and CargoNet. The top target commodities included food and beverages (up 115% month-over-month), household goods (up 76%) and vehicles and accessories (up 36%). The report also notes that Florida ports are also seeing a rise in incidents.

10 | INSURANCE JOURNAL | MAY 19, 2025

$1.6 Billion The amount of dog-related injury claims in 2024, according to Insurance Information Institute (Triple-I) and State Farm. The number of dog bite and related injury claims last year totaled 22,658, an increase of nearly 19% from 2023 and a 48% increase over the past decade. The average cost per claim increased 18%, from $58,545 in 2023 to $69,272 in 2024. More than 4.5 million people—mostly children—are bitten each year nationwide.

INSURANCEJOURNAL.COM

Declarations

Tort Reform and Rates

Tariff Tremors

Barring Gas Bans

— Georgia Insurance Commissioner John King predicting property/casualty insurance rates will drop 3% to 5% in the next year after lawmakers approved significant tort reform measures. He also seemed to warn insurance companies about filing for major increases. King’s comments came after Georgia Gov. Brian Kemp signed into law two bills that aim to reduce what has been called excessive litigation and seek to restrict financing of lawsuits by third-party lenders. King said his office is recruiting new insurance carriers and is willing to offer unnamed incentives to attract carriers to the state.

— Texas electronics manufacturing executive discussing the impacts and uncertainties surrounding the latest round of tariffs. Texas accounts for about 10% of total US manufacturing. A general gauge of business activity plunged to its worst reading since May 2020 based on recent survey responses from 87 Texas manufacturers, revealed by the Federal Reserve Bank of Dallas. While responses indicated modest current growth in production, company outlooks fell to a post-pandemic low as respondents pointed to frazzled supply lines and difficulty in forecasting.

— The Alliance for Automotive Innovation, which represents General Motors, Toyota, Volkswagen, Hyundai and other major automakers, in a letter stating car companies could soon be “ forced to substantially reduce the number of overall vehicles for sale to inflate their proportion of electric vehicles sales.” Major automakers want Congress to bar California’s landmark plan to end the sale of gasoline-only vehicles by 2035.

“So much political capital was spent on getting tort reform. They better not come to our office and ask a ridiculous rate increase.”

BRIC Hits Communities

“This is a generational set of infrastructure projects that would set us up for the next hundred years and it just—poof—went away.”

— Erin Burris, assistant town manager for Mount Pleasant, North Carolina, commenting on the Federal Emergency Management Agency’s (FEMA) elimination of the Building Resilient Infrastructure and Communities (BRIC) program. The change revoked upwards of $3.6 billion in funding earmarked for communities like Mount Pleasant. Officials across the country say long-standing plans have been upended by the move. INSURANCEJOURNAL.COM

“We have already had to turn around and refuse shipments because customers cannot afford the tariffs, delaying our ability to build, which will eventually lead to job losses.”

“Allowing these gas vehicle bans (something never attempted before in the United States) to proceed will increase automobile prices and reduce vehicle choices for consumers across the country at precisely the same time they are adjusting to the marketplace shock of 25% tariffs on imported vehicles and auto parts.”

Agentic AI Ecosystem

Canadian Snowbirds Take Flight

—Anthropic CEO Dario Amodei on the AI company’s partnership with AIG, which is focusing on using AI for core activities, and plans on creating an end-to-end AI process in an agentic AI ecosystem.

—Ken O’Brian, owner of Southwest Coast Realty in Naples, Florida, which has specialized in helping Canadians purchase properties in Florida for about 20 years. Real estate agents say they are seeing more Canadians cashing out, further softening property prices in warm-weather states. The "snowbirds" cite political uncertainty, the exchange rate and concern about whether Floridians would still welcome Canadians in the current climate.

“Enterprises are having a lot of success deploying [AI] in the periphery. That’s common across all companies. All companies need customer service. They need internal productivity for their developers. That’s the same whether you’re in insurance or some other area. So, [there’s] a lot of success there, and a lot of aspiration to make progress in the core of what they do.”

“Now with the political issue, the cost of maintaining a place here in Florida and the insurance, a lot of them decided to sell and go.”

MAY 19, 2025 INSURANCE JOURNAL | 11

American Integrity Insu

A Company Committed to Intern By Toni Logan

Adver

urance:

nal Growth

rtorial

Those accolades aren’t just plaques on the wall—they reflect the culture we’ve built by intentionally nurturing the growth, ambition, and potential of our employees. -Jon Ritchie, President

News & Markets New York High Court Unleashes Expanded Liability for Pet Owners By Andrew G. Simpson

og and other pet owners and insurers in New York are now exposed to increased risk of liability in the wake of a Court of Appeals ruling that allows an injured party to bring an ordinary negligence claim against a domestic animal owner for the first time. The New York Court of Appeals, the state’s highest court, has ruled that domestic animal owners may be held liable for an injury if they are deemed negligent for failing to exercise due care under the circumstances that caused the injury. That’s a broader standard than the strict liability theory that has been in place for decades and holds that a dog owner could only be held strictly liable if the owner knew or should have known the animal had “vicious propensities.” Now plaintiffs alleging injury can pursue one or both theories of liability against

14 | INSURANCE JOURNAL | MAY 19, 2025

an animal owner. “A plaintiff who suffers an animalinduced injury therefore has a choice. If the owner knew or should have known the animal had vicious propensities, the plaintiff may seek to hold them strictly liable. Or they can rely on rules of ordinary negligence and seek to prove that the defendant failed to exercise due care under the circumstances that caused their injury. Of course, a plaintiff might also assert both theories of liability, as Flanders chose to do,” the court explained. Flanders refers to Rebecca Flanders, a postal worker who, while handing a package to a homeowner on an inside porch, was attacked by the homeowner’s unrestrained 70 lb. dog. The dog bit her shoulder, causing an injury that required multiple surgeries and resulted in permanent scarring. Flanders sued under the state’s traditional dog bite theory of strict liability that the owner knew or should have known

about the dog’s “propensity to do any act that might endanger the safety of the persons and property of others in a given situation.” Flanders also sued under the theory of negligence, despite its precedent (Bard v Jahnke) set in 2006 that negligence did not apply in such circumstances. Flanders asked the court to overrule Bard and recognize negligence as an alternative to strict liability for injuries caused by domestic animals. Both of Flanders’ claims were dismissed by lower courts that found there was insufficient evidence to prove that the owner knew or should have known about “vicious” tendencies of his dog that would prove strict liability. The lower courts outright dismissed the negligence claim citing the Bard ruling under which negligence claims are unavailable in cases of domestic animals. The Court of Appeals, however, reversed those rulings and reinstated both

INSURANCEJOURNAL.COM

claims. The high court found there was sufficient evidence to create a triable issue under strict liability whether the owner knew or should have known about the dog’s propensities. Then the court went further and overruled Bard to the extent that it bars negligence liability for harm caused by domestic animals. The court reinstated Flanders’ negligence cause of action, allowing her to question whether the dog owner in her case took reasonable steps to “prevent foreseeable harm.” Noting that it had carved out various exceptions to the Bard ban on negligence claims over the years, and lower courts had tried to create loopholes, the court declared that “precluding negligence liability has proven unworkable, and at times unjust.” The Court of Appeals concluded: “Experience has shown that this rule is in tension with ordinary tort principles, unworkable, and, in some circumstances, unfair. Continued adherence to Bard therefore would not achieve the stability, predictability, and uniformity in the application of the law that the doctrine

of stare decisis seeks to promote.” The opinion continues: ‘Tort law seeks to incentivize us to be mindful of the risk that our behavior might harm others by imposing a duty to act with due care.

‘Insurers may face a higher volume of claims and greater exposure to damages, particularly in cases where the strict liability threshold could not previously be met.’ That is why, under ordinary principles of negligence, a victim may seek recovery by proving that a defendant failed to exercise due care and thereby proximately caused a victim’s injuries.” These principles apply to persons engaged in an array of activities including riding a bike, driving a car, and manufacturing. “A single idea unites these decisions: when people go about their daily lives, the law generally requires them to take reasonable steps to prevent foreseeable harm,” the opinion states.

By exempting owners of domestic animals from negligence liability, Bard departed from these principles, and the standard incentives of the tort system, according to the court. The opinion refers to a dissent in Bard that asked: “Why should a person who is negligent in managing an automobile or a child be subject to liability, and not one who is negligent in managing a horse or bull?” Legal experts see the decision leading to more claims and lawsuits against dog owners and property owners. “Insurers may face a higher volume of claims and greater exposure to damages, particularly in cases where the strict liability threshold could not previously be met. Now, even a well-behaved dog can be the basis for a claim if reasonable precautions were arguably lacking, attorneys Peter Gregory and Endell Osuna of Goldberg Segalla wrote. They also see the decision potentially affecting landlords, tenants, and business owners “if they fail to implement or enforce reasonable safety measures related to dogs on their property.”

Dog Bite Claims Soar in Frequency and Cost: Report

nsurers in the U.S. paid out about $1.6 billion in dog-related injury claims in 2024, according to data compiled by the Insurance Information Institute (Triple-I) and State Farm. The number of dog bite and related injury claims last year totaled 22,658, an increase of nearly 19% from 2023 and a 48% increase over the past decade, with the total cost of claims reaching about $1.6 billion, according to Janet Ruiz, director of strategic communications at Triple-I. The average cost per claim increased 18%, from $58,545 in 2023 to $69,272 in 2024. The cost has gone up about 86% over the last decade. The report was released in conjunction with National Dog Bite Prevention Week (April 13-18).

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Dog bites remain a serious public health risk, with more than 4.5 million people—mostly children—bitten each year nationwide. Nearly half (45.5%) of U.S. households include dogs, for a total of nearly 90 million canine companions in the United States. According to Triple-I, homeowners and renters insurance policies usually cover dog bite liability legal expenses, up to the liability limits (typically $100,000 to $300,000). The dog owner is responsible for all damages after the claim limit. At least two states, Pennsylvania and Michigan, have laws that prohibit insurers from canceling or denying

coverage to owners of particular dog breeds. Some states could exclude coverage after a dog bite, such as Ohio, which also requires owners of dogs that have been classified as vicious to purchase at least $100,000 of liability insurance.

MAY 19, 2025 INSURANCE JOURNAL | 15

Business Moves AXIS Launches Cyber in Canada

AXIS Capital Holdings Limited , today announced the launched an insurance policy offering customizable cyber and specialist liability coverage to companies in Canada with up to $2bn in revenue. The AXIS Cyber Technology and Miscellaneous Professional Liability (ACTM) policy is designed to protect businesses and avoid potential gaps in insurance coverage by enabling policyholders to cover multiple risks within one comprehensive policy.

National

Ignyte and Novacore Spin Off From NSM Commercial Business Sale

Ignyte and Novacore have launched following the recent sale of NSM Insurance Group’s U.S. commercial business to investment firm New Mountain Capital. Conshohocken, Pennsylvania-based NSM had said it would become two separate entities as a result of the sale, and on April 17 Ignyte was introduced as a specialty insurance platform and led by NSM founder Geof McKernan as well as Bill McKernan and Marc Castellucci. Ignyte is a portfolio company of investment firm Carlyle since 2022. Ignyte is now home to a growing global portfolio of specialty insurance brands spanning collector car, travel medical, international student health, leased equipment and other embedded insurance products. On April 22, the U.S. commercial business was relaunched as Novacore, an independent specialty insurance provider backed by New Mountain. Novacore will continue with more than 20,000 agent partners nationwide, a portfolio of more than 15 specialty programs, and a premier retail agency. Novacore also added Chase Clark as chief operating officer and chief underwriting officer. Additionally, Phil Dwyer joined as executive vice president of corporate development.

International Helvetia and Baloise

Helvetia and Baloise plan to merge

16 | INSURANCE JOURNAL | MAY 19, 2025

to create Switzerland’s second-largest insurance group with a combined business volume of 20 billion Swiss francs ($24.69 billion). The new group, to be called Helvetia Baloise Holding, will become one of the ten largest insurers in Europe, under what the two companies called a “merger of equals” with an even spread of senior executives and board members. The deal, which is expected to be completed in the fourth quarter of 2025, is the latest in the insurance sector after Belgium’s Ageas agreed to buy British car and home insurer esure for 1.3 billion pounds. Helvetia CEO Fabian Rupprecht will take the helm of the new firm while Thomas von Planta, currently chairman at Baloise, will lead the combined group’s board of directors. The exchange ratio will be 1.0119 new Helvetia shares for each Baloise share, with shareholders asked to give their approval at special meetings on May 23. Helvetia shareholders will hold 53% of the combined group, which will have a logo based on the one used by Baloise, whose base in Basel will be also be the new head office. In addition to the companies’ existing cost improvement plans, the merger is expected to generate annual savings of around 350 million Swiss francs ($433 million) before taxes. Around two thirds of the savings will come from cuts to the 22,000-strong combined workforce, although the company said it was too early to give a figure.

East

Hub International Limited, Allegiant Global Partners Inc.

Global insurance broker Hub International Limited reported it has acquired the assets of Allegiant Global Partners Inc. (AGP) of Boston. AGP is a health, welfare and risk consulting firm serving global employers. AGP serves the needs of international nongovernmental organizations (NGOs), higher education institutions and domestic nonprofits. Hub said AGP's expertise in the nonprofit and education industries complements its existing specialty and global benefits capabilities. Jay Bride, AGP founder and chief executive officer, Denis Guay, president, and the AGP team will join Hub National Employee Benefits and Hub New England, AGP will be referred to as AGP, a Hub International company. Terms of the transaction were not disclosed. Headquartered in Chicago, Hub has more than 19,000 employees in offices located throughout North America.

Midwest

Inzone Insurance Services, Davidson Insurance Agency Group LLC

Inszone Insurance Services acquired Davidson Insurance Agency Group LLC. Located in Missouri, Davidson Insurance Agency has served local businesses, families, and individuals since its founding in 1970. INSURANCEJOURNAL.COM

Originally established by Carrick Davidson in 1970, Davidson Insurance Agency has been family-owned and operated for over five decades. Carrick’s son, Dick Davidson, joined the agency in 1977, eventually purchasing it from his father in 1987. Davidson Insurance Agency specializes in tailored insurance solutions, particularly within the small commercial business sector.

