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Insurance Industry Grapples with Need for Young Talent

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Insurance Special Coverage

Protecting the Future

Lisa Johnson admits an insurance career can be challenging — and a constant learning experience.

“Even our veterans will tell you, nobody knows everything about insurance. They’re learning something new every week — from each other and from formal education,” said Johnson, chief operating officer of Encharter Insurance in Amherst. “We make sure we have people taking classes every year. We incentivize learning; it improves our businvess.”

And that goes double for new employees; even after landing a job, she said, it takes about a year of training to fully ramp up on personal lines, and three years on the commercial side.

“It’s a complicated business. As an agency owner, you have to be willing to put in the time and the energy to make sure people are getting the training they need,” Johnson told BusinessWest. “Sometimes people underestimate the learning curve, and it’s tough to stick with it and get licensed and have a career. You’re dealing with a lot of regulations, it can be a very technical business, and it can be very overwhelming.”

That may not sound like the most appealing pitch, but there are rewards on the other side, she said.

“We have a career that’s not stagnant; you’re always learning new things, learning to manage obstacles, and that should be presented as an opportunity. It’s enrichment for your career. It’s furthering your personal value. This career offers exceptional long-term benefits, a lot of stability. It’s recession-proof, with a lot of variable and transferable skills like customer service and sales. I always tell people, a great salesperson will never starve.”

That said, according to a recent article in Insurance Journal, the Bureau of Labor Statistics projects that the industry will face approximately 21,500 job vacancies each year over the next decade, and “this growing talent shortage is compounded by a rise in the severity of claims and by the industrialization of plaintiff litigation. As veteran employees leave the workforce, the industry loses invaluable expertise. That creates a ripple effect of challenges for claims-management organizations.”

Lisa Johnson

Lisa Johnson

“It’s a complicated business. As an agency owner, you have to be willing to put in the time and the energy to make sure people are getting the training they need.”

And that leaves growing agencies with a real challenge. John Dowd Jr., president and CEO of the Dowd Agencies in Holyoke, said recruiting may be more of a problem in the 413 than elsewhere.

“It has been a challenge for a long time to attract more people into this industry. I don’t think that’s unique to Western Mass., but compared to Eastern Mass. or more metropolitan areas, we just have fewer candidates that are drawn to the industry.”

Still, “I think it’s a great industry,” Dowd said. “We have many people come here to work with us, and most stay. Some don’t because they either don’t like it or they move to a different area, whatever the case may be.”

Recruiting the right people, those who will stick for the long term, has become so important, in fact, that the firm has, for the first time, hired a talent recruiter, as opposed to running ads in newspapers or working through headhunters.

“We’ve done those things for years, trying to attract people, both young people interested in the industry and seasoned people who have been in the industry for a period of time,” Dowd said. “Obviously, it’s easier to hire an experienced person to step in with minimal training and be effective at their job. But those people are not that easy to find. So a lot of times, we’ll say, ‘let’s recruit young people and train them and teach them our way.’ That way, they’re more likely to assimilate into our company’s culture.

“It is a great business, with a lot of different things you can do, depending on what your skills and interests are, and what your long-term ambitions are,” Dowd added, noting that the new recruiter will help build a pipeline of young talent. “We have multiple locations in multiple states. We’re going to have people retiring, people moving out of the area, and we have to fill those positions. We’re excited about this new role because we really think it’s going to help us fill positions and find better-qualified people — either experienced or inexperienced with lots of upside.”

Because of the training involved in hiring younger people, Johnson said, “it’s a huge savings if you can grab one of the seasoned people in our area, but I think it’s kind of a small group of people rotating from one agency to another.”

John Dowd

John Dowd

“Colleges typically don’t direct course curriculum to the insurance industry, and people don’t get introduced to it in high school or college unless they’re looking for that. And even then, it’s difficult to find courses specific to the insurance industry.”

So the industry absolutely needs an influx of young talent — and insurance careers can be appealing to them in a number of ways, she added.

“I do think it’s been a challenge in today’s labor market to find the right people. We’re competing with banks and other roles that appear more modern to younger candidates,” she said. “But it’s definitely an industry that is going to supply young people with a lot of upward mobility, particularly because they’ll bring their technical knowledge that some of the folks retiring don’t have.”

 

School’s Out

Part of the problem, Dowd said, is educational. “Colleges typically don’t direct course curriculum to the insurance industry, and people don’t get introduced to it in high school or college unless they’re looking for that. And even then, it’s difficult to find courses specific to the insurance industry.”

Considering that landscape, Sam Hanmer, president and CEO of Rush Insurance Group in Chicopee, said it’s valuable to work with community colleges and high schools to recruit through internships and generally expose students to opportunities in insurance.

“We have plenty of work, and they’re paid internships, so we hope we can get some young people to stick around,” he told BusinessWest. “We’ve even reached out to local high schools as well, creating opportunities for them. We want them to come work after school, do some data entry work, that kind of thing. We’re talking to guidance counselors about the potential for them to send over kids who are looking for after-school jobs.”

Sam Hanmer

Sam Hanmer

“Depending on what side of the fence you want to be on, there’s also a lot of financial work, payables, receivables, billing, all of that. And as an agency, we also need IT support. So there are a lot of different areas.”

The problem, as noted earlier, is that only a handful of colleges in the country actually offer coursework in insurance.

Hanmer noted that the Isenberg School of Management at UMass Amherst has put together an insurance club — one more oriented toward the carrier side of the business, not the agency side, but it’s a start toward exposing more young people to career opportunities.

“These are good jobs; they’re actually very-well-paying jobs relative to Western Mass. It’s really about educating people, getting them interested in trying this career path,” he added. “And the interns, we’re paying $22 an hour to keep them engaged. Minimum wage is not going to keep them engaged.”

Dowd, obviously, had an unusual level of exposure to insurance, as his family has been in the business for 128 years, and the business now includes the fifth generation of company leaders.

“I had plenty of introduction to the industry, and I always had an eye on it because it was a family thing. I watched my father and uncle over the years, and I went to work right out of college for an insurance company in New Jersey as an underwriter.”

That said, “I knew being an underwriter wasn’t something I wanted to do for the rest of my life, so I came back and joined the agency as a salesman. I knew that was the area I wanted to focus on. I liked interacting with people, helping them sort through the complexities of the insurance business and insurance policies.”

That movement speaks to one of the draws of an insurance career, Hanmer said.

“Insurance is a lot of contract law, and you get to learn a lot of insurance policy,” he said. “But, depending on what side of the fence you want to be on, there’s also a lot of financial work, payables, receivables, billing, all of that. And as an agency, we also need IT support. So there are a lot of different areas. Someone could come in and hang around and say, ‘hey, there’s an area I want to potentially continue my career path on.’”

Dowd agreed. “What I say to them is, ‘look, there are a lot of different things you can do in this business. You can be in customer service as an account manager, or be on the claims end of things, or be on the accounting end of things, or be in sales, or start as a receptionist and work your way up,’” he explained. “We’ve had some of our best people start as receptionists and work their way up to senior account manager positions or claims directors; it’s really about how ambitious you are, and we nurture them along the way.”

In fact, three current employees in leadership roles started as receptionists, he noted. “They’re thriving, and they’re happy, and we’re happy with them.”

Of all those roles, salespeople may be the hardest to find, Dowd said. “Or, I should say, good salespeople. Everyone thinks they can sell until they find out how hard it is. But it’s easier if you like people, if you’re ready to work hard, and if you’re patient, knowing you have to work your way through and gain experience and gain the confidence of clients. That takes time.

“You have to have perseverance and dedication to the process, becoming a student of the business, to be an effective service professional and service customers far and wide,” he went on. “If you are of that personality and have that dedication, you can thrive in our business.”

Johnson also has senior employees who started as receptionists, so she can testify to the opportunities for advancement.

For most young recruits, she noted, “whether they’ve just come out of high school or they have a PhD, we’re still training them from square one. Typically, our agency is looking for people with experience, but it’s not that we don’t take people without experience — we have done quite a bit of that.”

Youth Movement

Hanmer told BusinessWest that the insurance business may not be flashy enough for teenagers considering career paths, and they’re more likely to gravitate toward more technology-oriented fields.

“Insurance is not tech-heavy, although it’s evolving,” he noted. “So I don’t think insurance is exciting enough for them, and it’s too bad because it’s a great business. When I find a young person and I can bend their ear for a minute, I encourage opportunities to be in the insurance world.”

The Insurance Journal article argues for better efforts at understanding the workplace needs of younger generations, which include remote work, modern tools and technology, a collaborative environment, and clearly outlined core corporate values.

Johnson said Encharter has cultivated an environment that not only values constant learning, but the importance of relationships.

“It’s a person-to-person business, and that’s how you build relationships. I can’t overestimate how important that is,” she explained. “Also, if they think they’re valued and what they do matters, it’s a much more rewarding career — and that’s something we build on with that team environment.”

Dowd said agency leaders check in with new hires 90 days after onboarding process, “to find out not only how they’re doing, but how we’re doing. Are we living up to the promises we made, to the commitments we made, to provide training and support so you can thrive in your new position?

“It’s a great business because you meet all kinds of new people and learn about businesses of all types, inside and out, and the clients become your friends. Oftentimes, you can have decades of relationships with these people who really become your friends,” he added.

“I say to every one of them, ‘we want you to retire here.’ We’re proud when we can see somebody employed and happy. I always say, ‘we can’t do it without you. And together, we can survive and thrive in a competitive industry.’”

Blue Cross Blue Shield Foundation Grants Support Perinatal Health

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Insurance

Advancing Equity

 

The Blue Cross Blue Shield of Massachusetts Foundation announced $771,000 in new grant funding to support 15 organizations working to improve perinatal health across Massachusetts through its Perinatal Health Initiative, a multi-year program aimed at reducing racial inequities in perinatal health outcomes.

Now in its second cycle, the multi-year Perinatal Health Initiative grant program is part of the foundation’s broader strategy of grantmaking and policy analysis aimed at better understanding and disrupting structural racism and broadening health equity.

Building on the foundation’s 2024 effort, the two-year program was shaped by insights from community partners, fellow funders, and an ongoing assessment of the perinatal health landscape. Seven of the organizations funded in 2025 are continuing grantees from the foundation’s initial cohort to deepen their impact through this next phase. The grants support organizations providing community-based perinatal education and support, expanding the perinatal workforce, and policy advocacy.

“These organizations are creating lasting improvements in perinatal health by expanding access to culturally responsive care and centering community voices.”

“These organizations are creating lasting improvements in perinatal health by expanding access to culturally responsive care and centering community voices,” said Audrey Shelto, president and CEO of the Blue Cross Blue Shield of Massachusetts Foundation. “Their work exemplifies the power of community-based leadership in achieving health equity.”

The foundation’s board of directors approved two-year grants ranging from $25,000 to $60,000 for each of the following nonprofit organizations and their projects:

• Accompany Doula Care, Boston, which will partner with Health Leads and collaborate with healthcare systems, advocates, and providers to launch a cross-sector workgroup to increase equitable maternal health outcomes by integrating doulas into clinical care teams and creating supportive hospital policies;

• Berkshire Nursing Families, to expand the organization’s support of families who are Black, Indigenous, and people of color in Berkshire County by launching perinatal education programs, training new staff to become certified lactation counselors, and building a diverse workforce;

• Family Health Center of Worcester, to expand the capacity of its OB Advocates program, which connects community members with trained and culturally aligned doulas during pregnancy through two years postpartum;

• First Teacher Boston, which will integrate its pilot perinatal health program into its community-based parent education for Black and Brown families in Dorchester, Roxbury, and Mattapan, offering year-round workshops, infant-focused resources, and professional development for staff in perinatal care;

• Greater Lowell Health Alliance of CHNA 10, which will build upon its Doula Academy to expand, diversify, and increase skills of the local perinatal workforce in the Lowell area;

• Greenfield Community College Foundation, to create Massachusetts’ first public certified professional midwives accredited training program to increase access to a pipeline of trained, licensed midwives and expand community birth options;

• It Takes a Village, Huntington, which will partner with the Green River Doula Network to provide community-led perinatal education, perinatal mood and anxiety disorder prevention, labor preparation, postpartum care, breastfeeding support, peer-led support circles, and extended home visits for historically marginalized families in Western Mass.;

• Massachusetts Society for the Prevention of Cruelty to Children, which will support the Mind the Gap Coalition’s statewide advocacy to strengthen perinatal mental health policies and align efforts across the continuum from prenatal to infancy;

• Nantucket Community School, to increase access to childbirth education and lactation supports by providing classes and training three instructors from Black, Indigenous, and people of color communities and those fluent in Spanish and Brazilian Portuguese;

• Neighborhood Birth Center, Roxbury, to educate public health experts, policy makers, and payers regarding issues to advance midwifery education, workforce development, and access to birth centers, and lead a campaign to promote equitable reimbursement for licensed midwives and birth center facilities;

• North Quabbin Health Collaborative, Orange, which will expand one-to-one nurse visits for families up to one-year postpartum in rural and structurally marginalized communities in the towns of Orange, New Salem, Petersham, Warwick, and Wendell, providing health education programs, screening, and referrals;

• Propa City Community Outreach, Roxbury, which will implement a community-centered initiative focused on perinatal loss, expanding access to healing-centered education, connecting families and care providers across Massachusetts, and reducing isolation for families experiencing loss;

• Sacred Birthing Village, New Bedford, to train 12 multi-ethnic and linguistically diverse women in Southeastern Mass. to provide doula care and prepare them to meet state certification requirements for MassHealth-covered services;

• Worcester Addresses Childhood Trauma, which will partner with Worcester Public Health to deliver culturally responsive perinatal education, public awareness campaigns, and events guided by the Citywide Black and Brown Maternal Health Work Plan; and

• Worcester RISE for Health, to strengthen its Maternal Care Access program for refugee and immigrant communities by providing practice-based mentorship for doulas and developing a centralized referral system and wraparound supports.

The Blue Cross Blue Shield of Massachusetts Foundation will continue to collaborate with other foundations working in perinatal health to collectively learn, align philanthropic efforts, and elevate local leadership and community-led solutions to advance birth equity in Massachusetts.

From New Coverage Risks to Emerging AI, the Insurance Landscape Is Shifting

By
Insurance Special Coverage

Rate of Change

 

Insurance isn’t any home or business owner’s favorite topic — well, except for insurance agents, maybe — and the many pressures on rates over the past several years, from inflation and supply chain issues to adverse weather events and jury verdicts, has made it an even more difficult conversation.

The good news, said Sam Hanmer, president and CEO of Chicopee-based Rush Insurance Group, is that, while the rate environment has continued to move north, he’s seeing a slowdown on the property side.

“Property took the biggest hit after COVID. When supply was so hard to come by, it shot pricing up. Everyone’s experienced that. As an industry, we were relatively slow to figure that out,” he explained, noting that insurance carriers eventually increased rates to reflect that reality, some numerous times. “So the industry has caught up in terms of costs of construction.”

Still, rate changes vary with the age of a property, said Mark Rosa, senior account executive with Borawski Insurance in Northampton. “With newer homes, rates are fairly stable. Someone with an older house could see some rate increases because there are some insurance credits on new homes that someone with a house built in 1978 is not going to qualify for,” he noted. “But I don’t expect what we saw the last few years, 10%, 15%, 20% rate increases. That’s gone away slowly, and I expect to see some kind of stability.”

“I don’t expect what we saw the last few years, 10%, 15%, 20% rate increases. That’s gone away slowly, and I expect to see some kind of stability.”

That said, climate change and natural disasters have continued to impact the rate environment in unpredictable ways.

“I think that we as insurers would like to have that buttoned down, but with weather patterns, I think we’ll have to wait a little while longer; I think that’s going to continue to plague the insurance industry,” he said, as opposed to, say, construction costs, which have settled a bit: “I think we’ve handled that with the rate increases in the past.”

Automotive insurance has seen rate increases as well, but for different reasons, one of which is simply today’s technological sophistication, Hanmer said. “A fender bender used to cost $500, now it’s six grand, with all the cameras in these cars now.”

Another issue causing auto rates to rise is what Rosa, and others in the insurance industry, characterize as “legal system abuse,” or a trend toward massive payouts in lawsuits that wind up being borne by insurance payers and, eventually, passed on to customers. It’s a concern across all types of insurance, but particularly product liability and auto accidents; in those areas, verdict payouts rose 7.1% annually, on average, between 2016 and 2022, according to the U.S. Chamber of Commerce.

A 2025 Perryman Group study, “The Economic Impact of Excessive Tort Costs on U.S. Households,” says consumer prices in the U.S. are estimated to be 1.32% higher than they would be without excessive litigation.

Sam Hanmer

Sam Hanmer

“People believe they can buy insurance online, which a lot of people do, and they never have problems — until they have one. So where do they turn? They need an advocate in the form of an agent.”

Meanwhile, the median size of so-called ‘nuclear verdicts’ — defined as jury awards of $10 million or greater — has more than doubled since 2020, according to Marathon Strategies’ “Corporate Verdicts Go Thermonuclear: 2024 Edition.” And it’s not just the severity of the verdicts that’s trending upward, but the frequency of litigation as well.

All these statistics were compiled in a recent Legal System Abuse Toolkit prepared by Trusted Choice and the Big I for use by independent insurance agents.

“Legal system abuse is a problem for policyholders, consumers, and the economy as a whole,” the toolkit argues. “It drives up prices, drives out insurers and investors, and clogs the court system with frivolous cases that could be handled fairly without litigation. Moreover, the beneficiaries are opportunists in the legal field and their financial backers.”

There are other trends at play as well. Hanmer said umbrella insurance is seeing higher rates these days, and Rosa noted that some types of contractors, such as snow plowers, have found it harder to secure affordable policies. “But most classes of businesses are seeing some stability, and even some rate softening,” Rosa added.

 

 

Knowledge Is Power

Like many indepenent agencies have expressed to BusinessWest over the years, both Hanmer and Rosa took the opportunity to underline the importance of working with an agent to navigate these complexities.

“We have to understand their business before we put a program together,” Hanmer said. “We need to understand the business they’re in, their risks, the exposures they face, and how best to mitigate them. There’s more to that than buying insurance, but insurance is still primarily how you protect yourself from unknowns and risks. So with in-depth knowledge, we can put a program together and best fit what those exposures are.”

That creates relationships that go well beyond just buying a policy, he added.

“People believe they can buy insurance online, which a lot of people do, and they never have problems — until they have one. So where do they turn? They need an advocate in the form of an agent. It’s so important to educate people that there is a need for an agent. When you buy insurance, you hope you never use it, but when you need it, you’re glad you have it — and you’re glad you have an advocate.”

Mark Rosa

Mark Rosa

“We’re seeing cyber claims for classes of businesses I never thought possible. And there are legal fees that come with cyber strikes.”

Rosa agreed. “Obviously, you need to ask the right questions. Without an intimate knowledge of a business, you’re not able to do the job in the right way,” he said. “There’s so much in every one of these policies; they aren’t just one size fits all. There’s a lot of time involved in order to do the job correctly.

“So it’s a lot of learning what the business does, spending time with the owner, asking lots of questions. Otherwise, we don’t know how to fill certain gaps,” he went on. “I think what differentiates one agent from the next is what the experience is like and how unique it is. Everyone’s business is unique. While you might qualify for a certain policy type, it doesn’t mean you don’t need to go above and beyond that.”

Rosa added that insurance isn’t something business owners always want to talk about, but the conversations are necessary, if only to regularly check in on changes to the business and evolving risks and exposures.

One of those is cyber liability, which over the past decade has become an essential part of commercial insurance — for businesses of all sizes and sectors.

“More and more, the hackers are incredibly adept and professional in how they do things — it’s amazing how good these guys are. So cyber insurance is something that everybody needs now,” Hanmer said. “It used to be, people thought only big companies were targeted, but that’s not true anymore. Everyone is getting targeted. Cyber insurance is a must buy in this market.”

Rosa agreed. “We’re seeing cyber claims for classes of businesses I never thought possible. And there are legal fees that come with cyber strikes,” he noted. “Some business owners say, ‘the data was backed up from the day before, so I don’t care.’ Well, that’s understandable, but what happens when the state or the federal government comes and slaps you with a fine, and now you’re paying for credit monitoring? We’ve seen a small business pay $63,000 between the fines and the legal paperwork. And that business could have had a cyber policy anywhere from $1,200 to $1,500 over the year.”

 

Career Opportunities

Beyond the financial numbers, Hanmer said, the biggest challenge the industry faces — not just regionally but nationwide — is a shallow talent pool of young people clamoring to enter the field.

“They’re not migrating into the insurance world like they had in the past. So staffing and talent is our biggest challenge right now. Ask any agent, and they’ll say the same thing — we can’t find anybody,” he explained, before offering a few thoughts on why that might be.

“It’s not flashy enough, I think, for kids. All the technology and the tech startups, that’s where they’re migrating — the more tech-oriented world. Insurance is not tech-heavy, although it’s evolving. So I don’t think insurance is exciting enough for them, and it’s too bad because it’s a great business. When I find a young person and I can bend their ear for a minute, I encourage opportunities to be in the insurance world.”

Rosa noted that technology is creeping into the insurance world in some intriguing ways. For one, underwriters are using it to adjust what they currently have on the books, using drone or satellite footage.

“When they see your house was built in 1978, now they’re subscribing to third-party technology to show an image of your roof. And hey, this roof looks like it might be 20 to 30 years old. So are the rates increasing? They might be,” he said — if the company wants to keep insuring that property at all.

If not, he went on, “now you’re going from a carrier with a favorable rate to your options being more limited, and it’s gone from $1,200 to $1,600. It’s about insurability and certain risks and what insurance companies are willing to insure.”

At the same time, insurance companies are increasingly determining how they can incorporate artificial intelligence into those processes, and that will affect rates as well, Rosa noted.

“For homeowners and our business clients, AI will shake things up. Carriers have access to so much data, and they might say, ‘hey, we can’t insure this type of business any longer.’ And that will force rates higher. It might even be a good opportunity for carriers that don’t use the technology.

“It’s too hard to say what will happens,” he added, “but I do think insurance is an industry that’s been kind of slow on technology for many decades, but that will accelerate in the next two to five years — and insurance is going to be different from what it is today.”

The Insurance Advantage for Small Businesses

By Contributor
Insurance

From Risk to Reward

By Sam Hanmer

 

Every business, regardless of size, faces risk. For small companies, these risks can feel magnified. A broken piece of equipment, a slip-and-fall accident in a store, or a data breach could disrupt operations and potentially end the business altogether. Small businesses often lack the capital to weather such storms, unlike larger organizations that may absorb losses.

“Some business owners view insurance purely as an expense. However, it should be seen as a strategic investment. The premiums paid buy peace of mind, allowing entrepreneurs to focu s on growth.”

Insurance serves as a safety net. It allows owners to transfer some of the financial burden of unexpected events to a third party — the insurer. By doing so, entrepreneurs can focus more on running and growing their operations rather than constantly worrying about what-if scenarios.

 

Financial Protection and Business Continuity

At its core, insurance provides financial protection. A small business may spend years building up its reputation and customer base, but one uninsured disaster can wipe everything away.

Consider a restaurant that suffers a kitchen fire. Without insurance, the owner would need to cover the cost of repairs, replace equipment, and potentially pay employees during the downtime — all out of pocket. With proper coverage, those expenses can be absorbed by an insurance policy, helping the business recover quickly and reducing the likelihood of permanent closure.

Business continuity is another critical consideration. Certain types of insurance, such as business interruption coverage, ensure that income is replaced when the business cannot operate. This income can be the difference between reopening after a setback and shutting down for good.

 

Legal Compliance and Risk Management

Beyond financial protection, insurance is often a matter of legal compliance. Many states require small businesses with employees to carry workers’ compensation insurance. This coverage pays for medical bills and lost wages if an employee is injured on the job. Similarly, businesses that own vehicles are typically required to carry commercial auto insurance.

Even when insurance isn’t mandated by law, contracts may require it. For instance, landlords frequently require tenants to have liability coverage before signing a lease. Likewise, many clients and vendors may refuse to work with a business without professional liability insurance. Having proper coverage keeps the business compliant and opens doors to opportunities that would otherwise be closed.

 

Building Credibility and Customer Trust

Insurance also plays a role in building credibility. When customers know a business is insured, they feel more confident about doing business with it. For example, a contractor with liability and bonding coverage signals reliability and professionalism compared to one without.

Clients want reassurance that they won’t be left bearing the cost if something goes wrong. Insurance helps instill that trust. For small businesses trying to establish themselves in competitive markets, credibility can be as important as marketing or pricing strategies.

 

Attracting and Retaining Employees

Employees are the backbone of any business, and attracting top talent can be challenging for small businesses competing with larger firms. Offering insurance benefits — such as health, disability, or life coverage — can make a significant difference.

Workers often view insurance as part of their overall compensation package. By providing it, small businesses comply with legal requirements in some cases and demonstrate that they value employee well-being. This can improve morale, reduce turnover, and foster loyalty, boosting productivity and lowering the cost of recruiting and training new staff.

 

Types of Insurance Small Businesses Should Consider

Not all insurance is created equal, and every business has unique needs depending on its industry, location, and size. However, several core policies are widely recommended for small businesses:

• General liability insurance covers bodily injury, property damage, and advertising injury claims. It’s the foundation of protection for most small businesses.

• Property insurance protects buildings, equipment, and inventory against risks like fire, theft, or natural disasters.

• Business interruption insurance provides income replacement if operations are halted due to a covered event, ensuring business continuity.

• Workers’ compensation is required in most states if a business has employees. It covers medical costs and lost wages for workplace injuries.

• Professional liability insurance, also known as errors and omissions insurance, covers claims of negligence, mistakes, or failure to deliver promised services.

• Commercial auto insurance protects vehicles used for business purposes against accidents, theft, and liability claims.

• Cyber liability insurance, increasingly important in the digital age, covers costs related to data breaches, hacking, or cyber fraud.

• Health and employee benefits insurance attracts and retains employees while supporting overall workforce wellness.

Each policy addresses specific risks, and many insurers offer bundled packages tailored for small businesses.

 

Insurance as a Strategic Investment

Some business owners view insurance purely as an expense. However, it should be seen as a strategic investment. The premiums paid buy peace of mind, allowing entrepreneurs to focus on growth. Moreover, the right coverage can help secure financing. Banks and investors are more willing to back a business with sound risk management through proper insurance.

In this sense, insurance isn’t just about protection; it’s also about enabling growth. Reducing uncertainty encourages owners to take calculated risks, whether expanding into a new market, investing in new equipment, or hiring additional staff.

 

Emerging Risks for Small Businesses

The business landscape is constantly evolving, and new risks are emerging continually. Cybersecurity threats, supply chain disruptions, and climate-related events like floods and wildfires are now top concerns. Small businesses, which often lack robust contingency plans, are especially vulnerable.

Insurance products have adapted to these realities, offering specialized cyber threat or natural disaster policies. Staying ahead of these risks by maintaining up-to-date coverage ensures small businesses remain resilient in an unpredictable world.

 

The Cost of Being Uninsured

Finally, it’s worth emphasizing the cost of being uninsured. While skipping coverage may save money in the short term, the long-term consequences can be devastating. An uninsured lawsuit, for instance, can cost tens or even hundreds of thousands of dollars — sums that most small businesses cannot afford.

Even a single uncovered incident could trigger bankruptcy or force a business to close its doors. By contrast, insurance spreads risk and makes potential losses manageable. The relatively small premium paid today can prevent financial ruin tomorrow.

 

Insurance as a Foundation for Success

Insurance is not merely a regulatory requirement or a financial tool — it is a foundation for success in the small business environment. It protects against unforeseen losses, fosters credibility, supports employees, and creates growth opportunities.

For small business owners who have invested their time, energy, and personal resources into their ventures, insurance ensures that their hard work is not undone by a single accident or crisis. In short, it’s an essential part of building a business and a sustainable future.

 

Sam Hanmer is principal of Rush Insurance Group.

Navigating the Insurance Landscape

By Contributor
Insurance Special Coverage

Industry Sees Stabilizing Markets, but Ongoing Challenges

By John Dowd

Over the past several years, the insurance industry has faced tremendous pressure. Inflation, supply chain issues, and natural disasters have all contributed to higher reinsurance costs for carriers, which in turn led to higher premiums for individuals and businesses alike. Many policyholders have experienced year after year of increases, often without fully understanding why.

As we move through the second half of 2025, there are signs of relief. While certain industries continue to experience higher-than-average costs, in most sectors, hard market conditions are beginning to subside. Insurance companies are now pricing new business more aggressively, which creates opportunities for savings, if insureds know how and where to look.

That said, not every line of coverage is easing. Homeowners insurance remains volatile, and social inflation is reshaping how individuals and businesses must think about liability protection. Understanding these trends is key to navigating today’s insurance environment.

 

The Market Is Softening

The good news for most policyholders is that many insurance markets are stabilizing. For several years, the combination of high inflation, costly rebuilding expenses, and catastrophic weather events forced insurers to raise rates significantly. Now, as conditions improve, competition among carriers is returning.

“In many sectors, premiums are finally easing, creating opportunities for insureds to save money. Yet challenges persist, especially for homeowners in high-risk regions and for those facing the ripple effects of social inflation.”

This shift has led to more aggressive pricing for new business. For consumers and business owners, it means there are real opportunities to lower premiums, especially if you are proactive about comparing options rather than automatically renewing your current policy.

 

Homeowners Insurance Remains a Concern

The one major exception to this trend is homeowners insurance. Rates continue to climb, particularly in areas vulnerable to severe weather or wildfire. Some insurers have even chosen to stop writing new policies in high-risk regions altogether.

Several factors keep homeowners insurance challenging:

• Natural disasters such as hurricanes, wildfires, and convective storms are both more frequent and more severe, leading to higher claims costs.

• Construction costs remain elevated, with materials and skilled labor continuing to drive up the price of rebuilding.

• Catastrophic events, like the Los Angeles wildfires earlier this year, are tempering what might otherwise be a broader reduction in property premiums.

For homeowners in higher-risk areas, this reality underscores the importance of shopping carefully, exploring mitigation measures like home hardening or installing smart sensors, and considering higher deductibles to balance affordability with adequate protection.

 

The Rising Impact of Social Inflation

While inflation in materials and labor has eased somewhat, social inflation remains a growing challenge. This refers to the increasing cost of claims due to larger jury awards, more aggressive litigation, and the legal environment in Massachusetts that favors claimants against insurance companies.

One result is the rise of so-called nuclear verdicts, extremely large jury awards that far exceed traditional expectations. For insureds, this trend has important implications. The $1 million liability limit built into many standard policies is no longer as protective as it once was. Individuals and businesses should re-evaluate their underlying liability coverage and consider umbrella policies that extend protection beyond standard limits.

For business owners, management liability coverage has become increasingly important as well. Social inflation has heightened the potential exposure for directors, officers, and executives, making it critical to identify and eliminate potential coverage gaps.

 

How Consumers Can Save

Despite ongoing volatility in certain sectors, there are practical steps consumers can take to find better rates and strengthen their protection:

• Compare quotes. Carriers are pricing aggressively for new business, so shopping around, especially at renewal time, can uncover meaningful savings.

• Bundle policies. Combining auto and home coverage under one insurer often unlocks significant discounts.

• Adjust deductibles. A higher deductible reduces your premium, but only if you can comfortably manage the increased out-of-pocket cost in the event of a claim.

• Leverage technology. Usage-based auto insurance programs reward safe driving, while smart home devices, such as water leak sensors or fire detectors, can qualify homeowners for discounts.

 

A Balancing Act

The insurance market is cyclical, and after several difficult years, signs of stabilization are emerging. In many sectors, premiums are finally easing, creating opportunities for insureds to save money. Yet challenges persist, especially for homeowners in high-risk regions and for those facing the ripple effects of social inflation.

The best path forward is a proactive one: review your coverage carefully, shop the market, consider higher limits where liability risks are growing, and embrace risk management practices and technology that can both reduce claims and make you more attractive to insurers.

By taking these steps, both individuals and businesses can strike a healthier balance between protection and affordability in 2025 and beyond.

 

John Dowd is president and CEO of the Dowd Insurance Agencies.

 

Report Details Insurance Trends, Offers Advice to Homeowners

By Contributor
Insurance

Rates on the Rise

By Rate Insurance

In 2024, personal insurance pricing continued to rise due to a complex mix of escalating claims, extreme weather events, and ongoing coverage restrictions in select markets. The insurance market remained challenging, as carriers navigated the unprecedented impacts of climate change, technological advancements, and evolving risk profiles. Moreover, record-breaking economic losses from hurricanes, wildfires, and freeze events, have driven significant premium increases, particularly in high-risk geographic regions.

The 2024 home insurance market continued to experience sharp premium increases. Internal policyholder data comparing January through August 2024 to the same period in 2023 showed a national average annual premium rise to $2,072, a significant 20% increase from $1,723 in 2023.

Over the past six years, premiums have increased by 78%, placing persistent financial strain on homeowners. While the personal lines industry’s year-over-year improvement in underwriting losses was an important development, homeowners insurance carriers are still operating at a loss. Pricing is expected to stay high and continue to increase until profitability is restored.

“While the personal lines industry’s year-over-year improvement in underwriting losses was an important development, homeowners insurance carriers are still operating at a loss. Pricing is expected to stay high and continue to increase until profitability is restored.”

Looking ahead to the remainder of 2025, the trends that have shaped the insurance market will continue to challenge homeowners and carriers alike. As an insurance customer navigating the market, it is increasingly important to have a solid understanding of the ever-evolving insurance landscape, and proactive, detailed approaches are crucial. Here are 10 strategies to help customers avoid high premiums and at the same time get sufficient coverage.

 

Engage with Trusted Agents

Customers need to stay in touch with their insurance agents to stay updated on changes that could affect their policies. Agents can help identify gaps in coverage, explain new risks, and offer advice on options or discounts that might fit their situation. This ongoing communication ensures customers are prepared and adequately protected as circumstances and insurance requirements change.

 

Review and Update Insurance Policies Regularly

Customers should review their insurance policies at least once a year to ensure adequate coverage. This includes assessing and updating coverage limits and deductibles to reflect any home improvements, renovations, or changes in property value, reducing the risk of being underinsured.

 

Consider Higher Deductibles

By raising deductibles, customers accept more out-of-pocket expenses after a claim, which usually leads to a lower premium. This method is significantly safer than letting coverage lapse or lowering coverage limits.

 

Understand Flood Insurance Needs

Standard homeowner policies do not cover flood-related damage, leaving property owners vulnerable to significant repair and replacement costs. Flooding can result from various sources, including heavy rainfall, storm surges, overflowing rivers, and rapid snowmelt, and these risks are not limited to officially designated flood zones.

FEMA reports that approximately 25% of flood claims come from properties outside high-risk flood areas. This additional coverage is especially vital as weather patterns shift and urban development alters existing drainage systems, increasing flood risks in previously unaffected areas. Policies should be evaluated based on both current risks and potential future developments.

 

Consider Adding Coverage for Water Damage

Water damage is one of the most common causes of homeowner insurance claims, making it essential for customers to evaluate whether they have sufficient coverage. In addition to flood policies, homeowners should consider adding endorsements for increased protection against sewer backups and drain-related issues or raising coverage limits for water-related risks, particularly in areas prone to flooding or homes with aging plumbing systems.

Including service line coverage is also recommended to protect against costly repairs to underground water, sewer, or utility lines. Meanwhile, basic preventive measures can help reduce the risk of water damage year-round. Homeowners should consider installing sump pumps to manage water buildup, using smart water detection systems to catch leaks early, and insulating pipes to prevent freezing in colder months.

 

Stay Informed About Coverage Changes

Homeowners should stay informed about changes to insurance coverage, particularly for key home components like roofing, siding, and foundations. Policies may introduce stricter conditions, higher deductibles, or exclusions for older features. Regular policy reviews and proactively upgrading aging components can help maintain adequate protection.

By staying updated, homeowners can address these changes by replacing outdated components or adding endorsements to their policies, ensuring they have adequate coverage and avoiding unexpected expenses.

 

Plan for Natural Disasters

Customers in areas prone to natural disasters like hurricanes, wildfires, high winds, or hailstorms can protect their homes by investing in strategic improvements. For example, installing impact-resistant roofing and siding, reinforced garage doors, and protective systems like hurricane glass and shutters can reduce vulnerability to storms.

For regions at risk of wildfires, creating defensible space by clearing flammable vegetation, using fire-resistant building materials, and sealing gaps around roofs or vents can help protect homes. Installing hail-resistant shingles, anchoring outdoor structures, trimming weak or overhanging tree branches, and securing outdoor property reduces the risk of damage from hail, high winds, or heavy rains during storm seasons.

Homeowners should also review their policy to fully understand coverage for specific hazards like hurricanes, tornadoes, or hail. Since policy limits and exclusions can vary widely by location and insurance carrier, it is essential for customers to stay informed about their policy details.

 

Explore New Carrier Options

The evolving insurance market regularly introduces new carriers and competitive options. By comparing quotes from multiple providers, customers can evaluate premiums, deductibles, and coverage levels. Some carriers may offer unique discounts for bundling policies, maintaining claim-free histories, or having specific home upgrades like security systems or weather-resistant materials. Regularly exploring these options can help ensure customers get the best possible value for their coverage.

 

Understand the Implications of Non-renewal

Non-renewal notices can happen due to factors like increased risk, geographic hazards, or property-related issues such as an aging roof or poor maintenance. Insurance carriers may also issue non-renewals due to changes in underwriting guidelines and service area limitations. Understanding these factors and taking proactive steps to prevent risks can reduce the likelihood of a policy non-renewal. If a non-renewal does occur, shopping for new coverage promptly is critical to avoid gaps in protection.

 

Prepare for Increased Premiums

With the insurance market facing ongoing challenges, premiums are likely to continue increasing in the coming years. Customers should incorporate premium increases into their annual budgets to avoid financial strain and explore cost-reduction methods. Additionally, homeowners should work closely with their agent or provider to identify the factors driving premium increases and uncover potential savings.

By taking a proactive approach, customers can better manage rising costs while ensuring they maintain the coverage they need.

HUB International Continues to Grow Strategically

By
HUB International New England President Timm Marini
Insurance Special Coverage

Smart Policy

HUB International New England President Timm Marini

HUB International New England President Timm Marini

HUB International New England may be the largest insurance broker in those six states, President Timm Marini said, but that’s a point of pride that goes only so far.