CIBA Expands NexEdge in Midwest and Southeast Territories

CIBA, a commercial real estate insurance program headquartered in Glendale, California,expanded its NexEdge individual limits property product to the Upper Midwest and Southeast regions. The expansion builds on the success of the program’s initial launch of NexEdge in the Western States. CIBA said the expansion reinforces tits commitment to delivering tailored insurance solutions to its broker partners and their clients across the country. NexEdge has now expanded its dedicated limits product to include properties in the following states. Expansion includes Iowa, Illinois, Michigan, Minnesota, North Dakota, Ohio, South Dakota and Wisconsin in the upper Midwest and Kentucky, Tennessee, Mississippi, Alabama, Georgia, South Carolina, North Carolina and Florida in the Southeast. The expansion is supported by AZGUARD® Insurance Company, member of Berkshire Hathaway GUARD Insurance Companies and a non-admitted carrier in CA, NY, and other states. All Berkshire Hathaway GUARD subsidiaries are rated A+ Superior by A.M. Best (reaffirmed July 2024) and backed by the financial strength of the renowned Berkshire Hathaway Group. With AZGUARD® Insurance Company already providing support for CIBA’s General Liability product, this expansion represents a natural and seamless continuation of our established partnership.

South Central

Risk Strategies, GMC Advisors LLC

Risk Strategies announced that it has

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acquired GMC Advisors LLC, based in Houston, Texas. Terms of the deal were not disclosed. Headed by owner Greg Chubon, GMC Advisors is a specialist in commercial lines insurance products, with a focus on the construction and manufacturing industries, as well as companies in the energy sector. Founded in 2003, the firm has built a record of consistent growth propelled by specialty knowledge and a focus on helping middle-market companies in target industries. In addition to construction and manufacturing, GMC Advisors counts clients among engineering, oil and gas, and petrochemical-related firms in the region. Chubon is a 37-year industry veteran who, prior to founding GMC Advisors, held a number of positions for regional and national brokerages including new business development. Risk Strategies, part of Accession Risk Management Group, is a Boston-based specialty brokerage firm offering comprehensive risk management services, property and casualty insurance and reinsurance placement, employee benefits, private client services, consulting services and financial and wealth solutions.

wholesale brokerage for trucking and transportation insurance, is making a limited move into broader property-casualty coverage. The Marietta, Georgia-based firm, founded in 1989, introduced six new lines of business, including commercial general and excess liability; commercial property; inland marine; builder’s risk and garage insurance. Until now, the brokerage has focused on commercial auto liability, motor truck cargo and automobile damage. TAU has named Bernadette Flores senior vice president of the P&C division. She has 24 years’ experience in excess and surplus lines, including contractors, garage, habitational and hospitality.

Southeast

CRC Group, ARC Excess & Surplus

Trawick International Relocates Headquarters to Miami

Trawick International, a longtime provider of travel insurance, student insurance and specialty coverage, is moving its headquarters from the quiet streets of Fairhope, Alabama, to Miami, Florida. Trawick was founded in 1998, offering student insurance in the U.S. and abroad. It expanded a decade later into travel insurance In recent years, the firm has added international travel insurance, trip interruption coverage, group health, occupational hazard insurance for independent contractors, and assistance services.

Transatlantic Underwriters Expands With Six New Lines

Transatlantic Underwriters, a specialized

Southern Specialty Underwriters Rebrands as Arbour Specialty

Southern Specialty Underwriters, with offices in Tampa, Florida, and Macon, Georgia, has rebranded to Arbour Specialty, an insurance broker in the Southeast. Southern Specialty was founded in 2009 and, as Arbour, will continue as a wholesale outlet for specialized commercial and personal insurance coverage. The company is licensed in 13 states.

Independent insurance wholesaler CRC Group, headquartered in Birmingham, Alabama, said it has acquired specialty wholesale distributor ARC Excess & Surplus. ARC will join CRC Specialty, continuing to operate under its existing leadership team. Terms were not disclosed. ARC operates six offices in New York, California, Florida, Georgia, New Jersey and Connecticut. The company has more than $1 billion in annual premiums and serves over 2,000 retail brokers. Earlier this year CRC Group announced that its TIH brand will be sunsetting and replaced by CRC Group as the company's corporate brand. The firm also announced a new divisional structure, operating under two divisions: Specialty + Benefits and Underwriting. MAY 19, 2025 INSURANCE JOURNAL | 17

People National

Zurich North America,

headquartered in Schaumberg, Illinois, hired Jeannie Sullivan as head of technology for its U.S. middle market team. Sullivan has 35 years of Jeannie Sullivan insurance experience, most recently serving as assistant vice president – commercial officer for the middle market business unit at CNA Insurance Company. She previously served as executive vice president and chief underwriting officer at Berkley Technology Underwriters. and as vice president for the technology and medical technology underwriting segment at OneBeacon Insurance Company. Sullivan is based in the Minneapolis-St. Paul area.

Xceedance, headquartered in Worcester, Massachusetts, named Subramanian (Subbu)

Sankaran

to the new role of global chief operating officer. Sankaran has Subramanian over 30 years (Subbu) Sankaran of experience in global operations and transformation roles across organizations such as Wipro, Accenture, GeBBS Healthcare Solutions, WNS, GE Capital and Pfizer.

ReSource Pro, headquartered in New York City, appointed Paul Naquin as senior vice president and general manager, technology services, a newly created role. Naquin has over 30 years of experience leading technology programs for

Accenture, Capgemini and NTT DATA Services. He most recently served as group senior vice president at NTT DATA, following nearly two decades in executive roles at Capgemini, where he was chief operating officer for North America. Naquin leads technology services as a standalone business unit with full P&L responsibility.

Allianz Commercial, headquartered in New York City, expanded its U.S. construction team. Kristen Hoskinson was appointed executive underwriter team leader. Based in Atlanta, Hoskinson was previously the master Kristen Hoskinson builder’s risk practice leader and eastern zonal construction leader at AXA XL. Emily Hernandez joins as an underwriting specialist and is based in Chicago. Previously, Hernandez was an underwriter at AXA XL. Alexander Hansen joins as a senior underwriter. Hansen is based in Chicago and was previously an underwriter with AXA XL. He previously held roles at Lockton Companies, Aon Risk Solutions and Hub International. Karima Jones joins in a newly created hybrid role delivering client services support alongside underwriting. Jones is based in Atlanta, Georgia, and was previously a builder’s risk underwriter for AXA XL’s North America construction property team. Jared Bush-Howe joins as a senior risk consultant for the construction team. Based in

18 | INSURANCE JOURNAL | MAY 19, 2025

St. Louis, he joins from AXA XL where he was a senior construction risk engineer. He previously worked as a project engineer with Hensel Phelps. Allianz Commercial also appointed Melissa Hill as regional head of claims for North America. Hill is based in Atlanta and has over Melissa Hill 25 years of industry experience. She joins from Sompo where she was strategic claims transformation lead. Hill previously held senior claims positions at AIG, Hiscox USA and Kemper Insurance.

James River Group Holdings, Ltd., headquartered in Pembroke, Bermuda, appointed Bob Zimardo as senior vice president, investments and investor relations. Zimardo has over 20 years of experience. Most recently he was partner, investor relations and operations, with International Farming. He previously served as director of client services at Halcyon Capital Management (now Bardin Hill Investment Partners).

Willis, a WTW business based in New York City, appointed

Harry Merker as property and

casualty (P&C) cross-industry sales leader and alternative asset insurance solutions (AAIS) sales, Harry Merker strategy and execution leader for North America. In this newly created dual role, Merker drives broking growth

initiatives across Willis’ P&C business and leads strategic broking sales efforts and collaboration across the company’s 12 industry verticals. Merker has 20 years of experience in commercial insurance and broking, most recently serving as chief broking officer – middle market at Aon.

Everest, headquartered in Everest, New Jersey, made three key leadership appointments to the company’s U.S. wholesale business, Everest Evolution. Everest named Matt Meserole head of excess casualty, overseeing the strategic direction and underwriting performance of the Everest Matt Meserole Evolution Excess Casualty business. Prior to Everest, Meserole was a production underwriter at All Risks. Adam Birch was appointed head of industry specialties. Birch maintains his role as central region distribution Adam Birch leader for U.S. wholesale customers. Birch previously held senior underwriting positions at Lexington Insurance and Argo Group. Cristin McCarthy was appointed head of excess construction. McCarthy joined Everest from Liberty Mutual Cristin McCarthy Insurance, where she INSURANCEJOURNAL.COM

held senior roles in excess construction underwriting.

East

Falcon Risk Services, an MGA majority owned by HDI Global Specialty, a wholly owned subsidiary of HDI Global SE, appointed Laura Coppola as executive vice president, head of management liability. Falcon Risk Services is Laura Coppola based in New York City. Coppola has over 30 years of industry experience, previously serving as chief underwriting officer at QBE North America, and has held senior underwriting leadership roles at Swiss Re Corporate Solutions, Allianz Global Corporate & Specialty and Arch Insurance Group.

The Virginia Workers’ Compensation Commission

named two new deputy commissioners, Frederick T. Schubert II and Christopher R. Wilson, who serve as administrative law judges under the Virginia Workers’ Frederick T, Schubert II Compensation Act and hold evidentiary hearings at the commission’s Manassas, Virginia, Christopher R. regional Wilson office. Two deputy commissioners have retired from in 2025, Deborah “Debbie” Wood Blevins (Roanoke) and Susan E. Cummins (Fairfax). INSURANCEJOURNAL.COM

Midwest

Ryan Specialty, headquar-

tered in Chicago, Illinois, appointed Chris Kelleher president of SUITELIFE

Underwriting Managers

effective June 30. This role is in addition to his role as president of Ryan Chris Kelleher Specialty national programs dealer services and self-storage programs. John Welty, president of SUITELIFE Underwriting Managers, will retire June 30.

Rockford Mutual Insurance Company (RMIC), headquar-

tered in Rockford, Illinois, appointed Levi Dutcher as marketing representative for the states of Indiana and Michigan. Dutcher, Levi Dutcher based in Grand Rapids, Michigan, most recently served as senior field territory manager with Farmers Insurance, where he served for almost 14 years.

Southeast

Denise Wichmann joined Alliant Insurance Services,

headquartered in Irvine, California, as senior vice president Denise Wichmann within its employee benefits group. Based in Charlotte, North Carolina, Wichmann previously served as a senior principal and lead health and benefits

consultant with Mercer. She also held leadership roles at Carolinas HealthCare System.

West

SullivanCurtisMonroe Insurance Services (SCM),

headquartered in Irvine, California, named Adriana Valenzuela as vice president and bond manager. Before joining SCM, Valenzuela managed the surety department for Alliant Adriana Valenzuela Insurance Services’ Western offices. She also previously served as an account executive at Lockton Companies and BB&T.

Yvonne Breiter joined Alliant Insurance Services, head-

quartered in Irvine, California, as first vice president within its employee benefits group. Based in Southern California, Breiter previously served as a senior principal and West sub-market leader with Mercer, director of absence and productivity practice at Conduent HR Consulting and senior associate at Mercer Health and Benefits.

Megan Hood also

joined Alliant Insurance Services as vice presiMegan Hood dent within its employee benefits group. Based in San Francisco, Hood serves mid-sized and large tech employers in Northern California and nationwide. Hood previously served as director of health and benefits at Willis Towers Watson.

Eric M. Hansen, senior vice president – underwriting at Preferred Employers, was re-elected as chair of the California Workers’ Compensation Institute board of directors for 2025. Hansen was elected to the board in 2014, served on the institute's executive committee since 2021, and was elected chair in March 2024. Joining Hansen on CWCI’s 2025 executive committee are Kris Mathis, CopperPoint Insurance Companies, vice chair; Michael Cunningham, Zenith Insurance Company; Amanda Granger, ICW Group Insurance Companies; Carmen Sharp, The Hanover Insurance Group; Vernon L. Steiner, State Compensation Insurance Fund; and Matthew Zender, AmTrust North America. Also elected to serve on CWCI’s 2025 board were: David A. McGowan, AF Group/CompWest; Ricardo Nan, AIG; Andrew Linkhart, Berkshire Hathaway Homestate Companies; Jeff Rush, California Joint Powers Insurance Authority (an associate member); Mary Beth Pittinger, CHUBB; Christopher M. Thurman, CNA Insurance; Chris Champlin, EMPLOYERS; Tim Roberts, Everest Insurance; Julie Riddle, The Hartford; Dr. Mary CapelliSchellpfeffer, Liberty Mutual Insurance; Justin Smith, North American Casualty Company; Paul Gladden, Pie Insurance; Gene Simpson, Republic Indemnity Company of America; Brooks Rice, Schools Insurance Authority; Scott D. Lange, Sentry Insurance; Joanne Moynihan, Travelers; Michele Halstenrud, WCF Insurance; and Neil Deblock, Zürich North America.