That’s because there’s a difference between largest and best, and the latter is what the company strives for each day, and with each acquisition it makes.

And there have been plenty of those.

“We bought six agencies last year. We focused down in Connecticut a lot. You’ll see a couple more coming soon,” he said, adding that each acquisition has to make sense for both parties. “We bought two agencies down there, one in Fairfield County and one in the Putnam area — both smaller operations, but thirsting to partner with the backroom services that we offer, risk control, loss management, claims, financial services. We just do so many different things now.”

HUB International is no stranger to growth. The company was around 500 employees strong when FieldEddy, one of Massachusetts’ larger agencies, joined the organization in 2014; today, it boasts 19,000 across the U.S.

“A lot of it has been through acquisition, a lot of it through talent acquisition,” Marini said. “We’ve been out there acquiring really good people in their space where they operate — marketing, claims. I don’t know how many attorneys we have working for us in non-attorney jobs, but we’ve got highly educated people transacting and helping our customers.”

As for the smaller firms that join the fold, “they get expertise that they otherwise couldn’t necessarily afford on their own,” he said, noting that was essentially the draw for FieldEddy 11 years ago. “They get shared resources that are available to help make sales happen, make retention happen, and make the customer experience better. Just different minds, different thought processes.”

“We want to have a lot of conversations about how to help our customers and prospective customers survive through the maze of confusion. It’s dizzying the amount of change that goes on every day.”

HUB’s services run the gamut from business insurance and employee benefits to personal insurance and retirement services, with a wide range of specialties within each.

“We’ve refocused on small business, which Western Massachusetts has a ton of,” Marini said. “We’re focusing on some automation in there, some quick quotes, but also day-to-day service, partnering with our carriers to provide top-notch service to those customers. It’s our lifeblood. Small business is a backbone of the United States, and especially in Western Mass., Maine, Vermont, everywhere we are.”

On the middle-market business front, rates have receded a bit after a long stretch in the other direction. “It’s been three to four years of just delivering bad news, but you’re starting to see little to no increase, so that’s nice. Some of it is just loss-driven; if the customer had losses, then they’re getting increases.”

Since its entrance into the Western Mass. market in 2014 through acquisition of FieldEddy Insurance, HUB International has significantly grown its presence through both geographic and organic expansion.

Since its entrance into the Western Mass. market in 2014 through acquisition of FieldEddy Insurance, HUB International has significantly grown its presence through both geographic and organic expansion.

Meanwhile, HUB’s investment services represent one of its fastest-growing businesses; HUB has paired locally with Epstein Financial Services on that front. And these are important times for investors to have someone to consult with, he added, so they understand what’s happening in an uncertain market.

“There’s a ton of confusion, and it’s tough to keep track of all this,” Marini said. “With small business, middle market, employee benefits, and financial services, those four businesses, nobody can know everything. So it’s nice to have a peer group of experts to recommend to our customers so that they can deal with quality people.

“It’s funny, because if you think about what’s going on in the economy, it’s done nothing but really push people to talk to their advisors. And that’s kind of what we want to do, right?” he went on. “We want to have conversations, whether it’s about insurance or investment or risk services. We want to have a lot of conversations about how to help our customers and prospective customers survive through the maze of confusion. It’s dizzying the amount of change that goes on every day.”

That said, “seek your counsel; seek the advice of your experts,” he advised. “Don’t read your investment statement and get all upset and whatnot. Have a conversation. There may be some things moving around that you don’t know.

“I try not to look at my statements and things of that nature,” he added. “Of course, as you get older, you start to look at it. But at the same time, I don’t want to panic.”

 

Help … in Many Forms

Marini emphasized that the broad reach of expertise at HUB gives clients exposure to team members that can help them and have experience in their particular business or situation.

“We see the exposures, and we see the opportunities for improvement that could help their efficiency and effectiveness. And if you’re helping a business with efficiency and effectiveness, then you’re saving them time and money.”

“We see the exposures, and we see the opportunities for improvement that could help their efficiency and effectiveness. And if you’re helping a business with efficiency and effectiveness, then you’re saving them time and money.”

For example, “coming out of COVID really affected a lot of our manufacturing businesses. We heard a lot about the slowdown of supply and things coming in slower. That created a heck of a budgetary concern for some of those customers. But the only solution wasn’t to do more — because people were slow with reinvesting — but to do it more efficiently and more effectively over a shorter period of time. Better quality control, quality checking. That’s what we try to build, business solution relationships.”

The company employs high-tech methods to determine risk scores, he added. “We have data folks that can put in a mathematical equation using industry standards and data to predict loss. Not necessarily storms or things like that, but how much a machine can run before it breaks down, before it has a problem. It’s amazing the analytics we now see in our business.”

At the same time, he doesn’t want to lose the human touch of the company and especially a workplace culture that prioritizes work-life balance and employee appreciation.

“We want to make sure our employees feel the culture — that this is a pretty good place to work, and it’s a pretty good place to do business with. I never say the best because we’re still striving.”

Marini says HUB International has long maintained relationships of another kind as well — with the nonprofits and community organizations it supports with money, time, energy, and expertise.

Timm Marini, seen here with staff members during an employee-appreciation day at HUB, says the agency emphasizes a healthy workplace culture.

Timm Marini, seen here with staff members during an employee-appreciation day at HUB, says the agency emphasizes a healthy workplace culture.

HUB was recognized on the Military Times 2024 Best for Vets employers list for its efforts to hire veterans, and the company is working with Epstein Financial on a campaign to prevent veteran suicide.

Meanwhile, the company’s philanthropic and volunteerism arm continues to invest in its communities in myriad ways.

“It’s amazing how many different things that we invest in,” Marini said. “Our carrier partners invest along with us. Sometimes they’ll give us dollars to match, or, if we invest a certain amount, then they’ll double it or sometimes triple it. It’s nice to see that, especially in a time of need right now. I can’t tell you how many social service nonprofits, schools, educational institutions, and Boys & Girls Clubs we help.”

Meanwhile, employees are encouraged to volunteer for schools, nonprofits, and other community groups, often during their work hours if they need to.

“I still remain on about six boards, and they’re near and dear to my heart,” he noted. “Every time I think about walking away, I see the level of leadership on those boards is less and less, and doesn’t even meet quorum sometimes; it’s like, I can’t leave now. Some of them I’ve been on 20, 25 years. I’ve learned so much from doing it.”

 

Expansive Efforts

Marini has said HUB undergoes a due-diligence process before making an offer to acquire a smaller firm, one that involves three questions. Is it a good fit? Are they bringing something to the party to make HUB better? And can it grow? Meanwhile, for the agencies that come aboard, being part of a large, national company is a healthy balance between local autonomy and broader resources.

“We like to say we no longer have to grow just to grow, just to be big. We’re never going to get to the largest,” he told BusinessWest. “We’re around $5.7 billion dollars of revenue, and that affords us some scale in the marketplace so that we can invest in talent and we can grow, but hopefully just not to be big. We don’t want to just be big; we want to be best.”

It’s a message he hopes resonates with those 19,000 employees, who hopefully, as he noted earlier, feel the culture and do what they need to do to maintain a healthy work-life balance, and that means taking time off.

“I always promise, when people take their vacation, ‘don’t worry about your vacation. Your work will be there when you get back. We will take care of what the customer needs.’ And we allow them to enjoy their time.

“I often say, we’re not brain surgeons; we don’t save lives,” Marini added. “But we make lives better.”

Climate Trends, Weather Events Create Havoc for Premiums, Home Values

By
Insurance Special Coverage

Insuring Against the Worst

Amid the wildfires that ravaged Los Angeles last month, the U.S. Department of the Treasury’s Federal Insurance Office (FIO) released the most comprehensive data on homeowners’ insurance in history, along with a report showing that homeowners’ insurance is becoming more costly and harder to procure for millions of Americans as the costs of climate-related events pose growing challenges to insurers and their customers alike.

The report draws data from more than 330 insurers and more than 246 million homeowners’ insurance policies. That data was collected through a first-of-its-kind effort by the National Assoc. of Insurance Commissioners, state insurance regulators, and FIO.

Among the report’s key findings:

• Homeowners’ insurance costs are rising quickly across the nation, although with significant variation by region and ZIP codes. Average homeowners’ insurance premiums per policy increased 8.7% faster than the rate of inflation from 2018 to 2022, according to the data analyzed. Some consumers faced substantially larger premium increases than the national average.

• Homeowners in communities affected by substantial weather events are paying far more than those elsewhere. From 2018 to 2022, consumers living in the 20% of ZIP codes with the highest expected annual losses to buildings from climate-related perils paid $2,321 in premiums on average, 82% more than those in the 20% lowest climate-risk ZIP codes.

• Policy non-renewal rates also are higher in areas with the highest expected losses from climate-related perils. Consumers in the highest-risk ZIP codes faced higher policy non-renewal rates, with average non-renewal rates about 80% higher than those in the lowest-risk ZIP codes. Moreover, average non-renewal rates increased more in the highest-risk areas than in the lowest-risk areas over this period, which indicates that consumers faced decreasing availability.

• Climate change is making it more costly for insurers to operate. Insurers’ costs in the 2018-22 period were higher in areas with the highest expected losses from climate-related perils. The paid loss ratio, which reflects how much insurers paid for claims relative to what they received in premiums, was highest in the highest-risk ZIP codes. These areas had a higher frequency of claims and severity of claims, about $24,000 on average compared to an average of about $19,000 for lowest-risk areas.

 

Storm Brewing

In a recent article about insurance trends and changes in 2025, Lisa Eugin, manager of Marketing and Administration at Encharter Insurance in Amherst, noted that costs due to increased frequency of natural disasters will likely continue to impact homeowners’ insurance premiums.

“The climate-related disasters are so large that insurance companies will spread the increased costs across the entire country, and this will affect us here in New England. Many companies will be introducing stricter underwriting guidelines or higher deductibles,” she wrote.

“In many cases, we may advise you to leave your policy with the current insurer to avoid a new company inspection with stricter guidelines leading to either cancellation or higher-than-expected pricing,” she added. “On a positive note, many insurers are expanding discounts for smart-home technology, such as security systems and water-leak detectors, which help mitigate risk.”

Financial Preparation Saves Time, Money, Heartache

Wildfires in California. Hurricanes in Florida. While natural disasters like these are less common here in Western Mass., blizzards, tornadoes, fires, and more still pose threats. The experts at Freedom Credit Union shared some advice to help residents prepare in advance to save time, money, and heartache if disaster strikes.

Glenn Welch

Glenn Welch

“Disaster, whether personal or widespread, can strike anytime,” Freedom Credit Union President Glenn Welch said. “The more you can prepare now, the better off you’ll be later. Just as you stock up on salt, shovels, and other supplies before a blizzard, you should anticipate your financial needs in an emergency, so you have what you need on hand.”

Compiling important documents and storing them in a safety deposit box at your financial institution — or another safe place that is waterproof and fireproof — is the first step. This includes:

• Savings and checking-account numbers;

• Tax statements;

• Insurance policies;

• Debit- and credit-card information;

• Pay stubs; and

• Legal documents, including birth, marriage and adoption certificates, deeds and titles, Social Security cards, military service records, wills, and other estate-planning documents.

Include a list of important contacts and phone numbers, such as your mortgage representative, landlord, healthcare providers, insurance agent, lawyer, and others you might need to reach in an emergency if you didn’t have access to your mobile phone.

“It’s also wise to have cash set aside in case you don’t have access to banks or ATMs,” Welch advised. “Think about what you might need to ensure you can access food and other necessities easily in a time of crisis.”

He added that photos and videos of valuables can also help make insurance claims proceed more quickly after a disaster. “Record a video of your home and its contents, and take pictures of items of special value. Store all the documents, contacts, cash, and images you gather in a single, safe place where you can easily access them if needed. Be sure to add a reminder on your calendar to review all the materials once a year and make any necessary updates.”

Homeowners insurance is important to U.S. consumers, the economy, and the financial system. For many Americans, their home is their largest financial asset, and the cost and availability of adequate homeowners’ insurance has a direct impact on housing expenses and the value of homes. The cost and availability of insurance can also have significant consequences for local governments whose tax bases rely on property values.

Moreover, homes are increasingly vulnerable to natural disasters. The National Oceanic and Atmospheric Administration reported that, from 2018 to 2022, 84 billion-dollar disasters (excluding floods) cost more than $609 billion, and costs for such disasters have continued to rise since then.

Last month’s report considers homeowners’ insurance costs in the context of nine types of climate-related perils, explicitly excluding flooding (which is not typically covered by homeowners’ insurance policies) and non-climate-related disasters like earthquakes.

Insurance in the U.S. is regulated at the state level. In March 2024, FIO announced it was engaging in a first-of-its-kind partnership with the National Assoc. of Insurance Commissioners on behalf of state insurance regulators to collect data on the homeowners’ insurance market. The NAIC shared a subset of the collected data with FIO, with regular meetings between both to collaborate, review, and assess the data.

This latest report and the data-collection effort complements the efforts that states and local communities are undertaking to understand and address market challenges from the higher costs of climate-related disasters and other factors weighing on homeowners’ insurance markets.

 

Weather or Not

A new study by First Street Foundation called “Property Prices in Peril” analyzes the effects of climate change on real estate, noting at the outset that residential real estate, valued at around $50 trillion, is the bedrock of the U.S. economy, nearly double the country’s $27.4 trillion GDP.

That said, the report noted that climate risk is reshaping real-estate fundamentals, transforming the U.S. housing market through two forces: soaring insurance costs and shifting consumer preferences.

Specifically, First Street estimates that unrestricted risk-based insurance pricing would drive a 29.4% increase in average premiums by 2055 — comprising a 18.4% correction for current underpricing and an 11% increase from growing climate risks.

Meanwhile, by 2055, 70,026 neighborhoods (84% of all census tracts) may experience some form of negative property-value impacts from climate risk, totaling $1.47 trillion in net property-value losses due to insurance pressures and shifting consumer demand.

These trends reach well beyond the U.S. According to a report from the Canadian Broadcasting Co., the Insurance Bureau of Canada recently reported that, as a result of events like that country’s Jasper wildfire and flooding in Eastern Canada, 2024 set a record for insurance payouts in Canada, at $8.55 billion.

This will inevitably lead insurers to raise rates as they try to manage the broader risk. But as premiums rise and some regions become uninsurable, it could have a cascading effect that could lead to a financial crisis, Gary Yohe, Huffington Foundation professor emeritus of Economics and Environment at Wesleyan University in Connecticut, told the CBC.

“What’s happening now is that the really, really dark [climate events] are just catastrophic and all in one place, happening at the same time,” Yohe said, adding that, in terms of insurance, “it creates a societal problem, not just an individual problem.”

 

Heed These 10 Essential Tips to Winterize Your Business

By Contributor
Insurance

Before the Storm

By Lisa Eugin

 

As winter approaches, business owners need to prepare for colder temperatures, possible snow, and other seasonal challenges that can disrupt operations. Taking time to winterize your business can prevent costly repairs, ensure employee safety, and help maintain smooth operations during harsh weather. Here are some essential tips to help protect your business this winter.

 

Inspect and Maintain Your Heating System

A properly functioning heating system is critical for keeping employees comfortable and protecting your building from extreme cold. Schedule a professional inspection to ensure your heating system is operating efficiently. Replace filters regularly and address any issues immediately to prevent breakdowns during the coldest months.

 

Lisa Eugin

Lisa Eugin

“Taking time to winterize your business can prevent costly repairs, ensure employee safety, and help maintain smooth operations during harsh weather.”

 

Check and Insulate Pipes

Frozen pipes can lead to severe damage and expensive repairs. Inspect pipes, especially those in unheated areas like basements or exterior walls, and wrap them with insulation to prevent freezing. Keep the heat on during extremely cold days, even in rarely used areas, to further reduce the risk of frozen pipes.

 

Clear and Salt Walkways

Icy walkways can be hazardous to both employees and customers. Make a plan to keep walkways, steps, and parking areas clear of snow and ice. Apply salt or ice melt regularly, and consider contracting a snow-removal service for larger areas. This proactive approach reduces the risk of slips, falls, and potential liability claims.

 

Inspect the Roof and Clear Gutters

Snow accumulation can be heavy and cause roof damage. Before winter fully sets in, inspect your roof for any weaknesses, clear gutters to prevent ice dams, and trim any overhanging branches that could fall under snow weight. Clearing snow regularly can prevent excess buildup, but be sure to use a safe method to avoid damaging your roof.

 

Seal Doors and Windows

Energy loss through poorly sealed doors and windows can lead to higher heating costs. Add weather stripping and caulk any gaps to keep the warmth inside and drafts outside. This not only saves on energy bills, but also maintains a comfortable environment for your employees and customers.

 

Have a Backup Power Plan

Winter storms often bring power outages. Ensure your business can continue to operate by investing in a backup generator. For businesses that rely on refrigeration or heating for sensitive products, a power outage plan is especially critical.

 

Test Emergency Alarms and Sprinklers

Fire risks increase in the winter due to higher heating demands. Make sure your fire alarms, smoke detectors, and sprinkler systems are in good working order. Test these systems regularly, and keep a clear path to fire exits for safety compliance.

 

Review Your Insurance Coverage

Reviewing your insurance policies is an essential step in preparing for winter. Make sure you have coverage for potential winter hazards, including property damage from snow, ice, or freezing. Having the right coverage can protect your business from unexpected losses.

 

Create a Communication Plan

In the event of extreme weather or closures, ensure employees and customers are well-informed. Use email, social media, or text alerts to communicate closures, delays, or other essential information. This helps manage expectations and ensures everyone’s safety.

 

Stock Up on Winter Supplies

Be prepared with essentials like ice melt, shovels, safety cones, and emergency supplies. Having these items on hand allows you to respond quickly to winter challenges without delays. If possible, designate a storage area to keep winter supplies organized and accessible.

 

Conclusion

Winterizing your business takes a little time and preparation, but can make a huge difference in protecting your property, keeping operations running smoothly, and ensuring safety.

 

Lisa Eugin is manager of Marketing and Administration at Encharter Insurance in Amherst.

 

To Unlock the Potential of AI, Nonprofits Must First Know the Risks

By Contributor
Timm Marini, president of Personal Lines Insurance at Hub International New England.
Insurance Special Coverage

Real Talk on Artificial Intelligence

By Timm Marini

Timm Marini, president of Personal Lines Insurance at Hub International New England.

Timm Marini, president of Personal Lines Insurance at Hub International New England.

Artificial intelligence can help give nonprofits a leg up with donors and benefactors, but better AI safeguards may be needed to defend against potential cyber threats and other technology-related risks. Here’s what your organization needs to know.

Nonprofits are increasingly incorporating artificial intelligence (AI) into their operations and communication platforms, with their integration efforts actually outpacing their private-sector counterparts 58% to 47%.

AI enables nonprofits to enhance stakeholder engagement and can help them access solutions to social problems they are working to address. About 70% of nonprofits believe generative AI will help them achieve their organizations’ sustainable development goals by enhancing productivity, improving access to information, and increasing awareness to drive policy change.

But AI also presents risks that could threaten a nonprofit financially, reputationally, and operationally.