MAY 19, 2025 INSURANCE JOURNAL | 19

Closer Look: Cyber & Security Diversification, Risk Modeling Top of Mind for Carriers as Cyber Liability Market Softens

By Elizabeth Blosfield

s cyber insurance rates have begun to stabilize, insurance carriers are seeking more diversification to fuel their underwriting and growth strategies, according to panelists at this year’s PLUS Cyber Symposium in New York City. “They’re seeking diversification in the standard ways we know of—writing across multiple industries, size segments, and geography—but also more nuanced diversification by really looking at what

technology dependencies are large exposures for their portfolios,” said Crystal Boch, U.S. head of cyber analytics at Aon Re. “So, more carriers are investing in different scanning capabilities and different tools that really identify those technology aggregation points across the portfolio.” She pointed to August 2024 research from Parametrix and Aon on diversifying cloud outage risk as one example. The research paper, titled “Diversifying Cloud Risk,” showed how losses arising from cloud outage events can

20 | INSURANCE JOURNAL | MAY 19, 2025

be diversified within large reinsurance portfolios. “You can see from that if you spread your portfolio across geography, it greatly reduces your portfolio’s reliance on any one cloud region, which is really, really huge for mitigating that risk,” she said. “So, I think carriers are able to find diversification, but there is still some work to do there in increasing the pie to allow for more diversification.” Some of this work involves the small and medium-sized enterprise space, she added. “[It’s about] getting those

SMEs and micros to buy insurance—getting, I would say, mostly SMEs and micro, but even some medium and large insureds in different regions to buy cyber insurance,” she said. “So, increasing that pie will also help with the diversification.” She said that although work remains, more progress has been made in the SME space in the past few years. “The models were created initially focusing on the larger insurance since that’s where the larger take-up rate was on cyber,” she said. “As more INSURANCEJOURNAL.COM

Crystal Boch

Jonathan Hatzor

Mark Camillo

Pascal Millaire

SMEs are purchasing cyber, I think it shines light on better handling and grasping that SME [have] systemic loss as well.” This means that as SMEs learn from cyber events and gain a better handle on their risk, how they model risk is changing. Sometimes, it’s changing even more rapidly than in the larger enterprise space, Boch said. “I think [it’s changing] for the better and that we’re getting more nuanced around the SME modeling,” she said. Beyond the SME space, cyber risk modeling has evolved in insurance overall. Boch noted that vendor models have not only matured but have also gained credibility with traditional reinsurers, insurers, and investors in the insurance-linked securities market. “The models have converged in a number of ways in terms of the magnitudes of loss, but more importantly, around which perils are driving the tail,” she said. “I think most of the models and deterministic scenarios now all agree that malware ransomware is really the largest-tail driver, with cloud being number two.”

instrumental in unifying risk language across the industry, allowing for more effective communication between carriers and external model providers. Jonathan Hatzor, CEO of Parametrix Insurance, said that there has been a marked shift in the past couple of years, with carriers adjusting their reinsurance structures—from quota share arrangements to excess of loss programs—to better handle systemic cyber risks.

language perspective, there were certain things that were starting to kick off about the war language around critical infrastructure, particularly with Lloyds,” he said. “And so, we felt that at CyberAcuView, we should figure out a way to bridge the U.S. and U.K. gap at the time and create language that could be used…more broadly by the market.” Complicating things further was the introduction of widespread event coverage, in which carriers tried to segment their attritional versus systemic losses via supplements, he said. “If that would’ve happened with 50 different insurers creating 50 different endorsements, that could have been very chaotic trying to explain that to policyholders,” Camillo said. “The idea was let’s create some master language that, again, insurers could modify based on individual risk appetite.” Hatzor noted that while there is always a gap in the sophistication of external models compared to the capability of carriers, this gap has narrowed in the past few years. “Now, there is more similarity, and I understand the risk more in a way that we can use those external models,” he said. “That, we think, is helping the market a lot.”

Data Collection, Accumulation Risk Still a Challenge

Speaking the Same Risk Language

This convergence has been

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‘As more SMEs are purchasing cyber, I think it shines light on better handling and grasping that SME [have] systemic loss as well.’ “There is a lot of pressure on having models that speak the same language,” he said. “So, carriers have to use the same language in order to adjust to the external models.” Mark Camillo, U.S. and Canada head of network security and privacy at CyberAcuView, said that CyberAcuView has worked to be a driving force behind bridging the policy language gap. “I think from a policy

Despite this progress, challenges remain in cyber risk modeling. One of these challenges is around data collection. “What I think we’re finding from the data collection is it is taking a lot longer than what initially we expected for insurers to have a really good view of what that ultimate loss looks like,” Camillo said. “I think when you have an event, there’s a lot of panic, there’s a lot of fire drills. Trying to estimate some of the initial loss, the estimates that come out are fairly high numbers.” He said that it’s not until a year after the loss event in some cases that the losses begin to materialize. “You have some idea, but really, they’re going to go through the process of filing the business interruption claim, all the waiting hours, deductibles that go into that decision, some of the liabilities that tail…even a year, year and a half later, those numbers are being pushed up,” he said. “But again, I think that’s something that over time, we will get better at as we have more of a catalog of events.” Hatzor said that while having good models is important, understanding accumulation

continued on page 22

MAY 19, 2025 INSURANCE JOURNAL | 21

Closer Look: Cyber & Security continued from page 21

in portfolios is just as crucial. “Maybe even more important, I would say,” he said. However, Hatzor added that some service providers and many underwriters don’t contemplate accumulation risk enough. “CrowdStrike, for example,” he said. “CrowdStrike is a service provider and not a mission critical service provider. If they go down, they’re not really going to impact anyone and don’t really have the capabilities as a service system to be a highway for a cyberattack because of the way that the system has been designed. But the event that occurred was a bit of a surprise, I would say, because their ability to shut down clients’ endpoints was very surprising.” Hatzor said this example demonstrates that before even tackling cyber risk modeling, a better understanding of accumulation risk is the first piece of the puzzle. “I would say that the models are very useful right now, especially around the traditional loss, relatively accurate, I would say, and very stable around systemic,” he said. “Still, we have a big way to go, but understanding the accumulation, mapping the accumulation, and using technologies in order to do it is very, very important.” Although the cyber insurance industry has yet to grapple with “the big one” in terms of an accumulation event, said Pascal Millaire, CEO of CyberCube, it’s important to take the mini catastrophe events that have occurred into consideration when understanding accu-

mulation risk and improving cyber risk models. “We’ve seen a lot of mini cat events, and you start delving into those mini cat events and asking the counterfactuals, ‘Well, could this happen again? Yes. Could this be a zero day rather than a known vulnerability? Yes. Could there be a malicious actor behind this? Yes. Could this apply to a different piece of software with broader market share? Yes,’” he said. “I do think that certainly those kinds of questions have helped advance the state-of-the-art model. So, we’ve looked back, there have been a lot of investments, the models have proven useful. As always, there are more areas for improvement.” That said, it’s important to recognize how much cyber risk models have evolved as the industry continues to push forward, he said. “I guess if I went back five years ago, what you probably would’ve heard—and you may have explicitly heard on a stage like this—is cyber data and modeling is in its infancy,” he said. “I just don’t think that’s true anymore. If you look at the billions of dollars of claims, the tens of thousands of claims that have gone out there, the hundreds of millions of dollars at this point spent on data technology capabilities, training initiatives, vendor and third-party models, the reality is we have a way to go, but we have a robust set of infrastructure at our disposal.”

This article first appeared in Carrier Management (www. carriermanagement.com), a sister publication to Insurance Journal.

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Cyber Market Continues to Expand as Rates Adjust, Says Guy Carpenter

hose fighting cybercrime and those who insure against it must perpetually race to keep up with the new tech, strategies, methods, and goals thrown at them by nefarious actors working from all over the world. After significant compound rate increases in 2021 and 2022, the cyber insurance market stabilized in 2023, with some areas experiencing slight softening as the market continued to adjust throughout 2024, according to Guy Carpenter’s new report, “Behind the Firewall: 2024 Global Cyber Industry Insights.” The global cyber market was estimated to be worth $16.6 billion in 2024, with North America accounting

for $10.5 billion, Europe for $3.9 billion, the Asia-Pacific region for $1.7 billion, and the rest of the world for $0.5 billion. Growth is driven by under-penetrated industries, developing regions, and new product offerings along with increased awareness of cyber risks and a growing reliance on technology. North America leads in premium share and dominates in IT sector premiums, as the U.S. is home to nearly 70% of the world’s largest IT firms. The recent slower growth of premiums in the U.S. is a sign of market maturity rather than a lack of interest. In general, most coverages are offered across policies with limited restrictions on items like contingent business interruption (CBI) and ransomware.

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modeling cyber catastrophes. This will be most pronounced in the tail, especially in the event of a ransomware or cloud event.

While growth in North America is slowing, Europe and the Asia-Pacific (APAC) regions are heating up. Rapid growth in these areas benefits global reinsurers by diversifying risk and unlocking capacity in new markets. Insurtechs and SME-focused carriers that have found success in the U.S. are expanding to capitalize on this growth. However, growth in these regions could contribute to aggregated losses with a wide range of potential modeled outcomes. For 2024, the modeled global aggregation loss potential is estimated to range from $20 billion to $46 billion at a 1-in-200-year return period, suggesting a market loss ratio between 120% and 277%. The European region sees a more conservative approach

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to some cost components with contingent CBI offerings tending to be far more limited in scope and may require named cloud service providers to be affected to recover in some cases. Europe tends to have a conservative approach to coverages for General Data Protection Regulation (GDPR) fines as well, given the legal ambiguity around recoverability of those fines. APAC tends to have an even more restrictive offering around business interruption (BI) and CBI. In many cases, there is also no coverage for ransom payments, further impacting the nature of losses the region may experience in the event of a cyber catastrophe. These nuances in the coverages applied can influence losses experienced when

‘As risk drivers shift, underwriters are responding by sublimiting coverages, raising retentions and increasing scrutiny on limits. Privacy regulation and litigation funding have also renewed attention on third-party liability, especially around wrongful data collection.’ Evolving Threat Landscape

In 2023 and 2024, there was a noticeable increase in ransomware activity. However, there was not a corresponding rise in the severity of attacks thanks primarily to improved cybersecurity practices among insured organizations. As a result of this shift, attackers have increasingly focused on data theft rather than ransom payments, with 90% of ransomware incidents in the third quarter of 2023 involving data exfiltration. This tactic, double extortion, in which attackers steal and encrypt data, has become a significant concern for incident responders. Ransomware/malware

events remain the main driver of losses. These events remain a key concern for the industry, consistent across all individual regions. Cloud events still yield lower losses compared to ransomware/ malware events while data theft events are the third-greatest contributors. Cybercriminals increasingly target weaknesses in third-party services, which can have widespread effects and offer significant financial gain. Systemic cyber remains an area of concern with increased reliance on cloud services as well.

Responding to Increasing Cyber Threats

As risk drivers shift, underwriters are responding by sublimiting coverages, raising retentions and increasing scrutiny on limits. Privacy regulation and litigation funding have also renewed attention on third-party liability, especially around wrongful data collection. North America is the most advanced market for cyber, particularly among large corporations, where a significant number of companies carry cyber coverage. Growth opportunities may arise from smaller businesses, emerging sectors, and personal insurance lines. There remains a strong capacity for coverage from traditional insurers, with managing general agents introducing new capital into the market.

MAY 19, 2025 INSURANCE JOURNAL | 23

Special Report: Entertainment Risk Management Considerations When Having Family Fun

ne of my favorite recent additions to our Academy of Insurance catalog has been our How To Write series. We By Patrick Wraight have used this series of sponsored content to highlight niche markets so agents can be exposed to what makes for a great risk in different categories. One of the niches we explored last year was the family entertainment space. If you haven’t checked out that class, visit: www.ijacademy.com to register. It won’t cost you anything but time, and we think it’s time well spent. When you think about family entertainment risks, there’s more to consider than just the rides, lines, and shops. Today, these risks will combine all of those exposures that you think about 24 | INSURANCE JOURNAL | MAY 19, 2025

from an amusement park 30 years ago and much more. There is an amusement park near my family that we have gone to for over 20 years, and we have watched them grow from a few rides and a nice little petting zoo into a multi-faceted entertainment space.

shop, kids everywhere, and all of the other fun that crowds bring. Of course, there are the shops where every person under 10 looks at their people who are over 10 and asks for the overpriced stuffed animal, t-shirt, or more food to feed the gators. But what else is going on there?

The Risks of Having Fun

The basic aspects of the risks include what you expect. There is a large parking lot full of cars, trucks, buses, and RVs all moving around, jockeying for the best spots, and there are no people out there directing traffic. Once you’re inside, there are crowds of people doing crowd things like running to the next ride, stopping right in front of other people who are just trying to get to the ice cream INSURANCEJOURNAL.COM

The dining options at our park have changed over time, as they have in parks around the country. It’s not just pizza, wings, hot dogs, and burgers. There are sit-down places where you can get a proper meal. There are a few places where the adults can even have adult beverages. That adds a new layer of risk to our park. We can all agree that there are people who will have an adult beverage and that’s the end of it. Consider, however, that we’re not talking about someone having a beer in their living room. We’re talking about someone having the same beverage in an environment where the “fun” stopped happening three hours ago, the South Georgia sun has baked most of the moisture out of them, and the crowds have been extra special, so an adult beverage or two isn’t as simple as it could be. Additionally, our park isn’t just a place for hanging out with the family on a relaxing summer day; it’s also a concert venue. We will consider some of the concerts family-friendly events. This park isn’t bringing in groups that are likely to cause a giant mosh pit to open up—although anything is possible. But we aren’t talking about concerts in the middle of the day. The concerts are normally held later in the day and run into the night, so that attendees, even families, have now spent all day enjoying the park, and by the time the concert is over, they might have spent 10-12 hours there. You can imagine the risks that this can create for the park. None of these risk exposures are unique to this one park. Other venues have very similar exposures. They have parking lots, crowds, concerts, events, and more. Many also have resort hotels and camping sites available, adding to the risk exposures. So far, all we’ve done is think through the process of identifying the risks associated with this class of business. There are more risks than we’ve mentioned, but what’s to be done about them? It’s clear that risk avoidance isn’t likely, so that leaves us with considering those risk exposures and developing ways to mitigate them. It’s important to consider how much risk an entity is interested in taking on. There are certain risks a business just INSURANCEJOURNAL.COM

must accept. If they are in the business of inviting the public to enjoy themselves in this way, they accept that they will have people everywhere, there will be crowds, people will eat, etc. One perspective that they have to consider is how to avoid those risk exposures becoming a serious loss event.

Strict Safety Protocols

As we hear aboard commercial flights, safety is our priority. It is the same at an entertainment space. Most of their continued success in the business rests in people feeling safe when they are there. From the moment they arrive on the property to their first ride, to lunch, and onto the water slides, everyone likes the feeling of a little bit of danger under control. They want to be safe, even if they’re riding a roller coaster where they spend most of the ride upside down. Ride maintenance is one of the highest priority items for safety. Taking a ride out of service for maintenance or repair is a bummer for the people who want to ride it. The viral video of the ride failing and scaring a bunch of people is something else. The disaster of a catastrophic ride failure that injures people is worse still. Therefore, one of the most important risk management strategies for the park is ride maintenance. There are other maintenance requirements, too, but none that impact safety as much as ensuring that rides are properly maintained. On par with proper ride maintenance is proper training for ride operators. We have observed many ride operators over the years and have concluded that it is not the most difficult job to do, but there’s more to the job than simply starting the ride and hoping everything goes well. Training should include emergency procedures, such as when to trigger the emergency stop or simply stop the ride early, calling for emergency services, calling for park security, and who else to contact if something goes wrong.

Strict Security Protocols

By now, most of us are at least aware that amusement parks have some kind

continued on page 26 MAY 19, 2025 INSURANCE JOURNAL | 25

Special Report: Entertainment continued from page 25 of security in place to promote a safe environment for family fun. Some have policies where they only allow clear bags in, while others don’t care what color your bag is. From a risk management perspective, maintaining a secure environment is essential to minimizing the opportunity for someone to endanger people. Many amusement parks have some kind of bag check process in place. It may be that they only allow those clear bags that we mentioned before, and they give them a cursory check over to find banned items before they enter the park. Many amusement parks use some kind of metal detection technology to prescreen bags and people before they enter the park proper. If the detector indicates the potential of a prohibited item, then the security team can ask the patron to remove and open their bag for inspection. Signage at the park entrance is generally present offering the reminder that all people and their bags are subject to searches while within the park. Another avenue of providing security within the park is the presence of a security team. This could include those security personnel who are clearly identifiable and others who are not so clearly identified. They do not have to be dressed like police, or armed security, to be identifiable. They simply should have a uniform of some kind that shows that they are working for the amusement park and are there to help people out. The presence of “uniformed” security creates an atmosphere that discourages people from doing wrong to other people. The presence of security personnel who are harder to identify allows the park to observe people who might not be deterred by the other personnel. Done well, this allows the park to provide a safe and secure environment for family fun without making it look like some paramilitary force has taken over the park for a mandatory fun day.

Strict Response Protocols

If something happens, the first few minutes, hours, or days are critical in the risk management strategy to avoid further damage for the amusement park. Whether 26 | INSURANCE JOURNAL | MAY 19, 2025

we’re talking about someone who was injured because a group of children ran them over on their way to the ice cream stand, people got sick because the chicken wing and shrimp kabob hut served up undercooked food, or there was a ride failure, how the park responds could not only take care of people but keep the amusement park open. There should be a clear response protocol whenever anything happens that isn’t “normal business operations.” The response cannot only be that the ride operator or the food stand team member offers first aid (even though that can be part of it). The first step could be that the nearest team member, or a specifically identified team member in the area, notifies the risk office and their supervisor. Once leadership is notified, the appropriate response team is dispatched to the location. That might be the park’s emergency medical or security personnel to assess the situation, help people, call for more help, and report to outside agencies. Once the emergent situation is taken care of, that’s when the hard work of making sure that people are taken care

of and that the park’s reputation is cared for begins. Whether the event requires an insurance intervention or it’s funded by the amusement park doesn’t matter nearly as much as the speed with which it is handled and how it is handled. We understand that an entity that owns an amusement park can’t simply say, “Oops. My bad. I’m sorry,” and write checks every time something happens, but making quick and accurate assessments about what happened and acting in a way that takes care of people, and the company, go a long way to help people to recover and maintain the reputation of the park. These are just a few thoughts about some risk management needs of a family entertainment space. Each entity will have individual needs and should have a risk management team involved in their insurance purchases and creation and implementation of their risk mitigation strategies to help make sure they can fulfill their mission as long as possible. Wraight, CIC, CRM, AU, is director of Insurance Journal’s Academy of Insurance. He can be reached at pwraight@ijacademy.com. INSURANCEJOURNAL.COM

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News & Markets

Washington Issues Citations for Warehouse Quota, Safety Violations

T F

he Washington State Department of Labor and Industries issued the first citations under a new law

regulating production quotas in warehouse workplaces. L&I fined The Safeway distribution

center in Auburn $26,700 for several violations related to workplace safety and labor rights. An L&I investigation reportedly showed that Safeway had tracked employees’ restroom, meals and rest breaks to enforce changing productivity quotas. The department also found that workers were not informed in writing about quota requirements and were not provided proper time to use the restroom or take breaks. According to the investigation, workers affiliated with the produce and perishables department were also subjected to heavy lifting without adequate safety considerations. The department reported that workers were disciplined for failing to meet quotas. The quota law, which took effect on July 1, 2024, applies to warehouse employers with more than 100 employees at a single location or more than 1,000 employees statewide. It requires that quotas be documented, regularly updated and structured to allow employees to meet basic workplace needs without risk of discipline or injury. Safeway has filed an appeal.

Call Center Workers’ Comp Fraud Scheme Targeting Spanish-Speakers Leads to Charges

our individuals, including attorneys, were charged after an investigation reportedly revealed a large-scale workers’ compensation fraud scheme allegedly targeted Spanish-speaking workers and involved the illegal sale of more than 1,100 clients generating more than $550,000 in unlawful referral fees. The California Department of Insurance launched an investigation in 2022 after receiving reports that Spanish-speaking workers were being contacted by a call center operating in Mexico. The callers allegedly promised individuals they could receive money by filing a workers’ comp claim. In many cases, workers were reportedly misled and unknowingly completed official claims paperwork, which was then unlawfully sold to attorneys in Southern California. The four defendants include: Antony Gluck, 55, of San Bernardino, W2 | INSURANCE JOURNAL | MAY 19, 2025

who was charged with felony conspiracy and unlawful referrals and was booked at West Valley Detention Center on $500,000 bail. Michael De La Garza, 41, an attorney from Fontana, who was charged with felony conspiracy and unlawful referrals. He was booked at West Valley Detention Center on $500,000 bail. Arely Franco, 42, of San Diego, who was charged with felony conspiracy and multiple counts of unlawful referrals of workers’ comp claims. She was arraigned released on her own recognizance. Juan Leal, 57, of Riverside, who was arraigned on charges of felony conspiracy and unlawful referrals.

From January 2022 to September 2023, Franco allegedly sold 320 clients to attorney De La Garza and his business partner Leal for $168,750. From September 2021 to October 2024, Franco reportedly sold an additional 798 clients to attorney Gluck for $388,500. The San Bernardino County District Attorney’s Office is prosecuting the case.

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My New Markets Energy - Solar, Wind & Renewables Market Detail: WealthGuard Insurance

Group LLC offers comprehensive, flexible coverage for alternative fuels and renewable energy. Target classes include wind, solar, alternative fuels and independent power production. Coverage includes operators extra expense, physical damage, general liability, follow form excess and terrorism and sabotage (available on request). Locations include North America, Central America and South America. Contact the team to discuss eligibility and requirements. A common application may be accepted with supplemental details on a case-by-case basis. Has pen. Available Limits: $75,000 minimum premium Carrier: Not available States: All 50 states and the District of Columbia Contact: Joseph O’Connor, joseph@ wealthguardig.com, 832-479-0042

Landlord Insurance Quote & Bind

Market Detail: Landlord insurance is a policy for people who rent their homes to others, including single-family homes, apartments, multi-family, manufactured homes, condo units, vacation, or restoration. Acceptable named insureds include LLCs, trusts, corporations and partnerships. Coverage is available for one-to-four-family seasonal, multi-unit dwellings, Airbnb, VRBO, short-term rentals, long-term rentals, renovation policies, fix and rent, and fix and flip. Include up to 20 locations on a single policy. Coverage may include: fire, water, lawsuits, riot and civil commotion, vandalism and theft, injury, windstorm, hail and lightning, and bonus coverages. Available Limits: Not available Carrier: Admitted, Non-Admitted States: Available in all states and the District of Columbia, excluding Alaska, Colorado, Florida, Iowa, Kentucky, Louisiana, Massachusetts, New York, Oklahoma, Rhode Island and Wyoming Contact: Marty Ascher, m.ascher@ newageins.com, 516-488-2500

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Community Association Insurance

Market Detail: GIG Insurance Group, the industry leader in community association insurance, offers unmatched Directors & Officers (D&O) and crime coverage, as well as other essential solutions that deliver critical protection from numerous mounting exposures. GIG is a best-in-class program from NSM Insurance Group, the nation’s leading provider of specialty insurance. Programs include: specialized coverage, exclusive A++-rated carrier (AM Best), quality service and support and a cutting-edge GIG Agent Portal for agents to quote, bind and issue policies online in minutes. Directors & Officers Coverage includes a minimum premium of just $880 in most states; first dollar defense providing true duty to defend form for most risks; defense costs outside policy limits not to exceed policy limits or $1 million; automatic coverage for property manager; defense of suits arising out of breach of contract; $150,000 sub-limit on defense costs for wage & hour wrongful acts. Crime coverage includes commercial crime policy with all insuring agreements up to $3 million limits, including employee theft, ERISA fidelity, forgery or alteration, inside and outside the premises, computer and funds transfer fraud, money orders and counterfeit paper currency and fraudulent inducement (coming soon). Eligible community associations include condominium, homeowners, cooperatives, planned unit developments, property owners and timeshares. Has pen. Available Limits: See Market Details Carrier: Admitted States: All 50 states and the District of Columbia, excluding Alaska and New York Contact: NSM Insurance, nsmmarketing@ nsminc.com; 800-970-9778

Builder’s Risk

market includes single shot, reporting and blanket forms available; residential one-tofour family new construction; high value residential new construction; Frame - up to $10 million; higher limits for other constructions, pending underwriting review; light commercial projects; remodeling and renovation of existing residential structures; and mid-completion projects. Policy forms and sublimits include ISO Builders Risk Coverage Form – Inland Marine; new construction - replacement cost coverage (RCV); remodeling and renovation – RCV on value of remodeling/renovation; actual cash value on existing structure; property in transit - $10,000 - $25,000; property at temporary locations - $10,000; soft costs - $5,000 - $20,000 (ex. interest, taxes, architect expenses, insurance expenses); ordinance or law coverage – Coverage A Included, Coverage B&C $15,000 blanket limit. Has pen. Available Limits: See Market Detail Carrier: Admitted States: All 50 states and the District of Columbia Contact: Matthew Waxman, connect@ alchemyins.com, 717-481-3277

Excess Auto Liability

Market Detail: Risk Partners now offers excess auto liability for commercial auto accounts in all states - up to a $10 million limit. Target classes include: contractor fleets, trucking, NEMT, school bus, fuel oil dealers and waste haulers. Available Limits: $10 million Carrier: Not available States: All 50 states and the District of Columbia Contact: Brad Bartholomew, bbartholomew@riskpartners.com, 609-6788665

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Special Report: Entertainment

By Andrea Wells

echnology is playing a bigger role in entertainment than ever before. Today’s film and television industry is becoming more digitized in production, in

particular, with physical risks being replaced by digital risks. “We’re seeing technology increasingly play a more important role in film production,” said Fred Milstein, CEO of Media Guarantors, a CAC Group company. “I’m not

28 | INSURANCE JOURNAL | MAY 19, 2025

even getting to AI tech, I’m just saying really just on the actual film side, a lot of production is shifting to what we call virtual productions.” Finding the right location to film a movie has always been a critical part of production.

But now instead of finding that “weird house” to shoot a horror movie inside the living room, filmmakers are turning to digital tools rather than physical sets. “Now you can use very sophisticated LED screens on a sound stage,” Milstein said, instead of moving an entire cast and crew to a physical location in another state or country. Milstein recalled a recent major film production that was shot entirely on a sound stage in Las Vegas. The film took place primarily inside an aircraft, so instead of using real flights, the cast and crew only used virtual production on a sound stage that could be tilted and maneuvered to simulate flying. “Basically, the airplane stood still, but backgrounds kept moving and changing per the director’s instruction.” Virtual productions give film creators more control over things like natural landscapes, he said. “When shooting a scene, the director has the ability to do things like move the sunset to the right angle, manipulate the scene digitally.” “We’re seeing more and more of that ‘virtual’ type of production, and I think it’s going to continue to see growth,” he said. “At a certain point you won’t have to go anywhere; you will be able to shoot a lot of what you need just on a sound stage.” The new world of virtual moviemaking changes the risks, he said. “The physical risks to some degree are still there, but not to the same extent that they were before,” he explained. “You’re not climbing up a mountain or flying in an airplane; you’re shooting on a sound stage.” The digital risks and expoINSURANCEJOURNAL.COM

sure for high-tech equipment, including the LED screens, as well as the risk of that digital data being lost or stolen are important new considerations for productions. “I think that’s one of the big things that’s shifting in film production is we’re seeing more and more technology in the actual film production and moving to much more of a virtual world of filming than we had seen any time in the past,” Milstein said. These newer emerging risks are still insurable risks, he said, but they need to be analyzed and understood.

Market Stabilized

Entertainment insurance specialists say that the insurance sector overall for entertainment risks has bounced back from losses related to the COVID pandemic. The market has shown “stability and profitability for insurance companies, even in the face of entertainment union strikes and other macroeconomic factors,” according to Risk Strategies in its recent report, 2025 State of the Market Outlook on Entertainment. The sector remains strong with a great deal of new production beginning to take place this year. “Several carriers entered the space on the commercial production side with aspirational views of extending coverage into other areas of content creation and theatrical business over the next 6-12 months,” the Risk Strategies report said. “Rates are competitive for clients with positive loss profiles, limited auto exposure, and [who are] located/filming outside of catastrophe (CAT) zones/areas with extreme INSURANCEJOURNAL.COM

weather exposure.” John Hamby, senior managing director, national entertainment practice leader, at DeWitt Stern of California Insurance Services, a division of Risk Strategies, told Insurance Journal he agrees the market has become more competitive with new carrier entrants into the sector, including one large global carrier that is close to finalizing filings and policy forms in most states for the film and television space. But because of the specialized nature, and limited size, of the entertainment insurance space overall, new entrants create rate pressure, which may be good for the clients but is challenging for the insurance markets, Hamby said. “You don’t want too many different carriers in the space because then all the carriers want business, and we can’t give it to them all,” he said. “But we do like competition in the production insurance world, and so another carrier offering is always good,” he added. Hamby said that rates have flattened for most standard film and TV productions, but underwriting has become more stringent for productions with “audience participation” or “immersive productions” and for shows that contain higher-risk activities.