 

How Nonprofits Are Using AI

AI has surged since 2020 thanks to swift advances in technology to generate text, images, and videos. Nonprofits are tapping into generative AI and its large language model (LLM) subset to create text from big sets of data to enhance efficiency and expand their reach. Additionally, nonprofits can use AI to automate repetitive tasks, including certain administrative duties like scheduling meetings, data entry, or volunteer management, so they can instead focus their limited employee and volunteer resources on other important work.

“About 70% of nonprofits believe generative AI will help them achieve their organizations’ sustainable development goals by enhancing productivity, improving access to information, and increasing awareness to drive policy change. But AI also presents risks that could threaten a nonprofit financially, reputationally, and operationally.”

Savvy organizations are also leveraging predictive AI to analyze donor data and gain insights into potential future donors. These insights can guide generative AI to create personalized appeals through targeted communications such as letters, advertising, and other content. Some AI applications are even more ambitious by providing actionable information to people looking to get involved in a cause or mobilize resources.

 

The Risks in AI — and How to Combat Them

Despite AI’s benefits, risks abound, including errors in word choice, tone, or potential copyright infringement in AI-generated materials. It is critical that organizations have a process to fact-check AI-generated materials and develop usage rules and policies for employees or volunteers supported by awareness training. Organizations should also consider media liability insurance against AI content-related claims of personal injury, copyright/trademark infringement, and plagiarism.

Cybercrime is another concern. AI has enabled cyber criminals to improve the speed, scale, and automation of cyber attacks. The technology can turbo-charge schemes like phishing or ransomware and be used to mimic voices of real people ‘authorizing’ fraudulent activities, known as ‘deepfakes.’

AI systems can be targets as well. If a threat actor was able to compromise a language model and poison the information within it, the outputs generated by AI algorithms leveraging that model could be damaging.

“Savvy organizations are also leveraging predictive AI to analyze donor data and gain insights into potential future donors.”

Unfortunately, many nonprofits are resource-challenged and increasingly vulnerable to cyber threats. About 68% of nonprofits have had at least one data breach in the last three years, 75% don’t actively monitor their networks, and more than 70% don’t run vulnerability assessments.

Every organization using or considering AI technology needs best practices and policies to protect against the potential risks. Here are some steps to consider:

• Document AI use policies. Organizations need to determine who can use public AI tools, and for what purpose. For instance, can business or personal email accounts be linked to the programs? How will access be managed — and by whom?

• Perform due diligence. Third-party AI tools that organizations or its vendors can buy, license, or access cause more than half of all AI failures, which includes providing inaccurate or copyrighted information. Organizations must thoroughly evaluate AI tools and the AI practices of any potential vendors to ensure they are guarding against threats. Rigorous contractual risk management — including hold-harmless, indemnification, and insurance provisions — is a must.

• Conduct awareness training. All staff should be trained in the use of AI tools and general cybersecurity protocols.

• Ensure risk management. An experienced broker is an invaluable resource to help organizations assess their cyber risk. Organizations should work with their broker to ensure they have the right insurance for AI-related exposures, such as cyber insurance and intellectual-property coverage.

Contact HUB International’s nonprofit insurance specialists to learn more about how to protect yourself against AI-related risks and take full advantage of the technology.

 

Timm Marini is president of Personal Lines Insurance at Hub International New England.

 

Stay Safe by Preparing for Holiday Driving Season

By Contributor
Insurance

Rules of the Road

By Jack Dowd

 

Holiday season, which will ramp up over the next few months, is peak travel time. “From Atlantic to Pacific / Gee, the traffic is terrific,” goes the song, and it’s about 10 times truer today than it was when Perry Como sang it in 1954. The more people on the road, the more important it is to take extra care preparing for your trip and driving with safety in mind.

 

Preparation Is Key

90% of safe travel is in the planning. Even if you’ve driven to grandmother’s house more times than you can count, it’s still essential to run through a safety checklist before you hit the road.

 

Auto Insurance

Make sure your auto or motorcycle insurance policy is up to date and has the coverage you need. The rates of accidents spike during the holiday season, and even the most careful drivers can find themselves in dangerous situations. It’s best to be sure you’re covered.

Jack Dowd

Jack Dowd

“The one guaranteed result of road rage is regret. Don’t leap at the opportunity to join in on someone else’s bad judgment.”

 

License and Registration, Please

And pack proof of insurance while you’re at it. Again, despite a careful driver’s best efforts, accidents do happen, so be sure you’ve got an active driver’s license, current registration, and proof of insurance at the ready. We know you’ll follow all state and local speed limits, of course, so we won’t even bother to discuss that here.

 

Roadside Assistance

Whether you have roadside assistance through your insurance agency, your bank, a cell-phone carrier, or AAA, make sure your policy is active before you set out on your trip. If you choose not to participate in a roadside assistance program, be sure you have all the tools you need to change a tire or take care of any other minor repair en route. While you’re at it, check your spare and be sure it’s properly inflated and in good condition.

 

Basic Car Maintenance

If you’ve been putting off an oil change and haven’t checked your tire pressure in a while, take a little time to get your car ready for the long haul. Check the levels of oil, coolant, windshield fluid, and brake fluid. Test your lights, including turn signals, taillights, reverse lights, and the low and high beams on your headlights. Bring your tires up to their recommended PSI. Make sure your wipers work well and your windows are clean.

 

Know Where You’re Going

Don’t be too dependent on your phone to tell you where to go. Review your route carefully before you leave, and note some of the key milestones, exits, and turns. Heaven forbid you lose cell service, overshoot a turn, and miss the turkey!

 

Watch the Weather

Keep an eye on the weather forecasts for all the regions you’ll pass through along the way. Watch out for storm warnings and predictions of rain, snow, and ice. If it looks like a major storm will impact your route, seriously consider delaying the trip until it’s cleared. If you’re traveling through steep or mountainous terrain, or roads that tend not to be cleared regularly, bring tire chains with you or put your snow tires on before you leave.

 

Charge Your Devices

Start your drive with a fully charged phone. Bring along both a car charger and a rechargeable battery pack. That way, should your car break down, you can still keep your phone charged to call emergency services, friends, relatives, hotels, or airlines.

 

Keep a Calm State of Mind

When it comes to safe holiday driving, getting there is what’s important. Don’t worry about getting there before the car in the other lane or teaching that tailgater a lesson. It’s not a contest, and it’s not a race. The one guaranteed result of road rage is regret. Don’t leap at the opportunity to join in on someone else’s bad judgment. Maintain a smooth, safe speed; drive carefully; and visualize grandma’s apple pie. Relaxing music also goes a long way.

 

Mind the Speed Limit

Should you still be tempted to drive aggressively to make up time, get ready for a big surprise. According to AAA, speeding accomplishes nothing of the sort. If you drive 65 mph on a 45 mph-posted road for five miles, the most you will save is a whopping 1.9 minutes — not exactly worth risking your life or the lives of others. Keep cool and prioritize arriving in one piece.

 

Jack Dowd is vice president of the Dowd Agencies in Holyoke.

Property Owners Should Take Steps to Protect Assets from Weather Events

By
Insurance Special Coverage

Ready for the Storm

 

From water backups, ice dams, and snow runoffs in the basement to windstorms, fires, and floods that can cause much more damage, Beth Pearson has seen it all.

“We have a tremendous amount of experience with these events and have helped educate clients on snow and water-related coverages,” said Pearson, president of Pearson Wallace Insurance in Amherst and Pittsfield. “Then we get involved in the claim remediation and act as a liaison between the company, the carrier, and the client, and make sure it’s an easy process to expedite the claims payouts.”

That process may be a more common one in the coming years, while premium costs creep ever-higher, due to a combination of climate change and more severe weather events, inflation impacting labor and supply costs in the construction world, and insurance carriers basing their rates on what they expect to happen next.

“No area of the U.S. is immune to the impacts of climate risk,” Mark Friedlander, director of Corporate Communications at the Insurance Information Institute, told Bankrate recently. “Whether it’s hurricanes, wildfires, severe convective storms, tornadoes, floods, hailstorms, straight-line winds, or damage from heavy snow or ice accumulation, every county in every state is vulnerable to a multitude of risks.”

“The cost of a loss to a business or a home far outweigh the premium. So it’s important to understand what the replacement cost is. You might want a more expensive premium, but one that will respond to what you need if there’s a loss of business or personal assets.”

That said, the cost of prevention is much preferable to the cost of rebuilding, Friedlander added. “It’s essential that policyholders own their risk. This means they need to assess the risks they face where they live and determine what insurance coverage is essential to be financially protected from losses.”

Pearson agreed. “The premiums are becoming a more expensive budget item for both businesses and personal finances,” she told BusinessWest. “That’s unfortunate, but still, the cost of a loss to a business or a home far outweigh the premium. So it’s important to understand what the replacement cost is. You might want a more expensive premium, but one that will respond to what you need if there’s a loss of business or personal assets.”

That said, Pearson’s agency works with a large number of carriers. “One customer’s policy went from $3,000 to $12,000, and she wanted an alternative option. We found one that lowered it to the original $3,000 cost she was paying. There are options out there.”

Alex Bennett

Alex Bennett

“We come at this from an educational standpoint. It’s complicated, so we sit with every client, and we try to relate the information so they understand what a standard deductible is and how it applies in different claim scenarios.”

Alex Bennett, vice president of Business Development at Pearson Wallace, agreed. “Every carrier has different rates, and they set rates depending on a lot of different factors.”

One recent change due to climate trends has been a remapping of flood zones in Massachusetts and elsewhere, Bennett noted.

“That has changed a lot of the landscape of flood insurance, with the determination that water tables are rising and more floods are popping up,” he explained. “From an agency level, we try to let clients know that certain flood zones are changing, and floods are becoming more and more drastic in terms of actual water flow.”

They also explain that home-insurance policies don’t typically cover flood loss from groundwater, and that clients should consider that additional coverage, just as they would consider additional coverage from, say, earthquakes — which some policyholders do, even though such events aren’t common in the Northeast.

“They might come from the West Coast, where they experienced an earthquake, or a relative did,” Pearson said. “It’s not a standard coverage; it has to be endorsed in the policy. You don’t see a lot of East Coast activity, but it is available coverage if you want to add it.”

Wind damage is far more common, Bennett added, and wind deductibles can be different from other deductibles. In the case of named storms and other factors, the deductible is typically a percentage of the property’s value, which can catch policyholders off guard.

“We come at this from an educational standpoint,” he said. “It’s complicated, so we sit with every client, and we try to relate the information so they understand what a standard deductible is and how it applies in different claim scenarios.”

 

Ounce of Prevention

The other side of protecting property from weather damage — or at least mitigating the impact of that damage — is the broad realm of storm preparedness.

Lisa Eugin, manager of Marketing and Administration at Encharter Insurance in Amherst, recently prepared a checklist of considerations for businesses to protect their assets from severe weather. They include:

Develop a storm-preparedness plan. Identify the types of severe weather most likely to affect one’s area and evaluate how these weather events could impact business operations; compile a list of emergency contacts, including local emergency services, utilities, insurance companies, and key employees; designate evacuation routes and ensure all employees are familiar with them; and establish a reliable communication system to keep in touch with employees, suppliers, and customers during a storm.

“Do you have a proper replacement cost on your home or business? Five years ago, if you bought a home for $500,000, it might cost $400,000 to $500,000 to replace it. Today, it might be $1 million.”

Secure your physical assets. Regularly inspect buildings for vulnerabilities and repair any damage to roofs, windows, and doors to withstand severe weather; install protective measures like storm shutters, reinforced doors, and impact-resistant windows, as well as sandbags and flood barriers to prevent water intrusion; invest in a backup generator to keep critical systems running during power outages, and move valuable equipment and inventory to safer locations, while elevating sensitive items off the ground to protect them from flooding.

Safeguard your data. Perform regular backups of all essential data and storing copies in multiple locations, including off-site and cloud storage; and implement robust cybersecurity measures to protect against data breaches, which can become more common during chaotic situations.

Prepare your employees. Conduct regular training sessions and emergency drills so employees know what to do in the event of a storm; provide emergency kits for employees that include first-aid supplies, flashlights, batteries, water, and non-perishable food; and develop a remote work plan that allows employees to work from home if the business premises are unsafe or inaccessible.

Review your insurance coverage. Verify that the business insurance includes coverage for natural disasters relevant to the area, such as floods, hurricanes, and tornadoes; purchase business-interruption insurance to cover lost income if the business is forced to close temporarily due to storm damage; and make sure any policy covers damage to or loss of inventory and equipment.

Stay informed. This may include subscribing to weather alerts from reliable sources such as the National Weather Service (NWS) and local news channels, and utilizing resources from government agencies such as FEMA for the latest information and preparedness tips.

Conduct post-storm recovery. Conduct a thorough assessment of any damage to the property and assets, documenting the damage with photos and notes for insurance claims; implement a business-continuity plan to resume operations as quickly as possible; and provide support and resources to employees affected by the storm to help them recover and return to work.

“Even if you haven’t been in contact with the agent or carrier, first mitigate the losses,” Pearson added. “For instance, if a window is blown out, cover it up with plywood to prevent further damage.”

Bennett also emphasized basic preventive measures like winterizing one’s home, checking the roof and gutters, making sure the pipes are insulated, sealing doors and windows, checking the heating system, having a generator on hand, and preparing an emergency kit that includes essential food, medications, blankets, flashlights, and batteries.

“Something I talk about almost every single day is taking photos of your home — inside, outside, the garage, your possessions — maybe once a year,” he added. “If there was a total loss, if you were asked if you know everything you have in your home, most people would say no.”

Pearson also stressed the importance of business-interruption coverage, in case the business needs to be relocated or business income needs to be replicated during a shutdown.

“It’s really important for the clients to sit down with us to make sure there is coverage available and that it’s adequate enough,” she said, adding that both home and business owners need to understand the value of totally replacing a structure. “Do you have a proper replacement cost on your home or business? Five years ago, if you bought a home for $500,000, it might cost $400,000 to $500,000 to replace it. Today, it might be $1 million.”

 

Weather or Not

When a storm is on the horizon, Pearson Wallace often issues notifications to clients about the timing and expected severity, and the agency encourages property owners to carefully document damage after the event to ease claims processing.

“We work through the mitigation of claims and losses. We have conference calls with the carrier and advocate on the client’s behalf,” Pearson said. “A lot of agencies don’t offer that advocacy opportunity. But working with claims representatives is a tough go, particularly when you’ve had a loss and you’re focused on the loss. Having a claims-process advocate is important.”

And will continue to be important, Bennett added.

“Most carriers at this point are preparing their rates for the future based on continued extreme weather events. Whether it’s the West Coast, East Coast, Florida, regardless where you’re located, most carriers and most reinsurance companies are preparing for more extreme weather,” he told BusinessWest. “That’s a direct correlation to the change in weather patterns we’re seeing.”

Fallon Health Welcomes Dr. Jean Jaoude to Massachusetts Program

By
Insurance

Keeping the PACE

Fallon Health announced the recent appointment of Dr. Jean Jaoude as vice president and medical director of its Massachusetts Program of All-inclusive Care for the Elderly (PACE), locally called Summit ElderCare. In this role, Jaoude is responsible for supervising the medical care delivery of approximately 1,400 participants enrolled in the organization’s five PACE centers in Massachusetts, located in Leominster, Lowell, Springfield, Webster, and Worcester.

The primary goal of PACE is to allow older adults to live independently in their homes and communities instead of a nursing home, while maintaining or enhancing their quality of life with a dedicated care team, transportation, full medical care, and opportunities for socialization.

Dr. Jean Jaoude

Dr. Jean Jaoude brings deep experience in family medicine, geriatrics, hospice, and palliative care to his new role with Fallon Health’s PACE program.

Jaoude comes to Fallon Health with deep experience in family medicine, geriatrics, hospice, and palliative care. Most recently, he served as chief medical director of the Supportive and Palliative Care department within the ChristianaCare Health System in Newark, Del. Prior to that, he was chief medical officer for Baystate Home Health’s Hospice and Community Palliative Care division in Springfield. He has also served as a volunteer physician for free medical clinics for underserved populations in Iowa and was a missionary in South Africa providing education and free hospice care for underserved communities.

Jaoude is board-certified in family, geriatric, and hospice and palliative medicine. He earned his medical degree from Lebanese University in Lebanon and a master of health care administration degree from the Carlson School of Management at the University of Minnesota. He also holds a medical director certification from the American Medical Assoc. Society for Post-acute and Long-term Care Medicine and completed the Physician Leadership Academy of the American College of Physician Executives at UnityPoint Clinic in Des Moines, Iowa. He is multi-lingual and is fluent in written and spoken Arabic, French, and English.

He is an active member of the American Assoc. for Physician Leadership, the American Academy of Family Physicians, the American Medical Director Assoc., the American Geriatrics Society, and the American Academy of Hospice and Palliative Medicine, as well as the National Hospice and Palliative Care Organization.

The PACE model is centered on the core belief that given a choice, most elders, the disabled, and their families would choose to receive care in their homes and communities rather than in a nursing home. All PACE programs feature several essential components:

• An interdisciplinary team made up of healthcare and social-service professionals, such as doctors, nurse practitioners, physical and occupational therapists, social workers, and nurses;

• An individualized healthcare plan for each participant that outlines what services are needed to stay safe and healthy; and

• A PACE center that serves as the hub of services and activities, including a doctor’s office, rehabilitation gym, and social-work offices, as well as an activities center. Once enrolled in PACE, most medical services are provided at the PACE center, although services may be provided in the home or at another facility.

Backed by nearly 30 years of experience in PACE, Fallon Health boasts the largest PACE program in New England and among the largest in the country. The not-for-profit healthcare organization also operates a PACE program in Western New York.

Baystate, MassMutual Collaborate on New Community Health Center

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Baystate, MassMutual Collaborate on New Community Health Center
Insurance Special Coverage

A Powerful Partnership

Baystate, MassMutual Collaborate on New Community Health Center

From left: LaMar Cook and Kristen Elechko from Gov. Maura Healey’s Western Mass. office; Roger Crandall, chairman, president, and CEO of MassMutual; Springfield Mayor Domenic Sarno; U.S. Rep. Richard Neal; Baystate Health trustee Denise Jordan, executive director of the Springfield Housing Authority; Baystate Health President and CEO Dr. Mark Keroack; and Harriet DeVerry, chair of the Baystate Health board of trustees.

 

On May 21, in an effort to improve health equity and meet the growing needs of the Springfield community, Baystate Health announced a plan to build a comprehensive community health center in the heart of the city, made possible by the support of its longstanding partner, MassMutual.

MassMutual is donating approximately 10 acres of land valued at an estimated $5 million in the southeast corner of its Springfield campus, as well as providing financing and other support for the project. In addition, the MassMutual Foundation is donating $5 million over five years to support the new, state-of-the-art health center that will be owned and operated by Baystate Health. The expected total cost for the project is $45 million to $50 million.

The proposed 90,000-square-foot community health center, which will be accessible at the intersection of Wilbraham Road and Alden Street, will centralize services, creating a medical neighborhood caring for children, families, and adults and providing comprehensive primary care, integrated behavioral health, and ancillary services for the Greater Springfield area. The new center will have greater access by public transportation, ample free parking, and easy access from major thoroughfares.

Prior to conveyance to the Baystate Health Foundation, MassMutual will clear the site of the existing buildings, and the lot will be subdivided into its own parcel, separate from MassMutual’s headquarters. Construction is expected to begin sometime in 2025 and be completed in 2027.