Mona Grabowski, vice president – entertainment at HUB International, which specializes in music festivals, live events, and touring, said she’s seen traveling immersive events pick up. The events might range from a live event or theatrical show that previously was only in New York but now travels to various states on a four-month road trip to a pop culture event where participants walk through “transitional rooms” where attendees can play games and more. Grabowski said that immersive style entertainment gives attendees something tangible and fun. “Every room might be thematic, and so it’s a very benign experience in terms of the risk,” she said. “Then others can be a little bit more involved.” It’s important for insurance specialists to determine the physical involvement of the production to understand the risk, Grabowski said. Immersive productions are all about pop culture, she said. “People can attend and really immerse themselves, whether it’s in a television show that they’ve been a part of for 20 years, or a movie that’s really been impactful. They can immerse themselves in that environment; it’s tactile. They can feel furniture, they can

see props and really feel like they’re part of it.” But participation adds risk, too. “Immersive experiences—while exciting and innovative—introduce a different risk profile,” said Wanda Phillips, executive vice president, North America entertainment, Arch Insurance. “Interactive elements and elaborate staging can increase general liability, complicate crowd management, and elevate exposure to injury or property damage.” Phillips recommends “a proactive approach that includes event-specific coverage, robust safety planning, clear participant waivers, and risk consultations tailored to the unique dynamics of each event.” Today, the most pressing risks in the entertainment world include property and business interruption, especially given the increasing frequency and severity of wildfires, hurricanes, and other climate-related events, Phillips said. Cybersecurity also remains a top concern—particularly for companies managing digital content, intellectual property, or consumer data, she said, adding that ransomware attacks and leaks of unreleased material can lead to devastating financial and reputational losses. “AI—particularly generative AI—is increasingly part of the production toolkit, from writing scripts to creating visual effects and even voiceovers,” Phillips said. “But these tools come with unique risks. We’re monitoring issues related to intellectual property infringement, content ownership, misinformation, and reputational

continued on page 30 MAY 19, 2025 INSURANCE JOURNAL | 29

Special Report: Entertainment continued from page 29

fallout if AI-generated content is misused or misattributed,” she said. Regulation around AI is also developing rapidly, so that adds another layer of complexity, Phillips added. “As these technologies evolve, so must our understanding of their exposures—and our strategies to mitigate them.” Hamby senses that as the entertainment industry has moved further and further away from the pandemic, “business has turned around quite nicely.” For example, the theaters on Broadway in New York are reporting more attendance. That’s true for each of the past couple of years, Hamby said, as audiences have increasingly returned to theaters. Theatrical productions on Broadway boasted 2024 attendance at about 95% compared to pre-pandemic times. The movie business, however, has yet to see that kind of growth when compared to pre-pandemic figures. Annual movie box office sales in 2019 were about $11.2 billion, whereas in 2024 box office sales totaled only $8.5 billion, according to box office tracking

website Box Office Mojo. Hamby doesn’t see those movie figures trending back to the pre-pandemic levels anytime soon, if ever.

Budgets and Tax Credits

Profitability is down for theaters and filmmakers due to rising costs of producing on Broadway and bigger budgets for moviemaking. “I don’t see the budgets decreasing,” Hamby said. “The budgets are quite large, and a good majority of the productions are still being backed and financed by the streaming companies—Netflix, Amazon, Apple, and whatnot.” According to Hamby, there are still some big productions backed and distributed by the traditional distributors like Warner Brothers, Universal, Paramount, but a large percentage comes from streaming companies nowadays. There are also plenty of productions that still depend on real landscapes and settings. Due to the rising costs, some moviemakers have relocated production to places where tax incentives help to bring down expenses, Milstein said. “What we’re seeing now more so than ever is producers,

30 | INSURANCE JOURNAL | MAY 19, 2025

film producers, looking for areas where they can get ‘soft money’ or tax credits, tax incentives,” Milstein said. “We’re seeing a big outflow of work move obviously out of California, which doesn’t have very good tax incentive for business.” Productions are moving “anywhere in the world that’s got tax incentives,” he added. Hamby agreed, adding that by his estimation, about 70%plus of all film and television productions have moved to other U.S. states outside of California, or to other countries around the world due to tax incentives. “I would say more than half of the productions, both film and TV today, are filmed outside the U.S.,” he added. Some of the location selections might be based on a particular city’s landscape. “But a lot of the decision has to do with tax incentives and rebates, which can in some cases be as high as 30% to 40%,” Hamby said. “You can have a $100 million budget and the country’s going to give you $30 or $40 million [in tax incentives] to come and film there. That’s quite an incentive.” Milstein said the increased

movie production that takes place outside of the U.S. is also changing the insurance market to a degree, creating more interest in coverage for the tax credits. “Tax insurance, it is tangential, but it’s important to the [film] producers, and I think it’s going to become more important that we find ways to assist production in covering tax credits,” he said. How would that work? Milstein said there are a few risks to consider when it comes to tax incentives. “There’s the sovereign risk, having the right contract with the government and making sure the government of whatever jurisdiction that you’re working in actually lives up to what they say they’re going to do in terms of tax credits,” he said. “And the other obvious part is actually ensuring that the credits are properly earned and paid for.” Those are two areas he sees potentially having some implications when it comes to insurance. There is also the added risk of filming in another country, especially in countries that may be experiencing political risks, he added. “We just did a film in Georgia—the country, not the state—and we required as part of our underwriting that the production get political risk coverage,” he said. The day that the cast and crew left to film, a large demonstration protesting the country’s election occurred. “We knew filming was going to be around the election,” he said. So, there were a number of risks that needed to be covered as a result of that, he added. Arch’s Phillips said the current “geopolitical climate INSURANCEJOURNAL.COM

has made international shoots and global productions more complex.” Productions in certain regions might “require specialized coverage—such as kidnap and ransom, terrorism, or political risk—and must stay compliant with evolving international regulations,” she said. “Logistics, insurance placement, and talent safety all require a more strategic, globally minded approach.”

Tariffs and COVID

As most films today have some element of foreign involvement, making it a global business, the potential impact of tariffs is on the minds of entertainment specialists, as well. Early this month President Donald Trump said he would

impose a 100% tariff on all movies produced outside the U.S. but issued few details on the idea. At this current moment, it is unclear on what would go into effect and the impact of it, Milstein told Insurance Journal. “Films produced or partially produced outside the U.S. are services that are being used, not goods, so how this notion would apply is unclear at this moment,” he said. He added that additional risk or insurance implications are not expected, except the potential for fewer policies if production is limited or curtailed. “It’s way too early to know whether or not this will happen, or if it does, how it would work,” Hamby said. “Let’s see

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how it plays out.” There’s also been discussion of how tariffs might impact production equipment. “Those LED panels I was referring to aren’t made in the U.S.,” Milstein said. “Despite the fact that the costs may be lower shooting a film virtually, buying those panels and having to replace them may now increase the cost.” Despite all the headwinds facing the entertainment industry today, the public’s “appetite for content, live entertainment, and immersive storytelling remains incredibly strong,” Phillips said. “The future of entertainment lies in innovation, collaboration, and responsible adaptation.” One thing Hamby hopes to see the insurance industry get

rid of is COVID exclusions. “We’re five years out of from the pandemic, and COVID is still excluded on all the production insurance policies around the world,” Hamby said. If an artist gets sick and the filming is shut down, the carrier requires the artist to see a doctor and take a COVID test. “If they have COVID, there’s an exclusion for that in their cast insurance, or business interruption.” Hamby said it is time to either remove that exclusion or at the least bring back coverage with a sublimit. “We think in the brokerage world that it’s time to do that, but the carriers aren’t ready yet,” he said. “Still, I do think that’ll happen, but maybe not for a year or so.”

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MAY 19, 2025 INSURANCE JOURNAL | 31

Spotlight: Parametric Products Pairing Parametric and Standard Insurance Will Become More Common: East Carolina University Students

By Allen Laman

arametric insurance experts don’t see the coverage replacing traditional insurance. But how are the specialized products currently used—and how could their adoption expand in the future? Ten East Carolina students researched, organized, and led a presentation that explored these questions during a recent Academy of Insurance webinar. The roughly one-hour event marked the culmination of the upperclassmen group’s semester-long project in their advanced topics in risk and insurance course. Those students don’t think parametric will replace standard coverage options, either. Instead, their research has led them to believe that the combination of parametric and traditional policies will provide a more comprehensive and

well-rounded coverage strategy that ensures all aspects of a risk event are addressed. “We believe this approach will be increasingly common as industries start to realize the value in having both types of coverage working alongside one another,” explained Tyler Bonds, one of the presenters.

What Is Parametric Insurance?

Instead of covering the value of actual losses, parametric insurance payments are triggered by predetermined, measurable thresholds, such as a specific amount of rainfall or wind speeds reaching a certain mile per hour within a set distance of a property. Morgan Windley, another presenter, shared that these triggering events are the core of parametric insurance policies; they set predefined parameters that initiate agreed-upon payment even if the policyholder doesn’t experience a loss. This

32 | INSURANCE JOURNAL | MAY 19, 2025

objective system can minimize moral hazard, and without a claims adjustment process, payouts can be made in days. “While parametric insurance is fast and efficient, the challenge is defining policies that match real-world risk as closely as possible,” Windley said. She later added that coverages can vary by premium and corresponding payout structure based on measurable event intensity. Windley noted that parametric insurance has gained traction thanks to catastrophic bonds and other financial instruments that made the products more appealing to insurers and investors. In the past decade, parametric policies have expanded to cover a wider range of triggers, including water levels and wildfires. The group believes that parametric is becoming more relevant because it can facili-

tate faster payouts and reduce disputes, among other benefits. Their research citations included an interview with an insurance professional, as well as published articles from trade magazines, insurer websites, and more.

Real-World Examples

The Caribbean Catastrophe Risk Insurance Facility (CCRIF) offers parametric coverage for hurricanes, earthquakes, and heavy rains in the Caribbean. When Hurricane Dorian hit the Bahamas in 2019, CCRIF paid out $11 million; when Hurricane Matthew hit Haiti in 2016, CCRIF paid $23.4 million. “This system gives vulnerable countries predictable, fast payouts, which helps them respond faster and recover better after disasters,” said presenter Justin Tracy. Parametric policies can cover soft costs, too. Katelyn Batten shared INSURANCEJOURNAL.COM

grows, the students expect insureds to pair both types of coverage together. “Traditional insurance works best for situations where you can clearly assess and quantify the damage, like property damage or vehicle accidents,” Bonds said. “But parametric insurance is often ideal for measurable events, where the risk can be easily measured and the payout can happen fast.”

another real-world example of a casino that weathered a storm with no physical damage. However, a tree fell across the facility’s only access road and prevented customers from entering for more than three weeks. Because the casino had a parametric insurance policy and the threshold was met, the site’s leadership was able to recover lost revenue and still pay employees. Index-based livestock insurance covers farmers if droughts kill the grass their livestock feeds on in Kenya and Ethiopia. Satellites monitor green vegetation in these areas, and if the amount of grass drops below a certain level, a payout is triggered. Twenty thousand herders have signed up for the International Livestock Research Institutecreated coverage. Parametric insurance is also gaining traction in the U.S. Bloomberg reported that Fremont, a California city of 226,000, became the first municipality in the nation to buy its own citywide flood insurance policy last September. In March, parametric hurricane coverage provider Vortex Weather expanded its supplemental hurricane INSURANCEJOURNAL.COM

insurance solutions to Hawaii. And in February, Aon plc launched a new parametric insurance solution with parametric flood insurance provider Floodbase and Swiss Re Corporate Solutions that is designed to address and mitigate commercial losses from hurricane-related storm surge along the U.S. coast.

Parametric in the Future?

The students believe that parametric policies can be used to fill gaps that traditional policies don’t cover. Students see parametric becoming more standard as a supplement—not a replacement—for traditional insurance. As parametric use

‘While parametric insurance is fast and efficient, the challenge is defining policies that match realworld risk as closely as possible.’ About the Class

The webinar presenters are all enrolled in the senior-level advanced topics in risk and insurance course taught by Professor Brenda Wells. She launched the course 15 years ago to connect students to executive-level professionals, but following the COVID-19 pandemic, Wells restructured the class around a webinar

project that emphasizes public speaking and online presentation skills. Early in the semester, each student gave a presentation to campaign for a topic they believed would be a good fit for a webinar. When it was all said and done, parametric insurance beat per- and polyfluoroalkyl substances (PFAS) in the final round of voting. A subset of students led a parametric insurance presentation at a separate conference, and the entire class deepened and expanded that presentation for the webinar. Wells, who is the director of ECU’s risk management and insurance program, said she is proud of the group and thought they all did a fantastic job. Wells said she had heard about parametric insurance, but she didn’t fully understand the purpose of it before seeing her students’ findings. Parametric sounded like hightech, high-stakes gambling, she said, so seeing their research was a learning experience for her, as well. A free recording of the full webinar can be found at www. ijacademy.com.

MAY 19, 2025 INSURANCE JOURNAL | 33

Spotlight: Hospitality & Entertainment Trouble Brewing? 6 New Risks for Winery and Brewery Clients

s consumers embark on a non-stop quest to

find those perfect, Instagramable moments, wineries By Larry Chasin and breweries are responding. Today, beer and wine tourists can step out of the taproom and sip Chardonnay by the pool, listen to live music, and even enjoy an invigorating hike. While this dramatic rise in entertainment and adventure options generates plenty of buzz, it also creates new risks for brewery and winery owners. Agents can fill the gap by understanding the nature of these evolving risks and protecting their clients as they transition into full-fledged hospitality venues. Here, we’ll unpack six emerging amenities at wineries and breweries, examine their risks, and explore mitigation tips agents and brokers can share with their clients.

1. Outdoor Firepits

Firepits set the perfect ambiance for nighttime tasting and provide warmth on chilly evenings. They also offer a natural setting for intimate social gatherings. However, the larger the fire pit, the bigger the risks. Pits must be located as far away from flammable material as possible. Additionally, fire features increase the chances of burns to patrons and property, with wind-blown embers ranking among the biggest dangers.

Winery and brewery owners can reduce their risks by installing an automated shutoff on propane-fueled pits. Employees should perform and document routine pit maintenance, including cleaning and service. And venues must have a written emergency response plan, backed up by robust staff training.

2. Swimming Pools and Hot Tubs

Soak-and-sip is one add-on option among wineries. However, any water feature carries risks for drowning and increases the chances of slip, trip, and fall injuries. Tubs and pools must also be properly maintained and supervised. Property owners should provide adequate fencing around pools. Visible signage is required to detail pool rules and communicate whether or not a lifeguard is present.

34 | INSURANCE JOURNAL | MAY 19, 2025

Venue owners also must make sure their liability and property coverage is insured to its full value.

3. Onsite Lodging

Beer and wine tourists need a place to stay. Savvy winery and brewery owners are meeting the moment by adding boutique hotels to their properties. Doing so brings the same risks faced by traditional hotel owners, including injuries, bed bug claims, fire risk, and general liability concerns related to privacy and noise. Venues moving into hospitality must shore up the basics, including drafting standard guest rental agreements and liability waivers. All lodging facilities must comply fully with the Americans with Disabilities Act, and each guest room must be equipped with smoke detectors and fire extinguishers and should

include CO2 detectors, as well.

4. Golf Courses and Putting Greens

Lawn games, cornhole, bocce, putt-putt, and even a full-scale golf course create fun recreational options for guests. But they bring with them tripping hazards and a risk for injuries and property damage. Smart risk reduction strategies include routine inspections of both play surfaces and equipment to minimize accidents and liability. Draft liability waivers for any potentially hazardous activities. Keep any children’s activities in an area separate from where adults will play and imbibe.

5. Hiking Trails

The hillside setting of wineries doesn’t only improve the quality of a vineyard’s grapes. It also allows guests to INSURANCEJOURNAL.COM

staff who service their events. • Make sure brewery and winery owners properly vet all vendors and implement best practices for vendor management, including appropriate contracting.

in-house or third-party staff members trained in animal handling and supervision. Warning signs should also be posted so visitors understand the potential risks.

Advising Clients on Entertainment-Related Risks

get some brisk exercise. Some venues offer vineyard walks, while others have hiking trails located right behind their properties. These trails bring risks for slip, trip, and fall accidents, injuries, and even wildlife run-ins. Adequate risk mitigation starts with maintaining clear paths to and from hiking trails. Post signage to make guests aware they’re leaving the property and entering public land. Consider offering suggested routes encouraging guests to traverse low-impact trails and avoid hazardous ones.

add petting zoos to their properties, allowing patrons to feed baby goats, sheep, and even emus. While zoos are family-friendly, animals can be unpredictable. Winery owners must be ready to handle bites and scratches while limiting the transmission of diseases from animals to humans. For proper risk mitigation, handwashing stations are a must-have. So, too, are

As wineries and breweries transform, agents and brokers should talk with business owners early and often and provide options to keep their businesses insured to value. A few ways to make this happen: • Perform annual, on-site risk reviews, then follow up with quarterly check-ins. Ask about upcoming events or new improvements. • Recommend one-day event coverage for unique or significant exposures. • Assess each client’s liquor liability policy and adjust it as needed. • Encourage clients to perform and document all maintenance and safety training for employees and

Create a Memorable Experience for Everyone

As wineries and breweries transform into entertainment venues, they need a fresh look at their coverage and loss prevention strategies. Agents and brokers who keep abreast of the latest entertainment trends—and the liability that comes with them—will help their clients keep their venues as protected as they are popular. Chasin is president and chief executive officer of PAK Programs, which provides insurance programs for wineries, vineyards, breweries, wine and liquor retailers, cideries, meaderies, distilleries, liquor and wine importers and distributors. He has led PAK Programs for nearly 30 years.

‘Lawn games, cornhole, bocce, puttputt, and even a full-scale golf course create fun recreational options for guests. But they bring with them tripping hazards and a risk for injuries and property damage.’ 6. Petting Zoos

We’ve seen a few wineries

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Spotlight: Employment Practices When Harassment Follows You Home: Managing Employment Practices Liability Risk in a Remote Work Era

he boundaries between work and home have never

been blurrier. The shift to remote and hybrid environments By Karli L. Moore and brought flexibility, but for insurers and employers alike, it also introduced a new Nelson T. Kefauver exposure: harassment claims in the virtual workplace. According to the most recent data from the U.S. Equal Employment Opportunity Commission (EEOC), harassment charges jumped 47% over the last three years, totaling 31,354 claims in FY2023. From inappropriate video call comments to offensive imagery in virtual backgrounds, employers are held accountable for misconduct, regardless of where it occurs.

When Harassment Goes Remote

At first glance, the types of behavior that trigger claims—bullying, discrimination, intimidation, and sexual harassment—have not changed much. What has changed is how those actions show up and get documented. The rise in virtual meetings, instant messaging platforms, and digital collaboration tools means more evidence is preserved in writing or recordings. As a result, some claims are more

visible, traceable, and costly. In one case, an assistant alleged harassment by a company manager who initiated a non-consensual relationship during days they worked together from her home office, blurring professional and personal boundaries under the guise of collaboration. In another claim, a nonprofit employee alleged retaliation after whistleblowing on management. She says she was denied a request to continue remote work as punishment, raising complex questions about intent, accommodation,

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and retaliation. Even without extreme allegations, remote work has led to new gray areas: What happens when someone makes an off-color joke in a group chat, or displays a politically charged background during a Zoom meeting? These moments may seem small, but they are increasingly forming the basis of formal complaints.

What Employers Can Do

Employers need to recognize that a virtual setting does not exempt them from maintaining a respectful, harassment-free

environment. That starts with meaningful action in four key areas: Training. One-off videos or passive modules are not enough. Anti-harassment training must be interactive, repetitive, and clearly address digital conduct—what is and is not appropriate behavior in chats, emails, video meetings, and more. Communication. Open lines of communication matter. Remote work can make it harder for employees to speak up or seek help, especially if their manager is the problem. INSURANCEJOURNAL.COM

what constitutes harassment in virtual settings and clearly stating that remote or hybrid workers are entitled to the same protections as in-office staff. Policies should clarify that virtual misconduct—whether via video call, messaging platform, or email—is subject to the same investigative procedures and disciplinary actions.

‘From inappropriate video call comments to offensive imagery in virtual backgrounds, employers are held accountable for misconduct, regardless of where it occurs.’ Why Documentation Cuts Both Ways

Employers should ensure that employees have safe, confidential ways to report misconduct, including anonymous whistleblower hotlines. Culture. Managers should model respectful behavior and foster a sense of inclusion across remote and in-person teams. That includes holding space for virtual and physical interaction and ensuring equal opportunities for all employees, regardless of location. Policy. Employers should update their workplace policies to reflect remote realities. That includes explicitly outlining INSURANCEJOURNAL.COM

In a virtual environment, digital documentation can be both a liability and a protective tool. Unlike in-person exchanges, written chats, emails, and recorded meetings leave a lasting trail. For claimants, that often means stronger evidence to support allegations. For employers, it underscores the importance of maintaining detailed records of training sessions, performance reviews, and any prior behavioral issues, especially when a claim arises. In claims where allegations stem from virtual misconduct, the presence (or absence) of a documented history can significantly impact how quickly and effectively an issue is resolved. Without context or prior records, what may have been a misunderstanding can escalate into a drawn-out and costly dispute.

Coverage Considerations

As remote work evolves, so do exposures and the insurance solutions that address them. Employment practices liability insurance (EPLI) remains a key line of defense for organizations navigating workplace harassment claims. Employers should work with their insurance agents and brokers and carriers to review whether: • Third-party harassment coverage is included. • The policy addresses claims stemming from virtual or hybrid settings. • The insurer offers in-house claims teams that have EPL expertise. A standalone EPL policy often provides broader protection and access to more experienced claims handlers than one bundled into a commercial package. For insurance agents and brokers, the shift to hybrid work presents an opportunity to act as strategic risk advisors. To effectively manage EPLI risks in the remote work era, they should: • Proactively review clients’ EPLI policies to ensure alignment with virtual workplace risks. • Flag gaps in third-party and remote harassment coverage. • Recommend risk mitigation strategies tied to coverage, such as training, updated policies, and better documentation practices. By taking a consultative role, agents and brokers help clients strengthen both their coverage and their workplace culture.

The Role of Managers and HR

Beyond insurance, preven-

tion still hinges on people. Human resources departments and frontline managers need to be equipped and empowered to act swiftly. That includes: • Regular training refreshers, especially tailored to virtual conduct. • Proactive monitoring of team dynamics (without breaching privacy). • Scheduled check-ins that create space for honest conversations. • A clear chain of communication if employees need to report misconduct outside their reporting line. Remote environments can unintentionally widen the distance between employees and leadership. By building a culture of accountability and accessibility, companies can close that gap.

Not the Only Risk

In the remote work era, the signs of workplace harassment are subtler, the risks are higher, and the fallout can be just as damaging. As the legal landscape continues to evolve, companies must meet their existing obligations and anticipate where future risks may emerge. The digital workplace brings undeniable advantages, but it also demands new vigilance. Kefauver is head of financial and professional lines, North America, and Moore is senior claims manager, management liability, at Intact Insurance Specialty Solutions. Based in Chicago, they help clients navigate complex employment practices risks in today’s evolving workplace landscape. This article is provided for general informational purposes only and does not constitute and is not intended to take the place of legal or risk management advice.

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Idea Exchange: Trends Leaning into Uncertainty and Managing Risk

n a climate of rapid, often unforeseen change, leaning into uncertainty and adapting quickly is not easy but By Michael McKenna is always advantageous. For businesses to respond to challenges and harness opportunities for growth and development, understanding risk drivers is vital. Insurance acts as a barometer of increasing levels of risk—from political and economic volatility to technological advancements, including artificial intelligence (AI), conflicts, and trade disputes. Specialty insurers adapt to emerging risks and offer tailored solutions to help businesses manage uncertainty. We monitor the impact of key trends on commercial customers, ensuring we are responsive in our risk appetite, underwriting, and service approach, ultimately building a thoughtful, long-term view of risk. Amid this complex picture, we must also monitor the issues that continue to influence the commercial insurance environment. These include: • The impact of social inflation on liability claims costs. • The risk and reward of integrating AI into underwriting and claims processes. • The need for enhanced collaboration among customers, brokers, and carriers. Successfully responding to these factors as an industry elevates our ability to deliver for our customers, help businesses navigate the risk landscape, and ensure a resilient, sustainable insurance market.

Stemming the Tide of Social Inflation

Social inflation, characterized by increased litigation, higher jury awards, and broader definitions of liability, continues to significantly affect the commercial insurance market. We are seeing a proliferation of “nuclear” verdicts driven by evolving jury attitudes and third-party litigation funding. These factors drive 38 | INSURANCE JOURNAL | MAY 19, 2025

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claim costs, requiring insurers to adjust their underwriting approach and pricing requirements. Social inflation affects various industries and lines of insurance, particularly product liability, commercial auto, and other complex casualty risks where nuclear verdicts have unsettled the market for excess liability coverage. Swiss Re reported that social inflation has driven a 57% increase in U.S. liability claims over the past decade, with 27 court cases in 2023 alone awarding compensation of more than $100 million each. These higher litigation costs are forcing coverage restrictions and causing businesses to raise the cost of goods. Social inflation has intensified as public attitudes shift on corporate responsibility and social justice. The insurance industry must engage with lawmakers at the state and national levels on practical tort reform to balance fair compensation for injured parties with predictability for businesses operating in good faith. Underwriting acumen has never been more valuable, and investing in people is another key mitigation strategy for this challenging risk environment. For specialty insurers, investing in the development of talented underwriters and claims specialists, and the tools they need to succeed, is essential to delivering more stable results and deepening customers’ confidence in their insurance partners.

Intelligently Embracing AI

AI is a transformational tool for the insurance industry. By integrating AI intel-

ligently into our processes, we can improve outcomes for customers and remain competitive. It offers significant opportunities to enhance efficiency, accuracy, and effectiveness in underwriting and claims handling, while AI-powered automation can streamline operations, reduce manual workloads, and improve decision-making processes. For example, at AXIS we are focused on enhancing our processes in intake, submission review, and initial underwriting analysis. We are incorporating AI tools to extract relevant data, streamlining underwriting from submissions, and have invested in AI tools to augment elements of our underwriting process including quoting and policy issuance. This improves the experience for brokers and customers. We are excited about how these tools are already driving improvements while adhering to best practices in AI ethics, compliance, and governance to ensure we address potential risks.

Collaboration Between Brokers and Carriers on Emerging Risks

In uncertain times, strong broker-carrier partnerships are critical for supporting businesses. This partnership is essential for navigating challenging market conditions and ensuring that customers receive the best possible service, coverage, and price. We expect that the risk environment will remain dynamic and continue to evolve rapidly, as seen in three notable specialty markets: management liability, casualty,

and environmental. In a particularly litigious environment, management liability risk rises. The directors and officers (D&O) market has experienced fluctuations, with an imbalance between risk and premiums in some areas of D&O, particularly public, becoming unsustainable in recent years. Our D&O experience allows us to address evolving risks, claims, and appetite through clear communication with brokers and customers. As economic and social inflation continue to impact the casualty insurance market, underwriters need to maintain vigilance by applying enhanced risk interrogation methods as part of the underwriting process to maintain profitability. In the U.S., the environmental insurance market remains stable but faces uncertainties as new entrants aggressively position themselves for growth. Litigation and regulation of PFAS chemicals (per- and polyfluoroalkyl substances) and nuclear verdicts create added challenges requiring carefully calibrated specialty underwriting considerations in this class of business. Emerging risks and an evolving regulatory environment remind us why brokers and customers value “custom suits” rather than “off the rack” solutions. Brokers and carriers must prioritize elevated collaboration on risk in the months and years ahead to ensure we continue to provide the specialty solutions customers need today and in the future.

Delivering in Uncertain Times

The commercial insurance market faces rising claim costs from social inflation, the challenge of AI integration, and the need for strong broker-carrier collaboration. By leaning into these challenges, the industry can deliver valuable, sustainable, longterm solutions for businesses. At AXIS, we continue to leverage data insights and our underwriting expertise to navigate complex risk transfer transactions to support our broker partners and customers. McKenna is the head of North America at AXIS, a global specialty underwriter and provider of insurance and reinsurance solutions.