“Thanks to the generous donations and substantial support provided by MassMutual and the MassMutual Foundation, Baystate Health’s vision to create a comprehensive, integrated community health and wellness center to serve the most vulnerable populations in Greater Springfield can advance toward realization.”

“Thanks to the generous donations and substantial support provided by MassMutual and the MassMutual Foundation, Baystate Health’s vision to create a comprehensive, integrated community health and wellness center to serve the most vulnerable populations in Greater Springfield can advance toward realization,” Baystate Health President and CEO Dr. Mark Keroack said.

With the new community health center and wellness hub in place, Baystate Health will consolidate services from four of its existing Springfield health centers to the new building, where they will continue to provide services, plus more, for adult and pediatric patients at the new location. These centers will remain open and fully functional until their services can be transitioned to the new health center, and Baystate Health is committed to engaging the community and local leaders during the planning phase of the project.

The centers and their services that will be transitioned to the future Wilbraham Road location include Mason Square Neighborhood Health Center, Baystate High Street Health Center, Baystate High Street Pediatrics, and Wesson Women’s Clinic.

Roger Crandall

Roger Crandall says MassMutual and Baystate Health have long been committed to each other’s success.

These existing community-based facilities are limited in size and scope with many infrastructure challenges that require significant upgrading and capital investment to allow for growth and expansion of services. The new center will provide Baystate Health with a state-of-the-art, modern facility to provide robust care for patients as well as attract top providers.

“We intend to co-locate four of our existing Springfield community health centers into a larger, modern facility to create this unified healthcare delivery wellness hub,” Keroack said. “Several convergent factors have informed our vision. The positive outcomes we have demonstrated in our Medicaid accountable care organization, involving more than 50,000 of the region’s most underserved patients, have provided value to this population, improved health, and allowed us to begin to address health disparities and inequities. We could not do this without the generosity of MassMutual and the MassMutual Foundation.”

In addition to MassMutual’s support, the project will also benefit from some expected state and federal grants. The land that will be donated to Baystate Health represents roughly 10% of MassMutual’s approximately 100-acre Springfield campus. The company’s move toward digitization and bringing its employees together in its iconic main office building on State Street has left a portion of its property underutilized, including two vacant buildings. Rather than leave this space unused, the company wanted to find a better, more long-term meaningful use for the land, one that would serve the community MassMutual has called home since 1851.

“Throughout our long histories in Springfield, both MassMutual and Baystate have had an enduring commitment to each other’s success as we’ve worked toward our own respective, yet similar pursuits, helping people live better, more fulfilling lives,” said Roger Crandall, chairman, president, and CEO of MassMutual. “We are incredibly proud that a portion of our property will serve a more meaningful purpose and a greater good, expanding access to high-quality medical care to improve the health and well-being of our community for generations to come.”

“We are incredibly proud that a portion of our property will serve a more meaningful purpose and a greater good, expanding access to high-quality medical care to improve the health and well-being of our community for generations to come.”

Combined, the four existing community health centers planned for the move currently serve 125,000 patient visits annually. In the envisioned community health center campus on the land to be donated by MassMutual, Baystate Health expects patient visits to increase to 145,000 annually by 2028.

As two of the area’s largest organizations, MassMutual and Baystate Health have come together to support the Springfield community before. A few examples include:

• Baystate Health’s role in the MassMutual Foundation’s work in the North End of Springfield focused on bringing together residents, service providers, community leaders, and other stakeholders to identify and prioritize removal of barriers to community financial well-being for the neighborhood’s residents;

• MassMutual and Baystate Health’s support of the Alliance for Digital Equity, a regional coalition of community-focused organizations working toward digital equity for all people;

• MassMutual’s $3 million donation to help Baystate Health fund its Hospital of the Future expansion; and

• MassMutual’s donation of medical supplies to Baystate Health and redeployment of Springfield-based health professionals working in MassMutual’s Wellness Center to serve broader community needs in the early days of the COVID-19 pandemic.

“Two titans of their industries once again come together for the betterment of our Springfield community to continue to proactively facilitate good health outcomes, especially when dealing with mental-health situations,” Springfield Mayor Domenic Sarno said of the community health center, the organizations’ newest collaboration. “My administration was proud to support this health initiative with nearly $1 million in ARPA funding.”

Fallon Health Names Manny Lopes Next President and CEO

By
Insurance

Change at the Top

Manny Lopes

Manny Lopes

Fallon Health, a not-for-profit healthcare services organization with a focus on improving access, quality, and affordability in government markets, announced that its board of directors has appointed Manny Lopes as its next president and CEO, effective July 1, 2024. The selection of Lopes follows a comprehensive national search that began after the organization announced the planned retirement of President and CEO Richard Burke.

The board also appointed Chief Financial Officer Todd Bailey to serve as interim CEO from Burke’s retirement on Jan. 31 through June 30.

“I am honored and grateful to the Fallon Health board of directors for the opportunity to be the next president and CEO of this exceptional organization,” Lopes said. “I look forward to leading the organization and its dedicated, passionate, and caring employees in pursuit of its vision to be the leader in providing exceptional, coordinated care and coverage that meets the unique, diverse, and changing needs of its members.”

A seasoned executive with experience across the healthcare industry, Lopes is currently the interim CEO of Fenway Health, one of the first healthcare organizations in the country to specifically address the healthcare needs of the LGBTQ+ community. Prior to that, he was executive vice president of Public Markets and Government Relations for Blue Cross Blue Shield of Massachusetts (BCBSMA), with responsibilities for the company’s Medicare division, achieving growth through innovation while also improving consumer experience and health outcomes.

“I look forward to leading the organization and its dedicated, passionate, and caring employees in pursuit of its vision to be the leader in providing exceptional, coordinated care and coverage that meets the unique, diverse, and changing needs of its members.”

Before joining BCBSMA, Lopes was president and CEO of East Boston Neighborhood Health Center, a large, nationally recognized primary-care provider and insurer that offers a Program of All-inclusive Care for the Elderly and a Senior Care Options plan, both core programs in Fallon Health’s portfolio.

“Manny’s extensive and highly relevant experience make him the ideal person to lead Fallon Health at this point in its history and in support of its strategy to predominantly focus on government markets,” said Frederick Misilo, Fallon Health board chair. “Throughout his career, he has developed a deep and empathetic understanding of the healthcare needs of the communities that Fallon Health serves today and in the future. Manny and Todd are committed to ensuring a seamless transition for Fallon Health’s employees, members, and provider, business, and community partners.”

Deborah Enos, Fallon Health board member and chair of the search committee, added that “the board’s search committee worked diligently to find the right person to lead Fallon Health and continue to move the organization forward in its strategy to be the leading healthcare-services organization committed to government-sponsored health-insurance programs. Manny has a deep understanding of and commitment to all that Fallon Health stands for: its mission, vision, values, and its strong support of the community. His proven track record and passion for innovation, equity, and improving health outcomes is unparalleled.”

Misilo added that Bailey’s leadership has put Fallon Health in a strong financial position and played a key role in the organization’s strategic decision to focus predominantly on government programs, and that his 30-plus years of experience in the health-insurance and healthcare fields, and his unique vantage point in the business, have helped drive strategic and critical decisions in support of members’ care, the workforce, and the community.

Following a 25-year career at Fallon Health, including the last eight as president and CEO, Burke will retire at the end of the month.

“Under Richard’s distinguished leadership, Fallon Health has successfully pivoted to a predominant focus on government programs, experiencing unprecedented growth in several products and historically strong financial results, and receiving continued exemplary national ratings for quality and service,” Misilo said. “The board congratulates him on his retirement, thanks him for all he has done to expand the impact of Fallon Health’s mission, and wishes Richard well as he embarks on this next journey.”

 

 

Several Factors Are Accelerating Auto-insurance Rates

By
Insurance Special Coverage

Driving Up the Cost

 

 

Wondering why auto insurance is much more expensive now than it was a couple of years ago? You’re not alone.

There are a number of reasons why, but Joe Phillips starts with an unprecedented series of changes in driver behavior brought on by COVID-19.

“Companies started adopting safe-driver points and rebate offers, and when 2020 hit, everyone stopped driving, they stayed home, nobody was going to school, the roads were empty, and people got a lot of money back because accidents were way down,” said Phillips, president of Phillips Insurance Agency in Chicopee.

“That situation, with less activity, went on for more than two years: a reduction in driving, reduction in accidents, lower repair costs,” he went on. “But in late ’22, 2023, more people were back to work, everyone was back to school, distracted driving is on the rise, and claims have gone through the roof.”

John Dowd, president and CEO of the Dowd Agencies in Holyoke, said an increase in accidents after the pandemic caught insurance companies “flat-footed.”

“Insurance companies set their rates in advance for the year; they have to file with the state. So by the time claims started coming in and hitting their books, they could see that they were underwater in terms of seeing a profit.”

“Insurance companies set their rates in advance for the year; they have to file with the state,” he explained. “So by the time claims started coming in and hitting their books, they could see that they were underwater in terms of seeing a profit. So they’ve reacted to that, and this past year, the rates went up significantly.”

“So they’ve reacted to that, and this past year, the rates went up significantly — and in this current year, it’s still going on,” he continued. “It’s a challenge for brokers like ourselves; we’re getting quotes from different companies to try to mitigate some of these increases, but we’re finding they’re all pretty much raising the rates. It’s not isolated.”

Dowd explained a concept well-known in the insurance world, but perhaps not to many customers: the loss ratio. The break-even figure is 100%, meaning that, for every dollar a carrier collects in premiums, it’s paying that much back in claims and administrative costs.

“So, obviously they want to be at least a few points under that to be able to make a profit,” he said. “On the automotive line alone, we’re seeing loss ratios of 110%, 115%. When that happens, they have no choice but to raise their rates because these losses eat into their profits and cause all kinds of problems for companies.”

Why they got caught flat-footed is a story with several different factors, which Dowd and Phillips shared with BusinessWest for this issue’s focus on insurance.

 

Parts of the Problem

Among the ways the pandemic has continued to affect the insurance world are two terms everyone is weary of by now: inflation and supply chain.

“When you’ve got a damaged car and you have supply-chain problems because of COVID, you can’t get parts, and then you had a stimulus from the federal government that just caused inflation. So now you can’t get a part, and they’re more expensive, so these claims have gone through the roof,” Phillips said, citing electric vehicles in particular. He noted that the average cost to repair the bumper of a Rivian electric truck after a collision is $4,200, and the Tesla is the most expensive car to insure in the U.S.

Joe Phillips

“When you’ve got a damaged car and you have supply-chain problems because of COVID, you can’t get parts, and then you had a stimulus from the federal government that just caused inflation.”

Dowd agreed. “All the technology is more expensive. What used to be a $1,500 bumper repair is now $2,500, and that’s because of the sensors. It looks like there’s not much damage, but when you have to replace all the sensors, all of a sudden, you’re asking, ‘how did this bill escalate to this level? It didn’t look like that much damage to me.’ But it was in a bad spot where you had to replace the sensors.”

Beyond the availability and complexity of parts is the sophistication of technicians themselves, who understand the electronics in today’s high-tech cars, Dowd added. “With a lot of technologies built in, the technicians that do these repairs have to be trained properly, and there’s a shortage of them. So it’s the cost of products and labor, it’s the availability, the supply chain, qualified technicians … they’re sort of coming together at once.”

And it’s no myth that accidents are up, Phillips added. “The distracted driving is huge. Not to sound like the old guy, but these kids can’t put their phones down. When you get to a stop sign, you see these young people getting on their phone for 15 seconds, and you have to beep at them. And then the reaction … oh boy.”

Severe weather events in recent years have also played a part in rising insurance rates for every type of coverage, from home and auto to commercial, he noted.

“It’s a real confluence of things coming together to create almost a perfect storm,” Dowd added. On one hand, everyone knows about inflation and what that’s done to prices, whether at the grocery store, the gas pump, anywhere. The cost of parts to repair cars, the cost of materials to repair homes, everything has gone up, and it’s gone up in rather a dramatic fashion over the last 12 to 18 months.”

He noted that inflation has begun to wane, “but there still supply-chain challenges, and that creates delays getting parts, which creates delays in getting the car back, which means you’ve got to rent a car … these are all ripple effects of what’s going on.”

And it’s caused concern in the insurance industry, Phillips said, as evidenced by recent waves of layoffs at national carriers like GEICO and Liberty Mutual. “They’re not making the money they once did because of increased claims.”

Meanwhile, Dowd said, the retail market — which is the realm in which he and other local agencies deal with clients — is being pressured by the reinsurance market, which, as the name suggests, is populated by companies that reinsure much of the risk from retail carriers, which pay a premium to the reinsurer to limit their exposure to catastrophic loss.

“The reinsurance market has been tested financially in the last couple of years, like they haven’t been in a long time,” he explained. “Judgments are higher, the juries are awarding higher payouts to injured people, and it’s starting to get into the reinsurance layer, so the reinsurers have raised their rates; they charge their retail carriers higher premiums, and the retail carriers pass along some of these increases to their customers. For us, that’s another factor.”

With weather events alone contributing to $95 billion in insurance claims last year, much paid out by reinsurers, Dowd said, “they’re scrambling to make their profit.”

 

Risk and Reward

In short, there’s a lot going on, and it’s not a Massachusetts problem, Dowd said. “It’s a nationwide issue, and as brokers, we’re the ones that have to deliver the bad news. We certainly understand the level of concern the customers have, and we don’t want to deliver that news any more than they want to hear it.

John Dowd

John Dowd

“The reinsurers have raised their rates; they charge their retail carriers higher premiums, and the retail carriers pass along some of these increases to their customers.”

“We’re doing the best to find alternatives for them to keep increases to a minimum; sometimes we can, but sometimes we can’t,” he went on. “Every change you make to a policy to try to reduce cost, whether a huge deductible or less coverage, it’s all a gamble. It’s like going to the casino. When you take on a higher deductible or reduced coverage, you’re betting on not having a claim. And that can work for you, but it can work against you.”

Phillips agreed. “Everyone wants the lowest cost until they have a claim. When people come in for a quote, they say, ‘I don’t need that, I don’t need this.’ And when they have a claim, they say, ‘oh, I definitely would have taken that.’ Well, it would have only cost $32 a year.

“We never sell the lowest limits,” he went on, but sometimes clients will insist on saving a couple hundred dollars to raise a $500 deductible into the four-figure range. “People think they can tolerate a $2,000 collision deductible until they have the accident.”

Those who want to keep their costs down should not only shop prices, Phillips added, but be aware of their credit score and their driving record — “even a failure to stop or a speeding ticket can add hundreds of dollars of premium” — but also be aware of the type and make of the vehicle they buy, which greatly impacts coverage, based on average theft rate and repair costs.

Dowd said certain people, who have a long track record of safe driving, may be fine taking a higher deductible.

“There’s obviously no guarantee. And if you take the savings and take a little more risk, you still need the catastrophic protection in case something serious happens,” he stressed. “You don’t want to cut into the muscle of the coverage where the catastrophic protection isn’t there, which can really hurt people financially.”

After all, insurance is all about protecting against the most severe losses — even if purchasing it makes a bigger dent than it used to.

Altus Dental Confronts Challenging Landscape with Resolve

By
Jim Kinney
Insurance

Biting Comments

 

Jim Kinney

Jim Kinney says Altus Dental is well-positioned to handle the seismic changes taking place in the dental-insurance landscape.

 

Jim Kinney acknowledged that it will certainly take some time before the full impact of changes to the dental-insurance landscape in the Bay State — specifically a successful ballot initiative requiring insurers to dedicate 83% of revenue from premiums to patient care — is known.

But already, that landscape is changing, and in profound ways, said Kinney, vice president of Sales and Business Relations for Rhode Island-based Altus Dental, noting that several insurers have announced their intention to withdraw from the small-plan market in Massachusetts as a result of the measure, and more will likely do so in the months to come.

Altus isn’t one of them, he said, adding that the company is committed to staying in Massachusetts and continuing to provide small-plan coverage, despite the many challenges inherent with doing so.

“There’s been some contraction — five carriers have notified the Commonwealth that they’ll be exiting the market,” he told BusinessWest. “So right now, small group is really … turbulent. That’s the word I would choose to use; there’s going to be a lot of change.

“But we’re really committed to staying in the market,” he went on, adding that Altus prefers to look at these companies exiting the small-business market as an opportunity, one that will require an even greater emphasis on efficiency, something the company has always made a priority, and creating more volume — assignments we’ll hear more about later.

Meanwhile, beyond the turbulence, the companies exiting the small-market segment will be “doubling down,” as Kinney put it, on the large-market component, creating more competition and more challenges in the segment.

But Altus sees opportunities there as well, he said, adding that 2024 will certainly be an intriguing year, to say the least, as it looks to continue growing its membership in Massachusetts, which is currently about 230,000.

“We’ve been on a good growth trajectory, and with the market changes coming next year and going forward, we’re really expecting to see new sales in small group,” he said, adding that, in this environment, there is even more strength in numbers.

For this issue and its focus on insurance, BusinessWest talked at length with Kinney about how Altus, which has been steadily growing market share in Massachusetts, intends to continue its pattern of growth amid the tumultuous changes in the market.

 

Some Things to Chew On

In the run-up to the November 2022 election, insurers issued not-so-subtle warnings to Bay State residents that, if the ballot question passed, carriers would likely flee the state, leaving fewer options, especially in the small-plan market, and, more alarmingly, more people without dental insurance.

But, backed by the American Dental Assoc. and local dentists, the referendum question passed with ease, bringing dental insurers in line with healthcare insurers that are required by Obamacare to allocate 83% from premiums to patient care.

Now, some of those warnings are coming to pass.

Ameritas Dental Network and Principal dental insurance recently notified the National Assoc. of Health Plans, of which they are members, of their intention to abandon the Massachusetts small market. Those moves follow the announcement in August that Guardian Life Insurance, one of the country’s largest mutual insurance companies, had notified small businesses in Massachusetts that it would no longer provide dental insurance as a result of the ballot question.

And others will likely follow suit, said Kinney, who, when asked if the market was done shaking out, said simply, “there’s more to come.”

“The legislation goes into effect Jan. 1, but it’s going to be delayed, at least with some aspects of it,” he told BusinessWest. “We’re going to see more companies exiting the market, and unfortunately, that’s not a good thing for the health of the market.”

The small-business component comprises roughly 80% of the market in Massachusetts, with about 46,000 client companies, said Kinney, adding that this is a very large slice of the dental-insurance pie in the Bay State.

Now, there will be fewer players contending for slices of that pie, a scenario that, as noted, comes with opportunities and challenges, and probably more of the latter than the former, which is why companies are exiting the small-business market here.

“The numbers are very difficult; it’s difficult to make it work for carriers — they’re being really restricted,” he said of what’s known as the medical-loss ratio that is now being applied to dental insurers. “We have a bit of a different model — we’re more efficient, and we run a lot of new business on a much tighter margin than many can.”

And this efficiency, this ability to thrive on much tighter margins, will be ever-more important, said Kinney, who used some simple math to get his points across about this new regulation and why so many companies have decided to exit the small-business market.

He said a commercial market medical-insurance premium runs about $600 per month on average; this contrasts with $35 for a dental PPO and $20 for a dental HMO. Despite this huge monetary gap, dental and medical plans perform most of the same administrative tasks. That’s why most of the industry has long held that dental insurers should not be subject to the same medical loss ratio, in this case more than 80%.