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Idea Exchange: Is It Covered? Logic & Language and Forms & Facts Auto Coverage Under a CGL Policy

veryone knows that an ISO Commercial General Liability (CGL) policy does not cover the use of autos other than some limBy Bill Wilson ited coverage such as accidents arising from, for example, valet parking on or next to owned or rented premises. And, of course, there is coverage for motor vehicles that qualify as “mobile equipment.” Aside from that, the CGL policy excludes the “ownership, maintenance, use or entrustment to others” of autos. Well, not really. This is what the pertinent stem of the exclusion actually and exactly says is excluded [emphasis added]:

“‘Bodily injury’ or ‘property damage’ arising out of the ownership, maintenance, use or entrustment to others of any aircraft, ‘auto’ or 40 | INSURANCE JOURNAL | MAY 19, 2025

watercraft owned or operated by or rented or loaned to any insured. Use includes operation and ‘loading or unloading.’” For the exclusion to apply, not only must the loss arise out of the “ownership, maintenance, use or entrustment to others” of an auto, it must also meet at least one of two other conditions: the auto must either be (1) owned or operated by an insured; or (2) rented or loaned to an insured. In my October 2021 column, I wrote about the member of a church who used his mini van to pick up elderly church members on Sunday mornings and give them a ride to and from services. The church had a CGL policy in place but not an auto policy. If the church member had an at-fault accident that injured someone and the church was sued, would the church be covered by its CGL policy? The short answer is yes, as long as the auto wasn’t (1) owned or operated by or (2)

rented or loaned to someone insured on the church’s CGL policy. And this assumes there would be an argument that the church was “using” the auto vicariously through the church member. The complication in this church scenario was that church members are often included as insureds on CGL policies. If the church member was an insured, there is no coverage for the church under its own CGL policy because the auto was owned by “any insured” under the policy. By my last count, the ISO CGL policy mentions “any insured” 25 times. It should be apparent that a CGL policy potentially provides significant coverage for accidents arising from autos as long as the auto isn’t owned or operated by or rented or loaned to an insured under the CGL policy and, of course, there isn’t another exclusion that applies. One way this potential coverage can be diluted is through adding third parties as additional INSURANCEJOURNAL.COM

insureds on the CGL policy. This can best be illustrated by an actual claim I consulted on about five years ago. A large tenant, to enter into a lease, required that the landlord add the tenant as an additional insured on the landlord’s CGL policy. While it is more common for a landlord to ask to be an additional insured on a tenant’s policy, the opposite may be true for a desirable tenant. In this case, the tenant insisted that it, its employees, and several other entities be added as additional insureds on the landlord’s CGL policy. The claim arose when a customer of the tenant was run over in the parking lot by an employee of the tenant. Both the tenant and the landlord were sued. The tenant had no coverage under its own CGL policy because the auto was owned and operated by an insured (the tenant’s employee) under that policy. Fortunately, the tenant had coverage under a business auto policy. The landlord sought coverage under its CGL policy, but the claim was denied because the auto in question was owned and operated by an insured under the policy—but only because the employee had been added as an additional insured on the landlord’s CGL policy. If the tenant and its employees had not been added as additional insureds on the landlord’s CGL policy, the landlord would indeed have coverage for the claim under its own CGL policy. In this case, like the tenant, the landlord had coverage under its business auto policy.

‘While a CGL policy may provide some auto coverage, business relationships may sometimes have unintended consequences that create coverage gaps.’

It also illustrates that adding other entities as additional insureds on your CGL policy not only increases your risk of a claim and the dilution of policy limits, it also may result in the named insured effectively removing coverage for itself with regard to any exclusion that applies to all insureds if it applies to “any insured.”

Wilson, CPCU, ARM, AIM, AAM is the founder and CEO of InsuranceCommentary.com and the author of six books, including the Amazon 4.8 star “When Words Collide…Resolving Insurance Coverage and Claims Disputes,” which BookAuthority ranks as the #1 insurance book of all time. Email: Bill@InsuranceCommentary.com.

80 results for ‘cyber liability’

This illustrates perhaps the obvious— that every business needs auto coverage whether it owns autos or not. While a CGL policy may provide some auto coverage, business relationships may sometimes have unintended consequences that create coverage gaps. INSURANCEJOURNAL.COM

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Idea Exchange: Agency Management Taking a Step Back: Why It's Important to Take Time to Unwind In an Industry That Never Stops

ike every kid, I looked forward to the freedom and relaxation of summer vacation with great anticipation when By Tony Caldwell I was growing up. The idea of being completely free from the pressure to perform and the deadlines of assignments was always appealing. It seemed that the days grew longer as June approached with the promise of time off and a release from schoolwork. My father, however, was a relentlessly hard-working American business owner who didn’t really know how to take time for leisure. Every day that I didn’t have a job to go to during summer “vacation,” my father left me a lengthy list of work to do

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around the house. While this practice kept me out of trouble, it passed down to me the anxiety he felt when he wasn’t being “productive.” The habit of working all the time is seen in America as a virtuous key to success. It’s commonplace for employees to forgo vacation days or personal time off granted by employers. In my observation, the business owners themselves take even less time away from work. But is working, or overworking, really a key to productivity?

Working Hard or Hardly Working?

According to data from the Organisation for Economic Co-operation and Development (OECD) and World Bank, the U.S. was the 12th most productive country worldwide in 2022 measured by Gross Domestic Product per capita. The

same data ranked the U.S. 10th in output per hour worked. Clearly, the more hours we work in any society the more income goes up, and the U.S. is a world leader in productivity. Yet, the U.S. is 48th in life expectancy, according to Worldometer, and many of those countries higher on the list—like several in Europe, for example—feature shorter workweeks, according to World Population Review data. One result of taking more time away, working less or perhaps differently may be increased productivity while working. That seems to be the message from a study conducted by Ernst and Young, who reported an 8% productivity increase for each additional 10 hours of vacation they took as reported by CNBC. Anyway, that’s enough with the data.

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I think most people—except perhaps my father—would agree that taking time away from work is a good thing, and the data supports that idea. The question is why don’t we. I think there are several reasons worth exploring:

We have a cultural focus on being viewed as hard working as opposed to achieving results. Clearly, that is an

American value. So, we boast about our workweeks to colleagues and friends and managers focus on it in hiring and promoting. When was the last time someone boasted to you about how much vacation time they took? I think it’s obvious that effective and efficient time at work is more valuable than mere presence, and most would agree that results are more important than time spent in most jobs. But many managers still operate by taking attendance rather than measuring results through metrics like Key Performance Indicators (KPI). While this has improved some since COVID-19 and the work-from-home movement, it is not clear yet how managers will view attendance in the future. Guilt often drives behavior. For generations raised with similar expectations to my father’s, not knowing how to manage the emotions of being away from work makes it much more difficult. I have certainly struggled with this during my career, especially as I focused on trying to force myself to take more time off.

We don’t know how to take time away.

As a society we clearly focus on working well. We spend a long time in education, work preparation, internship, and other means learning how to work. We teach, train, and mentor managers in how to supervise work. But I don’t see a similar set of efforts to help people learn to maximize time off and its obvious benefits.

Moving Forward

Hard work and success are American values that have made our country a great nation and our economy the envy of the world. But if we could continue to maintain that level of success while encouraging ourselves and employees to leave work completely behind on a regular basis and relax, recreate, and recharge, INSURANCEJOURNAL.COM

it would make us healthier, increase our life expectancies, and shape us into superior workers. Business owners and managers should consider the following best practices:

Value, measure, and manage work and play. We’ve been doing that in my compa-

nies for many years by insisting managers model and lead. We track and talk about our time away, encouraging people to even boast about it. We insist people leave their work cell phones behind, ignore email, and not check in when they’re gone. On the wall of our office is a statement, “We honor good intentions but what we value is results,” and we explain that what we mean by good intentions is time spent at work. We measure and value KPIs over hours. Over time, this has created a different kind of work culture, a different way of thinking about the value of work itself—and the bonus is measurably better productivity.

Don’t just offer time off, encourage it. We unavoidably carry the lessons of

childhood and previous experience with us. But the lessons of the past may be replaced with better learning if we address issues head on and repeat as necessary. If managers believe that time away makes a better person as well as team member, they must not just give permission to check out but encourage it. Real encouragement gives those who are uncertain the courage to act and truly disconnect. Celebrating time away helps to remove the remaining stigma that exists throughout our society and many businesses.

Help your team understand how to disconnect. Leaders and managers can

also teach their teams “how” to be gone in ways that benefit everyone. Start with

asking employees to leave their work cell phones and computers behind. Assure them that leaning on coworkers to care for clients and complete important tasks in their absence is a compliment and an important vote of confidence for their teammates. It is also a chance for them to rest while their team has an opportunity to grow. Leaders and managers can help team members develop personal planning skills so they can plan time away effectively. If they don’t plan their time off, they will likely resort to thinking about work and miss out on the benefits of being away. Learning to plan better will assist employees when they return to the office, too. As a leader, you teach by example. I’ve been working on improving my own non-working skills for over 20 years now. I share my progress and failures regularly with those I work with in the hope they will not only learn from my experiences but be inspired by them. I’ve made considerable progress, learning along the way how to take almost as much time off as time spent working. I’ve seen my own productivity increase by 25 times. I’m proud of both the results at work and the time they afford me away. I’m prouder still of the progress my team has made, their stories, and the people they’ve become. So, get out of there and encourage your people to follow you. In an industry with unlimited work like ours, there will be plenty to do when you get back. Caldwell is an author, speaker, and mentor who has helped independent agents create more than 250 independent insurance agencies. Learn more by visiting www.tonycaldwell.net or contacting him at tonyc@oneagentsalliance.net. MAY 19, 2025 INSURANCE JOURNAL | 43

Idea Exchange: Minding Your Business Perpetuation Planning – Part Two

ast month’s column discussed the reasons to perpetuate a firm, the four common techniques to transfer ownership, pros By Catherine Oak and cons, and some options for internal perpetuation. This month we conclude with the remaining most popular options used by insurance agencies. Planning for perpetuation long before it’s necessary is both desirable and recommended.

Gifting the Stock

Under the new tax law in 2025, individuals may give up to $19,000 to any number of recipients each year without being subject to federal gift taxes. A spouse may also join in gifting. This allows a husband and wife to give together up to $38,000 annually to any number of recipients. For 2025, the maximum one-time gift amount is $11.2 million per person, adjusted annually for inflation, or $22.4 million for spouses. The increased exemption expires at the end of 2025.

the enabling bonus offers a far greater advantage if also used as an incentive, such as for writing new business. Likewise, there are disadvantages. In a personal buyout, the enabling bonus paid by the corporation is tax deductible. However, the bonus received by the buyer of stock and proceeds received thereafter by the seller of stock are taxable. The tax benefits derived by a corporate tax deduction are thus wiped out in large part by the taxes imposed on both the buyers and sellers of stock. So that the buyer of stock is not overwhelmed with a tax burden they cannot handle, the enabling bonus must be adjusted upward, thus making the transaction more expensive. As a generalization, for every dollar spent to fund a personal buyout, it used to be that about $0.44 is lost to federal taxes. The personal tax rates are now lower under the new tax law for each tax bracket, so the exact amount of tax will vary by income levels up to a maximum of 37% now versus 39.6%.

Perpetuation Through a Stock Redemption A method commonly used in the

perpetuation process involves the corporation buying outstanding shares of common stock and retiring these shares into Treasury stock. A clear disadvantage with this method is that the payment for the stock must come from after-tax dollars. However, interest associated with a stock redemption can be tax deductible. In addition, the sheer simplicity of this method is appealing though costly from a tax point of view. As a generalization, for every dollar spent to fund a stock redemption, about $0.21 is lost to federal taxes. This is down from 15%-39% before. If a company has the unfortunate choice between only a personal buyout or a stock redemption, neither method produces a clear advantage.

GRATification

A grantor retained annuity trust (GRAT) is an irrevocable trust to which a donor transfers property, retaining the right to receive annual payments from the trust for a term chosen by the donor. A taxable gift is made as to the present value of the remainder interest (at the end of the fixed term) in the property. If the grantor survives the fixed term, the entire value of the property escapes estate tax. The value of the stock remains frozen until it passes

Perpetuating Through a Personal Buyout

One option that can be used alone or in combination with others is that of the personal buyout. In a personal buyout, an employee of the agency purchases stock from the retiring shareholder. Under such a plan, the buying employee could fund the purchase through his existing salary or personal funds. Alternatively and realistically, the corporation can fund the buyout by creating a device called an enabling bonus. The enabling bonus provides employees who otherwise could not afford a large block of stock with the means to do so. However, 44 | INSURANCE JOURNAL | MAY 19, 2025

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to the designated beneficiaries. The value of the grantor’s annuity interest is subtracted from the value of the trust property in determining the amount of the taxable gift resulting from the creation of the trust. The transaction is leveraged in the sense that the gift removes a larger amount from the grantor’s gross estate for estate tax purposes than is subject to the gift tax. Basically, a GRAT allows property to be transferred to a member of the grantor’s family at a reduced transfer tax cost. Payments are normally deductible for the firm. There are sizable gift tax savings when the stock is transferred to the trust.

‘Most owners would like their business to continue and thrive well after they exit the firm.’ Leveraged ESOP

An ESOP, or an Employee Stock Ownership Plan, is a defined-contribution benefit plan designed to invest primarily in the employer’s stock, providing employees with ownership of the company. An ESOP allows a business owner to: (1) currently diversify a portion of the equity in the business without taxable event and without selling a controlling interest in the business, (2) lock in valuable key employees with “golden-handcuffs,” and (3) create a plan for the eventual sale of the rest of the stock, again without paying income tax on the gain realized from such sale. A business with an ESOP typically uses internal cash flow or outside financing to make regular tax-deductible contributions of cash to the plan, which then purchases from the company shares of company stock. Oak & Associates does not recommend setting up an ESOP for most independent agencies, as they can be fairly expensive. There is also a need for an annual valuation of the ESOP shares, which will add to the annual cost. Expenses incurred might be outweighed by tax savings for firms over a certain size. The ESOP must be adequately funded so that vested employees INSURANCEJOURNAL.COM

that quit or retire can be bought out. This repurchase liability creates additional costs to the company above and beyond the annual loan repayment.

Recapitalization

Consider corporate recapitalization prior to transfers. Restructuring the capital of the business can permit senior business owners to achieve many of the objectives of business succession planning. Creating the second class of common stock is a nontaxable event. The corporation is recapitalized so that the bulk of its equity lies in non-voting stock (this is permissible in an S corporation so long as the only difference is in voting rights). The donor can then give away substantially all of the equity without relinquishing the vote. For more information on recapitalization, contact a business attorney and/or CPA.