Such numbers explain why, in this environment, there will be a premium on efficiency and providing value, he said, and with fewer competing players, on top of the new regulation, there will be added pressure on premium costs.

“We’re committed to being fiscally responsible, keeping premiums affordable, and focusing on high value for the premium,” he said. “But I do have concerns that less competition will erode some of that for the market. But our commitment is to remain affordable, with a good focus on value for our members.”

And one of the keys to keeping premiums affordable will be efficiency, Kinney noted.

“We’ve gotten down to a process with our technology where we get a lot done in a simple way,” he said. “I think we’ve just done a really good job of using technology to focus on getting the right things done in the most efficient way. Also, many of our employees have been here for 20 years, so they really understand our systems very well, and they can make things happen quickly.”

Elaborating, he said this emphasis on technology, such as electronic data files, enables Altus to sped up the approval process on many procedures and process claims more quickly, thus improving overall customer satisfaction.

 

Bottom Line

As noted earlier, this changing environment puts additional emphasis on both size and efficiency, Kinney said, adding that Altus, which, unlike some carriers, focuses exclusively on dental, is better-positioned to thrive in this climate than its smaller and larger competitors.

“We’re small enough that we’re nimble and able to make changes and really meet the demands of the market very quickly,” he explained. “But our infrastructure is large enough to handle the administration and be able to actually support all the things that go into this.

“We understand that this legislation is going to impact us financially, there will some challenges, and the policy is going to bring some negative consequences for Massachusetts,” he went on. “But with our 20 years of experience focused on dental and our position as one of the fastest-growing companies, we really think we’re well-positioned to navigate this market and the changes and challenges that are going on.”

How Umbrella Insurance Protects Against Catastrophic Loss

By
Insurance Special Coverage

Shelter from the Storm

Beth Pearson (left, with Alex Bennett) says a dog bite (not from this good boy, of course) could leave a homeowner without proper coverage in a bad spot for a long time.

Beth Pearson loves dogs as much as anyone else.

Working in the insurance world, she also knows people can be careless.

“If you have a dog, and that dog bites a dog walker or bites a child, if you’re sued, that’s a catastrophic impact that can affect your life for a very, very long time,” she said. “Or let’s say a teenage driver gets behind the wheel while impaired, and an accident ensues.”

In situations like this, she added, “I always say one thing: ‘I hope you have an umbrella policy.’ It’s that important.”

An umbrella policy, as its name suggests, essentially sits atop existing auto, home, or commercial insurance policies to deliver an additional layer of protection, especially against catastrophic liability loss, noted Pearson, president of Pearson Wallace Insurance in Amherst and Pittsfield.

Alex Bennett, vice president of Business Development at Pearson Wallace, suggested another example: an inground swimming pool.

“The neighbor’s child comes over, hops the fence, jumps in the pool, and even though he’s not permitted to get on your property, the owner can still be essentially responsible for the death — or responsible for someone who’s badly injured from a diving board, a slide, or any sort of pool-related incident on your premises.”

In short, personal liability coverage of $500,000 or $1 million is simply not enough when real tragedy — accompanied by soaring liability — strikes, said Nathan Lee, a Commercial Lines producer at Rush Insurance Group in Chicopee.

“We live in a litigious environment these days,” he noted. “One million does not go nearly as far as it did five or 10 years ago. It’s not a lot of money these days.”

Bennett said agents on his team look at the property and unique situations of each client and make recommendations based on their general net worth and the specific exposures they might have.

“You have to consider the potential impact of what could happen in a life-changing event, in a lawsuit, when you find yourself in a hole for something that insurance could have protected against.”

“Things can happen to anyone. If someone broke into your house and fell down the stairs, they can sue you,” he said, citing what most people would consider a particularly unfair example of liability. “You have to consider the potential impact of what could happen in a life-changing event, in a lawsuit, when you find yourself in a hole for something that insurance could have protected against.”

Perhaps the most compelling aspect of an umbrella policy is its cost — maybe $300 to $400 per year for $1 million in coverage, with additional layers of coverage available beyond that, typically in increments of $1 million.

“In its most basic form, an umbrella policy is an additional layer of liability insurance,” Lee said. “It’s additional layers above and beyond the primary, underlying policy, and its intent is to protect against catastrophic losses that exhaust that primary policy’s limits.

“If I have, say, $1 million in underlying protection, general liability, and I have an accidental death in an auto claim that comes to be a judgment of $3 million, that would exhaust the primary underlying policy, and I would look for that $2 million above and beyond that. The umbrella policy is really just an additional layer of liability.”

 

Know the Difference

On the commercial side, Lee said, there’s a difference between an umbrella policy and what’s known as an excess insurance policy. Essentially, excess policies provide coverage only when the underlying policy responds to a particular situation, like major injuries or death. Umbrella insurance, on the other hand, does expand terms and provides broader coverage for losses not outlined in the underlying policy. It also covers legal defense costs.

Nathan Lee

Nathan Lee says he recommends umbrella insurance to “absolutely everyone.”

“An umbrella policy is much broader, more comprehensive, and frankly, we don’t see it a lot in the commercial space,” he explained. “Excess liability policies are more common in the high-hazard businesses, like fuel dealers and aircraft machine shops.”

But it’s the unexpected nature of life that should cause all business owners to consider umbrella insurance, Pearson said.

“We know that the cost of insurance is expensive and continues to rise every year. But not having the umbrella is one of the major liabilities of running a business,” she added. “A commercial umbrella gives you excess coverage over the general liability limits, the auto limits, as well as workers’ compensation. If someone is gravely injured by a machine and the underlying workers’ comp is a million dollars, but this person is dismembered for life, it’s important for the umbrella to be in place to reach down and provide an additional million to the liability.”

Lee stressed that he recommends such a policy to “absolutely everyone.”

“It’s really the broker’s job to examine the historical claims of the individual, see where the trends are, and build a program that’s priced conscientiously to the customer around how much excess umbrella they can afford and what they need,” he told BusinessWest. “We make recommendations to the customer — they make their own decisions, but it’s up to us to recommend the overall program.”

Clients can also purchase multiple layers of umbrella insurance, each carrying a less costly premium than the one below it. The key is to make sure the underlying policy limit is high enough to trigger the umbrella with no gap in coverage.

“If the umbrella policy says they need an underlying limit of $1 million and you only have a half-million dollars, it may not respond because of that half-million gap,” Lee said. “In some instances, you can pay that half-million gap personally, but those are very critical components when building a program.”

On the personal-lines side, an umbrella policy sits on top of primary home insurance, primary auto insurance, or other underlying policies, Pearson noted.

“It doesn’t matter whether it’s a small businesses with few employees or an employer with 100 people. Businesses are not exempt from accidents. This can provide coverage against losing everything.”

“Say, for example, you have a car accident and someone is seriously injured in your vehicle and loses a limb or some other body part, and you’re brought into a lawsuit for medical expenses well as any liability issues. If another person is injured and can’t go back to work or has a long-term disability, your auto insurance becomes exhausted in situations like that. The umbrella comes down and covers costs above and beyond those limits, and defense costs as well.”

She agreed with Lee that $500,000 or even $1 million in primary coverage can disappear quickly in a catastrophic event. “When those become exhausted and completely paid out, the umbrella gives additional coverage if they need it.”

Most people, Bennett added, “can’t afford not to have one. It starts at $1 million, but it can go as high as $25 million or $50 million.”

Those numbers may seem exorbitant, he added, but clients should consider what they’re putting at risk without one, especially considering the reasonable cost of premiums.

“With the nature of our world and our country, you can’t have enough of it these days. I think of umbrella insurance as peace of mind and asset protection,” he said. “We look at the account holistically. We want to understand what the net worth is, and we want the umbrella to be equal to, or more than, the family’s net worth.

“God forbid something happens,” Bennett went on. “The question we never want to hear is, ‘why didn’t I have an umbrella policy, if there was a policy that could have covered me?’ In a death or a large lawsuit, all kinds of different things can come into play in a situation. You’ll sleep better at night knowing that you have protection.”

 

Critical Questions

In Massachusetts, most umbrella policies provide coverage for the policyholder and their immediate family members living in the same household, with some exceptions.

Meanwhile, on the commercial side, the nature of the business would impact the risk exposure and, hence, the level of coverage needed. While a $1 million umbrella might be fine for a storefront florist or clothing store, a business owner with a fleet of heavy trucks would likely need more.

In addition, the level of coverage should reflect not only one’s net worth, but future earning potential as well. A doctor who just graduated from medical school and plans a career in brain surgery might have little more than debt to show right now, but a lawsuit could put significant future earnings at risk.

The keys are to “make sure you have minimum underlying limits, and make sure that the excess umbrella policy responds. Those are critical,” Lee said. “And you really need to pay attention to whether it’s an umbrella policy or excess.”

Pearson said business owners of all kinds need to consider their exposure. While a new business might be trying to keep initial costs down, liability can rear its head at any time, and for often-unexpected reasons.

“It doesn’t matter whether it’s a small businesses with few employees or an employer with 100 people. Businesses are not exempt from accidents. This can provide coverage against losing everything,” she said.

“I’ve seen businesses have catastrophic events and not have an umbrella, and it’s a very tough situation to dig out of. This saves money because, even though you’re spending a little extra, you’re protected from the storms that may occur.”

HNE Medicare Advantage Plan Earns Health Equity Certification

By Contributor
Insurance

Addressing Unique Needs

 

Health New England is the sixth health plan in the country to earn the National Committee for Quality Assurance (NCQA) Health Equity Certification for Medicare, and the first in Massachusetts to earn the recognition for both its Medicare and commercial health plans.

Health New England received this certification for its Medicaid, Medicare, and commercial plans by demonstrating exceptional efforts in reducing health disparities and addressing the unique needs of diverse populations.

To earn NCQA Health Equity Certification, health plans must build an internal culture that supports health-equity work; collect and assess data to help create and offer culturally humble care, including language services; ensure that its provider networks are delivering culturally and linguistically appropriate care to meet individuals’ diverse needs; and identify and act on opportunities to reduce health inequities and improve care.

Richard Swift

Richard Swift

“We are committed to continually improving our efforts to reduce health disparities, eliminate barriers to care, and ensure equitable access to healthcare services for all.”

“At Health New England, we believe that everyone should have the opportunity to achieve their best possible health. Receiving Health Equity Certification from NCQA underscores our commitment to advancing health equity for our members and the communities we serve,” said Richard Swift, president and CEO of Health New England. “This achievement reflects the hard work and dedication of our entire team, as well as our ongoing collaboration with healthcare providers, community organizations, and members. We are committed to continually improving our efforts to reduce health disparities, eliminate barriers to care, and ensure equitable access to healthcare services for all.”

NCQA President Margaret O’Kane noted that “the prevalence of racial and ethnic disparities has been a barrier to improving the quality of healthcare of many Americans for too long. Organizations achieving Health Equity accreditation are leaders in closing this gap, and NCQA commends them for their dedication.”

NCQA Health Equity Certification debuted in late 2021. Massachusetts will require health plans to obtain the certification for their Medicaid (MassHealth) plans by 2025. To ensure equity for all members, Health New England led an organization-wide strategy to achieve the certification for all plans.

“We believe that all customers deserve fair and equitable access to care and services no matter what type of health plan they have,” said Shelly McCombs, Quality and Accreditation manager for Health New England. “We are not just looking at whether people have physical health problems like diabetes. We are looking at the social determinants of health — the societal factors that affect people’s ability to be well, such as housing, healthy-food access, the availability of good jobs and childcare, and more. These are all factors that impact people’s ability to focus on their well-being.”

Such health-equity practices have had real-world outcomes. For example, Health New England worked to develop a program through its BeHealthy Partnership Plan with Revitalize Community Development Corp. and Baystate Health. Health New England identified the need to address social determinants of health to help diabetic members access healthy food. Members enrolled in the program receive a cooking appliance of their choice (microwave, slow cooker, or induction cooktop); a kitchen-supply bag; diet education; and 10 weeks of home-delivered, nutritious groceries specially curated for people with diabetes by registered dietitians. The groceries are culturally tailored and feature foods that promote a carbohydrate-controlled, therapeutic diet.

Health New England has made an organization-wide commitment to health equity, McCombs said, and continues to work with the healthcare practitioners in its network, community organizations, and other stakeholders to provide culturally humble care, identify health inequities, and bridge gaps. NCQA Health Equity Certification has helped Health New England earn a four-star overall health-plan rating from NCQA for commercial and Medicaid plans.

Rewarding Insurance Agency Grows into New Space, New Services

By
Rewarding Insurance Agency owners
Insurance Special Coverage

Selling Peace of Mind

 

Rewarding Insurance Agency owners

Rewarding Insurance Agency owners Lidia Rodríguez and Miguel Rivera.

 

 

 

While their insurance agency has been serving clients in Greater Holyoke for the past several years, Miguel Rivera and Lidia Rodríguez’s story in this sector goes back further than that.

“We started in the insurance business in 2009 in Puerto Rico,” Rivera said. “My wife and I were both insurance agents on the island. I used to sell cars, but I was tired of working six to seven days a week. So I found the insurance industry, and we fell in love with it.”

Their main focus — life and health insurance, mainly for an older clientele — was born from tragedy.

Back in 2009, “we were having a difficult time because my uncle died with cancer. And my aunt died with kidney failure two years later,” Rivera explained. “And I realized that I wasn’t doing my job, because my cousins ended up living in three different places because they didn’t have life insurance.”

So the couple became students of life insurance, and when they moved to Massachusetts, they started selling it in 2016, and it became a key niche when they launched Rewarding Insurance Agency in 2018.

They had no business office at first, and in late 2019, they began renting space at the Greater Holyoke Chamber of Commerce. But that was never going to be a long-term solution, especially as the agency grew to more than 1,000 clients.

“We want to be the most complete Latino-owned life, health, auto, home, and business insurance agency in the region; that’s what will make us a unique agency.”

So, earlier this month, Rivera and Rodríguez celebrated another milestone, opening their own office and storefront on Maple Street in downtown Holyoke, which the chamber marked with a ribbon-cutting event.

“It is so incredible to have seen the growth from Miguel and Lidia since they began working in our office,” said Jordan Hart, the chamber’s executive director. “Being the only bilingual insurance agency in downtown, where many residents are native Spanish speakers and live nearby, they recognized the need to accommodate their growing elder Latino customers with life insurance, notarizations, and health insurance, and completely pivoted their business, and now we can welcome them at their own space.”

Rewarding Insurance has its own downtown office

After more than three years sharing office space with the Greater Holyoke Chamber of Commerce, Rewarding Insurance has its own downtown office and storefront.

Indeed, Rivera said, “first, we started selling life insurance, and then we added Medicare Advantage, which is health insurance for seniors. And we are planning to add auto, home, and business insurance in January.”

Rivera said Rewarding is a relatively unique agency in that it serves mostly Hispanic seniors, which he feels has been an underserved population.

“We love our community. Our goal is to educate them in a way that they can understand what it means to have life insurance, because there is a lot of misunderstanding out there; they feel comfortable coming here and asking questions. And we also go to their house or their apartment to orient them about the insurance,” Rodríguez added. “And if something happens to them, the beneficiary can come here and ask questions. We don’t leave them alone in the process. We are with the family during the whole process.”

 

Planning for a Crisis

Rodríguez noted that ‘final expenses’ insurance, as it’s known, is an affordable type of life insurance that many people aren’t aware of.

“A funeral is really expensive; we’re talking $12,000 to $15,000. So how do they find that kind of money?”

Rivera agreed. “We encourage people to have life insurance so the family doesn’t have to collect donations and or do GoFundMe or things like that,” he said, adding that anyone can qualify for final-expense insurance. “People think that if they are too old, they don’t qualify for life insurance, but they do qualify for final expenses.”

That’s important during times of crisis, Rodríguez said. “It gives them peace of mind so that, ‘OK, I can focus now on healing because I have the financial cover. Let the insurance company cover all this for me.’”

On both the life- and health-insurance side, Rewarding Insurance has established contracts with leading insurance carriers to provide a diverse range of options, Rivera said. “When we meet with a client, we find the best plan for them.”

The agency’s focus on older clients came about organically, he added, based on the needs of the community.

“It was word of mouth; people want to do their life insurance and health insurance in the same place, so we’re trying to make it simple for our clients. And with the health-insurance plans, we give them access to services that help them have a better quality of life — access to durable equipment, food, over-the-counter medications. We help them save money on co-payments and deductibles. We find transportation for them.

“People love to come here and find the best health insurance plan that they can qualify for,” he went on. “We have access to CCA, Fallon Health, UnitedHealth, Health New England, Aetna, all those plans that are the top carriers here in Massachusetts. And depending on the doctor’s network and depending on their Medicare status, we find the best plan for them. We make sure their doctors take the plan they’re enrolled in. That’s the main focus.”

The agency also offers critical-illness insurance, a supplemental product that puts money in one’s pocket in case of an illness or an accident.

“So we are protecting families in case of illness or death or an accident,” Rivera said, adding that Rewarding also does 401(k)-to-IRA rollovers and helps clients make retirement-planning decisions around that savings vehicle. “So we help them protect their families financially with health, life, critical illness, and also their assets with IRAs.”

Jordan Hart

Jordan Hart

“It is so incredible to have seen the growth from Miguel and Lidia since they began working in our office.”

Those services, as noted earlier, will expand further with the addition of home, auto, and business insurance to the practice at the start of 2024.

“We want to be the most complete Latino-owned life, health, auto, home, and business insurance agency in the region; that’s what will make us a unique agency,” Rivera noted. “We will be a one-stop shop for all your insurance needs.”

 

Community Focused

Having grown into a new space and with new services on the horizon, Rodríguez said she expects more growth and a bigger agency in the future. And the couple both said their niche serving the area’s Hispanic community has been personally fulfilling.

“Holyoke is about 50% Hispanic, and about 90% of our clients are Hispanic — not because that’s what we wanted it to be, but that’s how it ended up being,” Rivera said, noting that Rewarding Insurance serves English- and Spanish-speaking clients with equal effectiveness.

“The Latino community feels very comfortable coming here,” he added. “English-speaking people have many insurance agencies to go to, but Latinos don’t have too many places here in this region where they can go and feel comfortable. We take time with them, explaining to them how everything works.

“We love it here. This is is the space we were looking for,” he added. “We can have meetings and workshops here. We have all the resources we need here. And the people feel comfortable coming here. They don’t want to leave.”

That was one of the goals, Rodríguez added: to create a comfortable, home-like environment for talking about critical issues of insurance and life planning.

“This is for them. This is their place where they can come and ask questions. We answer the phone, and now they know where to find us, too,” she told BusinessWest. “And we love our senior community, but we want to serve their families, too. We know that, once the family knows what we do, they’re going to do other kinds of life insurance with us. That’s what we want to do — not only serve them, but serve their sons, their granddaughters, everyone in the house.”

Rivera said it’s gratifying to get positive feedback in the community.

“My wife was at the supermarket the other day, and a client said, ‘hey, tell your husband I’m thankful because we’re saving money in co-payments and deductibles.’ So people are thankful, and we are glad.

“We just want to thank the community for their support,” he added. “Holyoke has been very welcoming. People say stuff about Holyoke, and Holyoke is not perfect, but we feel welcome here. We love the diversity here in Holyoke, and we are glad that we are in a good position and expanding here.”

Rodríguez agreed. “It’s satisfying when families come here and say, ‘thank you for everything you do.’ That is our goal: to continue to provide services that our community needs.”

Three Ways Financial-wellness Programs Boost the Bottom Line

By Contributor
Insurance

Sound Investment

By Hub International

 

Financial wellness is no longer just being a nice thing for employees or a way to help recruiting and retention — it’s an important tool for improving profits.

The demand from the workforce is clear. A recent survey indicated only 42% of employees feel compensation has kept up with higher living expenses, compared with 52% a year earlier. The same survey indicates that 19% of employees are looking for a new job primarily to improve their compensation.

With numbers like these, a strong financial-wellness program can have a significant impact on your bottom line.

Here are three ways financial wellness can improve the bottom line:

1. It drives down the cost of turnover. Losing employees is an expensive proposition. While estimates vary, it can cost more than $4,000 to replace an employee in terms of upfront ‘hard’ costs, while in terms of other costs, the price can be in multiples of salary. In addition, organizations lose the institutional knowledge of an experienced worker, which drives turnover costs higher through training and loss of productivity.

At the same time, 65% of workers have felt stressed regarding their finances due to the COVID pandemic, leading to increased turnover and lower productivity. Among employees who feel financial worries have hurt their productivity, two-thirds are struggling to meet their household expenses. One-quarter have saved less than $1,000 for retirement; more than half plan to postpone their retirement.

Given the high cost of employee turnover, it’s in employers’ best interest to improve employee financial well-being. Student-loan debt-management plans and financial coaching can lessen young employees’ stress of paying the bills, while improved education on retirement planning will lessen workers’ fears of the future.

2. Financial wellness lowers stress and boosts morale. Financial wellness does far more than lower turnover: almost half of financially stressed employees say money worries have had a negative impact on their mental health.

Given the connection between financial wellness and mental health, employers can consider offering financial coaching alongside mental-health resources. Employees are likely to respond to one-on-one financial coaching via phone or video chat because of the personal and confidential nature of their financial issues.

3. It boosts productivity. Even when financial issues don’t take a toll on employees’ mental health, the stress still reduces productivity. About 40% of workers say they’d be more productive if they didn’t have to worry about their personal finances while on the job, and employees spend around one-quarter of their time at work coping with financial issues.

Employers who promote financial-wellness programs (HUB’s FinPath is but one example) can reap tangible gains in employee focus and productivity. Mandated education on budgeting, debt management, and building emergency savings shouldn’t be considered an expense or loss of productive time, but an investment in worker well-being that will have a long-term impact on the bottom line.

More Than Ever, Benefits Are Key to Attracting, Retaining Employees

By
Vinnie Daboul (right, with Bob Borawski)
Insurance Special Coverage

Beyond the Paycheck

Vinnie Daboul (right, with Bob Borawski)

Vinnie Daboul (right, with Bob Borawski) says employee leverage has made things “really, really different” when crafting a benefits package.

Allison Ebner called it “a little bit of a wavy ocean at the moment.”

She was referring to the shifting calculus within companies of what benefits to offer employees and how to structure them, but the description is equally apt for the workforce challenges that are making those discussions just a little more important these days.

“We have employees that were coming out of the pandemic last year looking to add benefits in the wellness space, with financial wellness, health and wellness, and then non-traditional things like tuition reimbursement and pet insurance, which have been in play for a number of years. Those were really amped up and on the table,” said Ebner, president of the Employers Assoc. of the NorthEast (EANE).

With employers starting to worry about a recession, however, “some of that has been pulled back a little bit,” she continued. “Certain core benefits — health care, dental, vision … the practical pillars of benefits — no one’s touching those, even though some employers are seeing double-digit increases in health. But a lot of employers are saying, ‘hey, wait a minute, we want to do X, Y, and Z, but maybe let’s hold off on that a little bit.’”

The problem, of course, is that — even at a time when employers worry about economic tides — workers still have leverage due to a staffing crunch that has enveloped most sectors. And in many cases, benefits are a huge part of job seekers’ decision-making process.

Vinnie Daboul, benefits consultant with Borawski Insurance in Northampton, told BusinessWest he recently spoke with someone who had just turned down a job offer.

“They’re with a company right now with unlimited PTO and 16 weeks of maternity paid at 100%. They have a job offer from another company with unlimited PTO, but six weeks of maternity. And they’re like, ‘nah, it’s a game changer. I can’t do it. I’m not taking that job.’ Today, things are really, really different.

“Some people really want pet insurance. Some people say, ‘I need help repaying my student loans.’ You’ve got to offer personalization of benefits to employees. That’s the most effective way to attract new staff.”

“Think about this,” he went on, gesturing at Bob Borawski, the agency’s president. “Five years ago, if Bob walked in here and said to all of us, ‘hey, I just want you in the office on Tuesday, Wednesday, and Thursday, and you can stay home on Monday and Friday,’ he’d be a hero. Today, post-COVID, you say to your employees, ‘hey, we want you in the office on Tuesday, Wednesday, and Thursday, and you can stay home Monday and Friday,’ they’re like, ‘no way — we have to do what?’ It has drastically changed.”

Ebner said employers can no longer neglect the overall employee experience and employee value proposition, or, as she put it, “what are you going to give employees in exchange for what they do?

“That has become much more personalized,” she noted. “Some people really want pet insurance. Some people say, ‘I need help repaying my student loans.’ You’ve got to offer personalization of benefits to employees. That’s the most effective way to attract new staff.”

Allison Ebner

Allison Ebner says employers can no longer neglect the employee value proposition.

That said, Ebner went on, employers must consider several factors: the state of their industry, what fiscal shape they’re in, and how aggressive they want to be competing for talent. Those are reasonable, bottom-line considerations. But they become more complicated at a time when employees increasingly understand their value — and want to be compensated for it, in ways that go beyond the paycheck.

 

Wants and Needs

Daboul said it’s not a one-size-fits-all equation when it comes to crafting a benefits package that works for a company’s bottom line but still satisfies — and, just as important, attracts — employees.

“A lot depends on the client size,” he said. “If we’re engaging with a 10-employee client, it’s quicker. I don’t want to say it’s more transactional for them, but if I have 10 employees, I just need to get something in place. I want medical, dental, vision, and a life policy. I don’t want to say it’s easy, but it’s a different engagement.

“A lot of our clients are larger clients,” he went on, and with those employers, it’s important to sit down and build a comprehensive benefits strategy — and not just talk about it once or twice a year, but regularly discuss changing situations.

“We look at the population and do risk analysis on that population, based on the changing demographics, aging, so many different things. And we take the financial condition of the company into consideration too. How are they doing? Times have been tough for some companies; they’re laying off. Is the benefit package OK? Is it secure? We look at funding.

“Employers are looking at every avenue to accomplish three key things: make sure their expenses stay down, make sure they create a benefit package that helps them recruit and retain, and make sure the benefits are incredibly competitive.”

“So, with anything to do with the benefit program,” he went on, “it’s not just the product, but, strategically, where do you want to be this year? Where do you want to be five years from now? Those are the conversations we try to have with our clients.”

That said, Daboul agreed with Ebner that clients’ strategies around “core benefits,” as he called them — medical, dental, group life, and disability — haven’t changed much, though fewer companies are pushing to add life and disability these days. As for health insurance, the big change for employers is rising costs, particularly in this region, where a few large insurers dominate, and the lack of competition drives prices up.

As a result, employers have to decide how much to pay into a health plan and how much their employees will pay, in addition to options like higher deductibles, health savings accounts, and self-insurance.

“There are things we wouldn’t have seen five, 10, 20 years ago,” he said. “I mean, they were in the market, but when I started at MassMutual as an underwriter in 1987, I would have been fired if I self-insured a client under 500 bucks. You just wouldn’t do that.”

At the end of the day, he explained, “employers are looking at every avenue to accomplish three key things: make sure their expenses stay down, make sure they create a benefit package that helps them recruit and retain, and make sure the benefits are incredibly competitive.”

It can be a tough balance, but creativity and flexibility can help. Remote and hybrid work options, as well as generous paid time off, can appeal to a sense of work-life balance. Meanwhile, Ebner said, many employers have turned to spending accounts targeted to specific benefits — say, $1,000 per year for wellness expenses such as gym memberships and fitness equipment, or $1,000 for learning and development, such as classes or training events that the organizaion pays for.

“Lifestyle accounts have gained in popularity because they allow employees to choose what they want to spend it on, and that delivers a personalization of benefits,” she noted. “Again, we’re seeing employers re-evaluate and continuously revamp based on the value proposition and the fiscal state of the organization, which is affected heavily by things going on in the market. If they’re taking a conservative approach to the recession conversation, they’re going to maximize the benefits they do have.”

Kim Adams, a Vermont-based senior account manager at OneDigital, a national insurance, financial services, and HR platform, wrote recently that personalization and malleability have become more important in the world of benefits.

“The American workforce is currently home to five distinct generations working shoulder-to-shoulder,” she noted, and a generous 401(k) match may not be as valuable to recent college graduates bogged down with student loans, while a Gen-X employee may choose to decline healthcare coverage because their spouse has a richer plan, resulting in the company spending much less on their benefits than for most other employees.

“To combat this uneven distribution of benefits resources (and perhaps unintentionally ageist outcomes), employers may find it helpful to reconceptualize benefits as a malleable pool of resources that individual employees may allocate according to their specific needs,” Adams continued, noting options ranging from pet insurance to paying to attend a conference. “This personalized approach to benefits can effectively foster more equitable outcomes, boost employee morale, and broadcast a positive corporate culture.”

Daboul also noted the shift toward non-traditional benefits like pet insurance, tuition reimbursement, and identity-theft protection, and added that traditional products like 401(k) accounts and long-term-care insurance may be on the rise due to projections about the life expectancy of younger generations.

“I was listening to a podcast the other day,” he said, “and they’re projecting that kids being born today will have a life expectancy of 105.”

 

Give and Take

Even pre-COVID, Daboul said, the benefits calculus was changing at many companies. Now, the conversation can’t be avoided.

“As an employer today, thinking about my benefit strategy, what’s going to be my platform? How am I going to deliver the benefits to everybody? Who do I include? Because now I have contractors, I have part-time employees, I have seasonal employees. It’s drastically different, and the demographic you’re now delivering it to is a very different demographic. It’s a younger demographic, and they’re not as connected or committed to the employer.”

Ebner said the impact of the Great Resignation has eased up a little — EANE members are saying it’s not a crisis to the degree it was last year, toward the end of the pandemic, when businesses were trying to fully ramp up — but that trend could be temporary.

“And it could continue to be a problem for us, particularly in the Northeast, where we’re seeing the demographic numbers drop on a consistent basis. We don’t have as many workers available; the younger workers are leaving for greener pastures west and south. Employers are feeling that the relief is a temporary situation. So they have to focus on workplace planning — they have to have a plan in place for where to find help.”

The key, Ebner said — at least on the benefits side — is flexibility, as well as communication.

“Know your organization, and, if in doubt, ask the employers what they’re looking for in benefits. Make sure you’re working with a benefits broker that you trust, that’s bringing ideas to you and asking your employees about benefits. Take a survey; maybe they’re looking for things that you don’t anticipate. It’s always good to ask and consider any ideas they want to contribute.”

After all, a happy employee is a retained employee. These days, that’s a valuable commodity well worth the investment in the right package of benefits.

What Employers Need to Know About Workers’ Compensation

By Contributor
Insurance

Avoiding a World of Hurt

By Encharter Insurance

 

If you are an employer in Massachusetts with one or more employees, workers’ compensation is a mandatory business-insurance coverage. An employer may be an individual, a partnership, a corporation, or any other form of ownership that has employees. Failure to carry workers’ compensation coverage can result in an immediate stop work order and fines for every day that no coverage was available.

Besides being the law, here’s why you need it: workers’ compensation is essentially a no-fault system designed to protect both employers and employees should a workplace injury or illness occur. Your workers’ comp insurance policy would cover payment for medical care related to the employee’s injury, and would pay wage-replacement benefits, also called indemnity payments. In exchange for these benefits, workers’ comp, rather than the courtroom, becomes the employee’s exclusive remedy.

Individual states have jurisdiction over their own systems, so specific regulations and benefits vary by state. In Massachusetts, the Department of Industrial Accidents (DIA) manages the workers’ compensation system, adjudicating any disputes or appeals that arise. Meanwhile, the Massachusetts Workers Compensation Rating and Inspection Bureau sets rates.

 

How Is Coverage Obtained?

Most employers secure their workers’ compensation from an insurance agent. Large employers sometimes self-insure but must pass several regulatory gating issues to qualify for self-insurance.

If two or more insurance companies decline to insure your organization, you may have to seek coverage in the Massachusetts residual market, also known as an assigned risk pool.

Workers’ compensation insurance can be canceled by the insurance company, but only for the reasons of non-payment of premium, fraud or material misrepresentation, or a substantial increase in the hazard being insured. Your insurance company would need to notify you of cancellation with 10 days written notice.

 

How Are Rates Set?

The cost of the insurance is based on anticipated loss experience and is comprised of two basic components.

Under manual premium, the cost for your workers’ compensation policy is determined by your payroll and the classification of the work your employees do. The riskier the work, the higher the rate for the class code. There are thousands of class codes set by the Workers Compensation Rating & Inspection Bureau (WCRIB) in Massachusetts.

Under modified premium, once you have purchased workers’ compensation for two years, if the sum of the premiums for two years is $11,000 or more, your policy will be subject to experience rating. Manual premium is multiplied by an experience rating factor (or ‘e-mod’) reflecting your specific organization’s loss history. Much like the experience rating system used by many states to develop auto insurance rates, a bad year will impact an employer for years to come, as three prior years’ experience are used to develop a workers’ compensation e-mod.

 

What Benefits Does Workers’ Comp Provide to an Injured Worker?

Workers’ compensation coverage provides unlimited medical expenses, lost wages (also referred to as wage replacement or indemnity), rehabilitation expenses, and dependent and funeral expenses up to a state’s limits

The amount and duration of wage replacement and medical benefits varies based on each state’s law. Generally, the injured worker faces no out-of-pocket medical costs.

 

What Are Your Responsibilities as an Employer?

• Obtain workers’ compensation insurance coverage. Failure to carry coverage can result in stop-work orders and daily fines for the uncovered duration.

• Show proof of that coverage by posting notice in a public and visible place that all employees use.

• Provide a safe workplace, as required by OSHA.

• If an employee is injured, send them for medical care. In Massachusetts, you have the option to choose the physician for the first appointment.

• Report a medical-only injury (one with no anticipated lost time) to your insurer.

• Report a workplace injury with five or more days of absence, or a death, to the Massachusetts Division of Insurance.

 

What Are Some Best Practices to
Minimize Costs?

You can lower your workers’ comp costs by working to the lowest possible e-mod. There are two variables that you should work to control: the frequency of injuries, or how many work-related incidents occur; and the severity of workplace injuries, or the duration of time away from work. Here are best practices to help control both and to help you attain the lowest possible experience e-mod:

• Maintain a safe and healthy workplace. The least costly injuries are the ones that never happen. Control frequency by setting the expectation for an injury-free workplace, training employees to work safely, requiring personal protective equipment, and conducting periodic walk-through audits. Your insurance company can often provide safety resources.

• Have a plan for point-of-injury response. A quick, caring, non-judgmental response to a work injury will help to set the trajectory for a positive outcome for all. Ensure that employees and managers know what to do if an injury occurs. Escort the injured worker to medical treatment.

• Partner with a nearby occupational doctor or medical clinic. Massachusetts allows employers to choose the first medical contact. Choose a top-quality physician or a clinic experienced in workplace injuries. Your insurance company may have a good network.

• Report injuries to your insurer in a timely manner. Early reporting is extremely important — numerous studies have demonstrated that the sooner injuries are reported, the better the outcome. Aim for same-day reporting.

• Prepare for return to work. It’s important to get employees back to work and on the team as soon as possible to help prevent disability syndrome. Plan for a transitional or modified job duties to help the employ re-acclimate and work-harden to their regular job.

A Number of Factors Have Converged to Send Insurance Premiums Higher

By
Insurance Special Coverage

Perfect Storm

Inflation ebbs and flows in unpredictable ways. The insurance world is certainly finding that out — and so are customers seeing their auto-insurance bills.

“Auto insurance hasn’t kept up with inflation over the past three to four years, and it’s finally catching up to it,” said Michael Long, CEO of Axia Insurance Services in Springfield, partly explaining why the average premium nationwide rose more than $240 in the past year, according to Bankrate.

There are plenty of other parts to the equation, of course, including the ongoing supply shortages that are generating inflation on everything that goes into cars, from materials to computer chips to labor.

In fact, used-car values in 2022 were 37% higher than they were previously, Long said, meaning insurance carriers that had been paying, say, $20,000 for a totaled car were now paying $30,000. Eventually, that was going to be passed to customers.

Bill Grinnell, managing partner of Webber & Grinnell Insurance, agreed. “A few things are driving automobile prices; one is supply-chain issues and a lack of supply of replacement vehicles and parts, and the increased costs of all that.”

As a result, he went on, “your collision claim that might have cost a couple thousand dollars pre-pandemic is now $3,800. It’s significantly more, and the insurance has kind of trailed that inflation. First the cost of the replacement vehicles and parts go up, and that’s reflected in the financial statement of the insurance company, and they need to react and bring rates up. It’s not a leading edge, but a trailing edge, but there’s an inflationary factor there.”

And it’s not just auto insurance. On the home-insurance side, the cost of building materials has risen sharply over the past few years, and supply shortages and lag times still beset the construction industry. Meanwhile, contractors dealing with those issues and also a workforce crunch aren’t able to take on as many jobs as they’d like.

Bill Grinnell

Bill Grinnell

“The cost to build a home three years ago might have been $175 per square foot, and now it’s $275 per square foot. If you’re insuring a home that was worth 300,000, now it’s $400,000.”

“The combination of those two factors have driven up the cost of repairs, and that’s reflected in increased claim payments. So insurance companies need to adjust their rates to afford these claim payments.”

The other huge factor is the dramatic rise in home values over the past two years, another supply-and-demand metric. “You’re required to insure your house to an educated, calculated measurement of its true replacement value,” Grinnell said. “And the cost to build a home three years ago might have been $175 per square foot, and now it’s $275 per square foot. If you’re insuring a home that was worth 300,000, now it’s $400,000.”

Whatever the reason — and, obviously, there are many — insurance customers are experiencing more pain than usual in their monthly premiums. While there are ways to reduce the hit, the key economic factors influencing those increases will continue to linger, at least in the short term.

 

Up, Up, and Away

Plymouth Rock Assurance recently created an infographic that showed customers why home and auto rates are rising.

On the home side, it listed a worker shortage (the construction industry is down 200,000 trade workers); supply-chain shortages and delays with everything from asphalt shingles and piping to copper wire and drywall; lumber and other material costs up more than 50%; and increased operating expenses for energy, transportation, storage, and more.

On the auto side, higher costs are related to chip shortages; a technician shortage driving labor costs up about 6%; a shortage of parts in repair shops causing delays, higher demand, and higher repair prices; and a still-low vehicle inventory on many lots, inflating the sticker price of cars — and their replacement value.