Summary

Any succession planning will take time and must include the advice of tax and estate planning professionals. Keep in mind these techniques must be done within the context of acceptable legal limits and must not be used in a manner to avoid taxes. Most owners would like their business to continue and thrive well after they exit the firm. With the proper planning, owners can create a structure that will increase the chances that their business will be passed successfully to the next generation. Oak is founder of consulting firm Oak & Associates, based in Northern California and Bend, Oregon. The firm specializes in financial and management consulting for independent insurance agencies, including valuations, mergers/acquisitions, clusters, sales, and marketing planning as well as perpetuation planning. Phone: 707-935-6565. Email: catoak@gmail.com MAY 19, 2025 INSURANCE JOURNAL | 45

Idea Exchange: Commercial Lines An Agent’s Guide to Expanding into Commercial Lines

oo many insurance agents lose out on lucrative opportunities by quoting only half of the business available to By Oliver Travieso them. For the typical new agency owner, focusing on personal lines makes sense because it’s easier and more familiar. However, ignoring the commercial lines market severely limits earning potential. According to the Big “I” 2024 Market Share Report, independent agencies only placed 39% of personal lines written premium in 2023, compared to 87% of commercial lines written premium. The takeaway? Many individuals are happy to find insurance on their own, whereas business owners are more likely to value the guidance of an insurance expert. And that’s just one reason to offer commercial lines. In addition to tapping into a massive and highly receptive target market, there are five key advantages to becoming a commercial lines agent.

portfolio isn’t diverse. By expanding into commercial insurance, you’re in a better position to help a greater number of clients.

Advantage #2: The Ability to Navigate Market Changes

When the insurance market changes, agents need to pivot to survive. Let’s say you only sell personal insurance, and you’re in a state that has been plagued by natural disasters. Rates dramatically increase, and capacity is hard to come by. Then, several carriers stop writing business in your state. Suddenly, you’re struggling. This isn’t fiction—it’s a scenario that many agents in California and Florida know all too well. Market changes can be disruptive,

but agents who offer a wide variety of coverage types are able to pivot. If it becomes hard to sell personal insurance, you can shift your focus to commercial insurance—and vice versa. It’s always better to have options.

Advantage #3: Long-Term, Loyal Customers

J.D. Power says auto insurance shopping has surged. Amid rising auto insurance premiums, nearly half of policyholders are actively shopping for a better deal. Personal lines policyholders aren’t the most loyal. Most auto and homeowners insurance policyholders simply want the best price they can find. Commercial policyholders are different. Although they can be cost conscious, they

Advantage #1: A Diversified Business Portfolio

No matter how well you do with a single option, failing to diversify your portfolio will cause you to lose sales. Let’s say an agency places all of its business with one carrier. Because the carrier is popular, the agent is able to sell a lot of policies. Plus, sticking to one carrier makes things easier. However, there will always be some clients who can’t find what they need with this one carrier. If you don’t offer anything else, you will lose those clients. This is why so many agents make the switch from the captive to the independent model: They understand the value of diversification. The more carriers you represent, the easier it is to meet the needs of all of your clients. The same goes for lines of coverage. If you only sell personal insurance, your 46 | INSURANCE JOURNAL | MAY 19, 2025

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also tend to be serious about risk management and long-term goals. They are often interested in developing relationships. For agents trying to build a future-proof book of business, this is highly desirable.

Advantage #4: More Lucrative Commissions

The commissions that agents earn are tied to the cost of the policy—the bigger the premium, the bigger the commission. Of course, this doesn’t mean agents should try to sell their clients policies that are overly expensive. However, it does mean that focusing on more expensive coverage types is a smart way to boost your revenue. According to Forbes Advisors, the average cost for a homeowners insurance policy with $350,000 of dwelling insurance is $1,678 per year. According to U.S. News, the average cost

of car insurance is $172 per month, which works out to $2,064 a year. Commercial insurance policies vary greatly in cost, but the average premium tends to be well over $5,000. By selling commercial policies, agents command larger commissions. They may also be able to sell more policies to a single client over the years. With a personal lines client, you may be able to start with auto insurance and then sell homeowners and life insurance. Maybe you’ll even be able to sell a vacation home or boat policy. However, most people don’t need a huge number of insurance policies. Businesses are different. Even a small business may need commercial property, commercial auto, commercial general liability, and workers’ compensation insurance—and that’s often just the beginning. As the business grows, the size of the policies it needs will also grow. A single

business client can significantly increase your book of business.

Advantage #5: The One-Stop Shopping Advantage

Business owners also need personal lines insurance. Likewise, many personal lines clients may be business owners. The cross-selling opportunity is immense. The U.S. Chamber of Commerce says a record-breaking 5.5 million new business applications were filed in 2023. Some of these businesses may not have a physical location or any employees, and their insurance needs may be modest. However, even small businesses need coverage, whether it’s a professional liability or a commercial auto insurance policy. Furthermore, small business owners may be unaware of their risk exposures. By talking to your personal lines clients about their business ventures and related insurance needs, you’ll help them protect their new businesses while securing additional commissions for yourself. If you don’t cross-sell to your existing clients, you risk losing them. Let’s say you have a client who has homeowners and auto insurance with you. This client opens a restaurant and needs commercial insurance. Because you don’t offer it, the client goes to another agent. To make matters worse, that other agent may be able to convince the client to move his personal policies—after all, it’s less work to deal with a single agent. Now, you’ve lost a valuable client. As a multi-line agent, you can offer your clients the one-stop shopping advantage.

Getting Started

It’s time to address the elephant in the room. Many agents know they can make money in commercial lines, but they avoid it because it seems difficult. However, with the right support, writing commercial insurance doesn’t have to be challenging. Travieso, senior vice president, commercial lines, at Smart Choice, has an extensive knowledge of the commercial insurance market and how brokers can succeed in it. He draws on his background in both sales and underwriting. Website: www.smartchoiceagents.com/agent-services. INSURANCEJOURNAL.COM

MAY 19, 2025 INSURANCE JOURNAL | 47

Idea Exchange: Agency Management Navigating the Landscape of Agency Agreements

he relationship between insurance agents, brokers, and carriers is vital to the successful operation of the insurance industry. At its core, this partnership rests on the agency agreement, trust, and clear communication.

The Agency Agreement: Defining Roles and Responsibilities

By Mark Robinson

The agency agreement serves as the legal backbone of agent and carrier relations. These contracts vary depending on the type of relationship with the insurer, such as agency, brokerage, captive, independent, wholesaler, or lead generation, among many others. It is critical that agents carefully review their agreements to confirm the agreements evidence the intended relationship and, if not, request reasonable changes prior to execution. Here are the essential categories and terms to consider in an Agency Agreement.

Appointment & Authority. Appointing and establishing a producer’s relationship and specific authority to place business with a carrier are fundamental in any agency agreement. To be clear, producer authority is not unlimited, and common restrictions on an agent or broker’s conduct in the relationship include, without limitation: • Binding authority. • Issuance and modification of coverage documents. • Modifying policy terms or payment schedules. • Territory limitations. • Appointment of sub-producers. • Claims handling. Producers and carriers must also be aware of state-specific regulations regarding appointments and their effect. For instance, in California, a “Notice of Appointment” filed with the Department 48 | INSURANCE JOURNAL | MAY 19, 2025

of Insurance creates a presumption that the producer is acting as an agent of the insurer, which prohibits the producer from charging the insured broker fees, as only brokers can charge a broker fee in California. If an appointed producer charges broker fees, either the producer or the carrier could be required to refund them. In states like New York, a licensed broker can charge fees, but an appointed licensed agent cannot. This clarity of roles is essential to avoiding liability and ensuring seamless operations.

Producer Responsibilities. The producer’s

responsibilities section in an agency agreement can be extensive. Areas that are typically addressed are: • Licensing requirements for both the agency and individual producer. Failure to maintain a required license may result in termination of the Agreement

and no obligation to pay commissions. • Retention of insurance transaction documents. • Claims reporting. • Maintaining adequate errors and omissions (E&O) and cyber liability coverage. • Handling of premiums.

Commission Structures. These terms set forth detailed definitions of new and renewal business commissions, bonus structures, and return commissions in the event of cancellations. Ownership of Expirations. This is a critical

provision for producers not to overlook. Producers typically own their expirations (renewal rights in their books of business) during the term and after termination, except in the case of indebtedness to the carrier after termination of the agreement. INSURANCEJOURNAL.COM

termination of the agency agreement, and the right to receive commissions.

Privacy & Data Protection. In an era where

data breaches are a growing concern and data security laws are continuing to be implemented, there has been an emphasis on agreements addressing the parties’ respective obligations for handling confidential and personally identifiable information (PII), as well as data breach procedures. Agencies and insurers are required to adhere to and ensure compliance with data security laws and protecting sensitive information.

Indemnification. Mutual indemnification

clauses further safeguard both parties by clearly outlining and shifting responsibility in the event of a party’s breach of the agreement.

‘The agency agreement serves as the legal backbone of agent and carrier relations.’ Best Practices for Success

However, it is not uncommon for the carrier to include numerous other grounds upon which an agency’s book of business would be transferred to the carrier.

Termination & Post-Termination Rights.

No relationship lasts forever, and agency agreements include provisions for termination that should be closely reviewed. Whether mutual or for cause, these clauses must comply with state laws, which often mandate notice periods ranging from 30 days (Florida) to 180 days (Louisiana). Producers should negotiate their rights post-termination, such as the ability to continue servicing their books of business until transferred to other carriers and earning commissions on renewals. Also, some states like California and Washington have agent protection laws that allow for limited policy renewals under certain circumstances, even after INSURANCEJOURNAL.COM

To foster successful agent and insurer relationships, the following are highly recommended: 1. Review: Carefully review the agency

May 19, 2025 Developers Surety and Indemnity Company 7801 Folsom Boulevard, #202 Sacramento, CA 95826 The above company has made application to the Division of Insurance to amend their Foreign Company License to transact Property and Casualty Insurance in the Commonwealth of Massachusetts. Any person having any information regarding the company which relates to its suitability for the license or authority the applicant has requested is asked to notify the Division by personal letter to the Commissioner of Insurance, 1000 Washington Street, Suite 810, Boston, MA 021186200, Attn: Financial Surveillance and Company Licensing within 14 days of the date of this notice.

agreement and request changes to key provisions that do not comply with your intended relationship. 2. Compliance: Regularly verify compliance with the terms of the agency agreement, including licensing, document retention, accounting of premiums and commissions, data protection, among other key provisions. 3. Adaptability: Be sure to review and update agreements to reflect changes in laws, market conditions, and business needs.

In Closing

The intricacies of agent and insurer relations demand attention to detail and a deep understanding of the contractual and regulatory framework. By following the principles outlined above, producers and insurers can build partnerships that are not only legally sound but also mutually beneficial. To be sure, when it comes to navigating these relationships, preparation and precision make all the difference. Robinson is founding partner of Michelman & Robinson LLP, a national law firm headquartered in Los Angeles. He is an insurance industry authority who primarily represents retail brokers and agents, and a recognized authority on regulatory issues. Phone: 310-299-5500. Email: mrobinson@mrllp.com.

Advertisers Index Amalgamated Insurance Underwriters www.aiu-usa.com American Integrity Insurance www.aii.com Applied Underwriters www.auw.com Marsh, Berry & Company, Inc. www.marshberry.com The Hartford www.thehartford.com WSIA- Wholesale & Specialty Ins. Assoc. www.wsia.org

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MAY 19, 2025 INSURANCE JOURNAL | 49

Closing Quote Industry Recruitment: Lessons Learned

By Jason Ernest, Esq.

all it a mid-life crisis. A “come-to-Jesus” moment. Corporate existential angst. It was early 2022, and our organization—Insurance Agents & Brokers (IA&B), the association for independent insurance agencies in Pennsylvania, Maryland, and Delaware—was at a crossroads. Our leadership recognized that the industry’s talent crisis was deepening. We knew we needed a plan to sustain our member agencies and, in turn, our own organization. Enter Minding Your Business (MYB), a consulting and research firm that specializes in the association space. MYB led the IA&B board of directors and senior management through an extensive research process and intensive in-person planning retreat. The outcome was a five-year plan to position the association and its members for the future, with an identified priority of talent recruitment and development.

about their jobs. We found that Gen Z’s aspirations were shaped by technology. Dubbed “digital natives,” they grew up immersed in the internet and expect agility and flexibility in their career as a result. They also experienced the pandemic and resulting economic upheaval at a young age, which contributes to their desire for stability. Overall, we found that this generation prioritizes a flexible schedule, professional pay, job security, and growth potential when considering a profession. What’s reassuring is that these traits can be found in an independent insurance agent career. In fact, they fall in line with Insurance Journal’s 2025 Young Agents Survey results, in which respondents reported that they most appreciate that their job allows “freedom, quality of life, opportunities to grow, challenges and the ability to solve them, the people and relationships built, the compensation, and of course, the satisfaction that comes with helping others.”

What Independent Agency Principals Need

We also worked with MYB

to conduct focus groups of our member agency owners and principals. We wanted to understand their experiences with recruitment, as well as their needs as employers. Participants expressed the desire for help positioning the independent agent career more positively to attract candidates. They also shared frustration in the time required to onboard industry newcomers. They told us that young, new hires often needed handholding—from explaining the ins and outs of daily agency operations to teaching soft skills for handling client calls and emails. Again, these findings echo Insurance Journal research, this time the 2025 Agency Salary Survey, which highlighted the importance of employees’ soft skills and emotional IQ to ensure client satisfaction.

Where to Go From Here

“Knowing is half the battle.” (There’s a G.I. Joe cartoon quote that Gen Z won’t recognize.) Once we knew what the next generation of prospective insurance professionals wanted and what support insurance agencies needed, we felt confident in working toward

our goals of talent recruitment and development. I’m proud to share IA&B’s resulting accomplishments from the past two years. We hired a Director of Career Services, a full-time recruiter who targets diverse, new talent for the industry. We also developed the Insuring Careers Certification Program (ICCP), an online, flexible program for industry newcomers. ICCP goes beyond state licensing exam prep and provides education on insurance basics, the technical side of insurance, application of the material to real-life scenarios, and soft skills training. Our industry and its career opportunities are exceptional, and we can offer what the next generation of professionals want. Collectively, what we need are ways to engage diverse, new talent and support hiring agencies. I firmly believe that together we can accomplish this, and I hope that our lessons learned will aid others’ efforts and work toward our common goal of sustaining the independent agency channel. Ernest, Esq. is president & CEO of Insurance Agents & Brokers.

What Gen Z Wants (That We Have to Offer)

Our market research focused on high school and college students. We attended classes and career fairs and spoke to students about their professional goals, career aspirations, and top motivators. We also talked with current young agents to gauge what they value most 50 | INSURANCE JOURNAL | MAY 19, 2025

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