Michael Long

Michael Long

“Not all insurance companies are created equally. Whether it’s the way they handle claims, the way they handle billing, the way they handle cancellations after a loss or two losses, all those things need to be discussed with an agent because not all contracts are the same.”

“It’s a challenging time for all of us,” Long said. “When we talk to clients, last year’s rates were up about 15% on the auto side, and we’re expecting another 8.4% this year.”

Some of the cost factors are unexpected — for example, glass replacement. “With glass claims, it used to be a couple hundred to replace a windshield. I’ve seen them as high as $2,400 because of all the information you get from the sensors in the windshield.”

Then there’s driver behavior. Long noted that accidents were up 7% in 2022, and insurance companies have never seen the volume of lawsuits they’re dealing with.

Grinnell agreed. “The results are worse for insurance companies. The severity of accidents is up, and that’s driving up the cost of the insurance, too.”

There are only so many ways for customers to reduce insurance costs, and some of them are common-sense.

“First, don’t have a claim. Drive carefully,” he said. “Claims really impact your premium quickly, so drive safely and don’t have motor-vehicle violations; don’t get a speeding ticket.”

Paying bills on time helps as well, he said. “There are so many hidden factors that none of us understand, even at the agency level, that go into ratemaking these days, but late payments and being consistently behind and getting cancellation notices is a sure way of having your premiums go up. So pay your bill on time and even enroll in automatic bill payment.”

While it’s important to have adequate coverage, Grinnell said people with older cars they might not be driving for much longer may opt out of collision coverage. He did just that with a 12-year-old car he owns but doesn’t drive that much, and it saves him about $450 per year.

Long said he talks to clients all the time about raising their deductibles. “If you currently have a $500 deductible, maybe look at a $1,000 deductible. If its $1,000, maybe $2,500. We’re regularly quoting $2,500 deductibles,” he noted. Meanwhile, “if a tree comes down, and it’s a $500 loss, absorb it, and pay it in full.”

Carriers also offer any number of discounts, from safe-driver and good-student benefits to discounts related to involvement in organizations ranging from the Pan Mass Challenge to the Massachusetts Golf Assoc. “There’s a Red Cross discount; if you contribute $25 to the Red Cross, you get 5% off your insurance. So you’re helping the community and saving money on insurance. Everyone wins with that deal.”

 

Weather or Not

The home-insurance market has been buffeted by a series of costly weather events, from hurricanes in Louisiana and Texas to tornadoes in the Midwest to fires in California. Insured losses from natural disasters routinely top $100 billion per year these days, and Long said $20 billion of that in 2022 was in auto claims alone.

As noted earlier, the cost of lumber and other building materials (up 33.9% in 2022) and labor (up 27%) are already causing insurance companies to play catch-up, and weather and climate events are just another challenge to deal with.

“It’s been a funny year for homeowners,” Grinnell said. “Property rates were certainly affected across the country due to some of these climate changes and weather patterns, the big windstorm losses.”

He noted one “big freeze” day last year that wound up affecting the region’s home-insurance carriers. “It was one of the biggest lost days on record. Pipes burst, and those are expensive claims. Generally, that’s not helping our region at all.”

Long advises people to be careful when switching carriers due to rising rates because the new carrier might not have made the same inflationary adjustments, and the customer will just have to face that all over again — while possibly losing benefits like accident forgiveness.

“Not all insurance companies are created equally. Whether it’s the way they handle claims, the way they handle billing, the way they handle cancellations after a loss or two losses, all those things need to be discussed with an agent because not all contracts are the same.”

On the other hand, Long said customers should absolutely stay in touch with their agent. “How often do you review insurance with them? Every year is not realistic, but every two to three years, you should be getting a call from your agent: ‘hey, let’s talk about what’s going on, and any new coverages out there.’”

After all, people still need to have enough coverage in case the worst does happen. And with home values what they are now, a total loss could be extra catastrophic if the coverage is not in line with that.

“The biggest investment people have is their dwelling. So, young people may have the time to make up for a disaster, to build equity in their house if they lose it,” Long said. For older homeowners, inadequate coverage for a loss could be a real problem.

The bottom line? Insurance costs money, and even more so this year, as customers should expect premiums to rise another 8% to 10% for both home and auto, Long said.

But when disaster strikes — even a small disaster, like a burst pipe or a sideswiped car — it beats not being covered.

The Dowd Agencies Expands Organically and Through M&A

By
Current and future leaders at the Dowd Agencies
Insurance Special Coverage

Putting a Premium on Measured Growth

Current and future leaders at the Dowd Agencies

Current and future leaders at the Dowd Agencies, from left: Evan Dowd, account executive; John Dowd Jr., president and CEO; Dave Griffin Jr., senior vice president; and Jack Dowd, vice president of Personal Lines.

There’s a framed picture of downtown Holyoke on one wall of the conference room at the Dowd Agencies — downtown Holyoke circa 1870.

The view is looking west along Dwight Street by the first-level canal. City Hall, prominent in the upper-left corner, looks … exactly as it does today. The other side of Dwight Street, not so much — most of the buildings seen in the image have been gone for decades. For perspective, a horse-drawn carriage is moving east down the hill.

John Dowd Jr. said the picture was owned by a long-time client who offered it to him after Dowd repeatedly raved about it. He accepted the offer and gave the picture a prominent home — across the conference room from another framed photo, this one of the insurance company’s founder, James J. Dowd, who went into business just a few decades after that picture of downtown was taken.

Together, the pictures provide some needed perspective — about time, Holyoke, the company, change, what hasn’t changed — and how they all come together. And the juxtaposition of all this will come into even sharper focus in 2023, when the agency, which Dowd claims is the oldest family-owned insurance agency doing business in the Bay State, celebrates its 125th birthday.

“We want to continue to grow, but want to make sure we’re not growing too quickly; we don’t want to get over our skis, as we like to say.”

There hasn’t been much hard planning about how to mark that milestone, he said, adding that he and others will pick up the pace in the coming months and put together some events and programs, as they did for the company’s centennial in 1998.

“We have a few things we’re planning that are in the works,” he said. “We’re trying to do some things that involve the community; overall, it’s an opportunity for us to say ‘thank you’ to the community for supporting us for 125 years and through five generations. That’s an important ‘thank you,’ and we’re thinking long and hard about what we’re going to do.”

In the meantime, the company is taking steps to ensure that it can continue its long history as an independent agency, said Dowd, noting, for example, the latest in a series of recent acquisitions that provide needed size and flexibility at a time of continued consolidation in the insurance industry.

Just last month, the firm acquired the Ideal Insurance Agency in Ludlow, which, like many smaller, family-owned agencies in the area, became available for one of many reasons, ranging from COVID-19 to lack of a clear succession plan to the inability to effectively compete in a market increasingly dominated by larger firms.

photo of downtown Holyoke, circa 1870

This photo of downtown Holyoke, circa 1870, has earned a spot on the wall in the conference room at the Dowd Agencies.

This was the third such acquisition over the past two years, coming after Dowd bought the J. Raymond Lussier agency in West Springfield and the Wilcox agency in Westfield and Feeding Hills. This expansion has given the agency much greater size, and in insurance, as in banking and most all other sectors, size matters, and it bring benefits.

“The advantages come with volume with carriers,” Dowd explained, noting that the firm is roughly 30% larger than it was a few years ago, and almost double the size it was a decade ago. “The more volume you have, the better compensation you negotiate, as well as profit sharing, services, and other perks. We’ve been able to achieve some of that volume leverage through aggregation with other agencies and through M&A.”

Moving forward, the agency will continue to look for opportunities for growth organically, and also through additional acquisitions, said Dowd, adding that it approaches this assignment with an eye toward smart growth and not taking on too much too quickly.

“We want to continue to grow, but want to make sure we’re not growing too quickly; we don’t want to get over our skis, as we like to say,” he noted, borrowing a phrase used often in business to connote getting ahead of oneself with a specific strategic initiative. “A healthy company grows organically and also through M&A. With the M&A, it has to be measured growth, but organic growth is essential — that’s boots on the ground, bringing in new clients, retaining your current clients; that’s good, healthy growth, augmented by acquisition, which comes with debt, which obviously has to measured and balanced.”

Meanwhile, there are other matters to consider, said Dowd, including succession planning for this agency, something that is obviously taken seriously at a company that has been around this long, covets its independence, and wants things to stay that way.

For this issue and its focus on insurance, BusinessWest talked with Dowd about … well, everything conveyed by those two photos in the conference room.

 

Cover Story

Dowd told BusinessWest that the phone calls come maybe once a week, or five or six times a month on average.

They’re from representatives of private-equity firms who want to know if Dowd Insurance might be for sale, and, if so, under what circumstances. He tells them ‘no,’ and in a polite way — at least the first time they inquire.

“I’ll usually have one conversation with them and let them know that we’re not interested in selling and are happy to stay the way we are. And then when they call the next month with the same question, my patience starts to wane, and I start to wonder about how obligated I am to answer every email and every phone call, especially when I’ve already talked to them and told them my plan.”

“They are relentless,” said Dowd of those on the other end of the phone. “I’ll usually have one conversation with them and let them know that we’re not interested in selling and are happy to stay the way we are. And then when they call the next month with the same question, my patience starts to wane, and I start to wonder about how obligated I am to answer every email and every phone call, especially when I’ve already talked to them and told them my plan.”

These days, there are even more people calling and asking about the agency, he noted, and that’s because of those acquisitions over the past few years and the scale they generate.

It’s a somewhat minor annoyance, and at the same time a reminder of the agency’s track record for success, he said, adding, again, that he is polite, but only to a point.

Dowd has other matters to occupy his time, he noted, adding that, overall, the firm is still trying to make its way all the way back to where it was before the start of the pandemic, especially with “behind-the-scenes” work, as he called it, when it comes to quality, efficiency, and serving clients.

“We have a quality team that evaluates what we do and how we do it,” he explained. “They would get suggestions every month from anyone on the staff — ‘here’s an area that I think we can look at and get better at’ — and the quality team would research and come to us with suggestions for developing a plan. That’s an example of an area where we lost some momentum.”

Some momentum was also lost when it came to connecting with potential new customers, he went on, adding that this put far greater emphasis on growth through acquisition, which is exactly what the company did.

“From a revenue standpoint, we were flatlining — if we held onto everything,” he explained. “And we didn’t hang onto everything because businesses were closing. It was a scary time because there was so much uncertainty. But then came the M&A opportunity, and we looked at it and said, ‘this is not a great time to be taking on some debt, but we think this is prudent.”

John Dowd Jr., seen here next to a photo of the company’s founder, Joseph Dowd

John Dowd Jr., seen here next to a photo of the company’s founder, James J. Dowd, says the Dowd Agencies targets controlled, ‘smart’ growth, both organically and through acquisition.

Elaborating, he said the agencies that came into consideration were good fits, culturally and otherwise, and under normal circumstances, they would be consider logical acquisitions. The circumstances weren’t normal, but the times dictated some aggressive action.

“Sometimes you’ve got to stick your chin out there and, when opportunity knocks, take advantage of the opportunity,” he said, adding that this is just what the firm has done.

In doing so, it has put itself in and new different position — an independent agency of considerable size — and it is determined to sell both of those qualities.

“We’re a good-sized agency, certainly in Western Mass., and the only one of our size that is still independently owned — not owned by one of the big guys,” he said. “We like that distinction, and we use it to our advantage. We’re totally local — not only do we live and participate in our community here, we’re also locally owned, and profits go right back here in to Western Mass., and not Chicago or anywhere else.”

But with that independent status comes the challenge to compete with those often much larger concerns, Dowd explained, adding that this challenge, as in banking and other sectors, is very real and becoming more stern with each passing year.

“We’re at a point now where getting to the next level requires a higher level of sophistication in just about every area,” he said. “Obviously, technology is huge because it creates the efficiencies we need. Meanwhile, the labor market is extremely difficult and challenging right now.

“The investment in technology and the way we staff ourselves, the levels of management … all of these important areas have to be looked at and adjusted accordingly,” he went on. “You can’t keep doing things the way you were when you were half the size. You have to be forward-thinking in this business; you have to be looking ahead and be prepared for what may come, and you know the unexpected will happen. You have to be nimble enough to be able to adjust.”

 

Prudent Policy

As he looks forward, Dowd sees the agency doing what it has been doing all along and especially over the past decade or so — seeking to grow organically, but also looking for opportunities to grow through acquisition and expand geographically.

The agency currently has nine locations, all in Western Mass., but it is exploring options well beyond this area code, he noted.

“We’ve looked at Northern Connecticut, we’ve looked at acquisitions in Vermont and New Hampshire, and we’ve also looked at Eastern Mass., toward Worcester, working our way in that direction,” he said, adding that, while the agency serves clients in those areas and others, including Boston and New Jersey, it does not have a physical presence in those locations, but could attain some if the conditions are right.

“In our business, it’s about where your network of contacts takes you and what your appetite for challenge is,” he told BusinessWest. “Do you want to do what it takes to be regional and available and able to support services? You just have to be realistic that you can do what you say you can do.

“We’re careful and selective with regard to companies where there’s some distance,” he went on. “But we’re looking at some relationships in New York right now where we could possibly have an ofice and be able to operate similarly, but on a smaller scale, to what we’re doing here.”

Overall, there are a number of ways to get to the proverbial next level in terms of size and revenues, he went on, adding that, while remaining independent is the preferred route, the agency will consider all its options. “We’re evaluating what steps we need to take in order to continue to grow and build the company.”

Returning to those phone calls he gets from the private-equity firms, Dowd noted, again, that he doesn’t take many of those calls anymore.

“I feel bad about that, but not too bad,” he explained. “I get a lot of messages — they call and they say they’re from such and such firm, and he’s calling again; I talked to him a year or two ago and told him I’ll call if anything changes.”

Nothing has really changed, at least on that front, he went on, adding that there has certainly been change with regard to the company’s size, reach, and position among area agencies.

Over the course of 124 years, many things have changed, but the most important ingredient hasn’t — this is still an independent, family-owned agency.

And as it prepares to mark another important milestone, that’s a quality worth celebrating.

 

George O’Brien can be reached at [email protected]

Massachusetts Residents Cite Costs as Primary Healthcare Concern

By Contributor
Insurance

Price Pressure

The cost of healthcare, not the COVID-19 pandemic, is now the top healthcare concern facing residents of the Commonwealth. Massachusetts residents reported that only inflation and the cost of housing were greater challenges than the cost of healthcare, according to a new survey commissioned by Blue Cross Blue Shield of Massachusetts.

The survey, conducted by Beacon Research, also found that the cost of care resulted in skipped or delayed healthcare for nearly half of Massachusetts residents.

“As we emerge from the COVID pandemic, we conducted this poll to better understand what Massachusetts residents believe are the key priorities in healthcare.”

“After two years of intense focus on COVID, cost is again the primary healthcare issue facing Massachusetts residents,” said Chris Anderson, founder and president of Beacon Research. “Consumers strongly believe that this is an urgent issue that health plans, the government, and hospitals should be working to address.”

Key findings from the survey included:

• Massachusetts residents are three times more concerned about cost of care over quality, access, or the COVID-19 pandemic;

• Healthcare costs are challenging family finances for nearly two-thirds of Massachusetts residents, trailing only the daily pressure of gasoline and food price increases;

• Eighty percent of Massachusetts residents think it is highly or extremely important to take action on healthcare costs;

• When asked who they think should be doing more to control healthcare costs, residents cited health plans (87%), government (85%), and hospitals (81%);

• Massachusetts residents are putting off needed healthcare (42%) and prescriptions (26%) because of cost; and

• Younger and affluent residents are the most likely to think care is unaffordable.

“As we emerge from the COVID pandemic, we conducted this poll to better understand what Massachusetts residents believe are the key priorities in healthcare,” said Jay McQuaide, senior vice president and chief Communications officer at Blue Cross. “There is a clear call to action in these survey results for those of us in healthcare to do more and to act with greater urgency to address the unsustainable rise in healthcare costs.”

Blue Cross reported that it is working with others in healthcare to responsibly moderate the growth in healthcare spending. Among the steps the company is taking are collaborating with physicians and hospitals to achieve contracts that reflect the community’s serious concerns related to healthcare costs; advancing next-generation, value-based payments; better supporting members managing chronic conditions; and managing pharmacy spending — the company’s most-used benefit — to ensure members are getting high-quality, clinically appropriate prescription drugs.

 

How to Save on Your Teen Driver’s Car Insurance

By Contributor
Insurance

Counting the Cost

By HUB International New England

 

When do you need to list your teen driver on your car-insurance policy, and how can you make this additional coverage fit in your budget?

It is certainly not inexpensive to get car-insurance coverage for a new teen driver. When a teen driver is added to their parent’s policy, the typical insurance premium for a one-car family is likely to increase by 40% to 50%. If you’re a multi-car family, then you will probably see your insurance rates rise even higher. And if you’re opting to reward your new driver with a car and expecting them to secure their own insurance policy, you should prepare yourself — or your teen — to pay at least a couple thousand dollars in car-insurance costs.

So we understand why parents might want to hold off on getting auto insurance for their teen driver until absolutely necessary. However, even if you think your teen will only occasionally be borrowing the family car, the fact is they are now a licensed household member. As such, if you do not add them to your current policy as a covered driver, you risk being denied by your insurance carrier for any future claims, having your coverage terminated, or both.

In addition, should you decide you want to shop around for a better car-insurance rate, you will also need to make sure your teen driver is listed on all of your insurance applications so that you get an accurate quote and adequate coverage.

 

Six Tips for Saving Money

At HUB International, we have several strategies for saving money that we discuss with our clients:

• You can take advantage of discounts such as Good Student, which rewards teens with a grade point average of ‘B’ or higher. If your student is eligible for this discount, it may save you hundreds of dollars on your car-insurance premium.

• Completing defensive-driving courses can also earn you and your teen significant monetary credits toward your policy premium. Even more, your teen will hopefully drive away from this course with a better understanding of how to keep safe behind the wheel. Since even minor fender benders can drive up your insurance costs, it’s critical that your teen — as well as all other family members listed on your policy — do their best to keep their driving record clean of any accidents and moving violations.

• Investing in accident forgiveness can limit the financial impact in the event your teen does get in a car accident. Since 16-year-olds have higher crash rates than drivers of any other age, we recommend that our clients with teens strongly consider this endorsement, which can cancel out the surcharge points that are typically assessed by your insurer after an accident.

• Sharing a vehicle with your teen rather than giving them their own vehicle may allow you to classify your youngster as an occasional driver rather than the primary driver, which is another excellent way to keep your insurance rate lower. If you decide, however, that your teen will need a car of their own, it may make financial sense and keep your insurance costs down to assign them as the primary driver of the family vehicle that is the least expensive.

• Are you adding a vehicle to your household for your teen to drive? Look for a car with safety elements, such as anti-lock brakes, airbags, and anti-theft devices, as insurers will often reward you for having these features with lower car-insurance rates.

• Monitoring your teen driver with today’s technology can not only help you keep an eye on your teen when they are on the road, but also earn you discounts on your car-insurance premium. Some insurers are now offering devices to parents that can be installed under a car’s dashboard and create a report card of your teen’s driving behavior. Information may include the number of miles the car covers, how fast your teen is driving, the hours the car is on the road, and how often your teen slams the brakes. Insurers with this program are providing discounts ranging from 15% to 30% to drivers who achieve predetermined safe-driving benchmarks.

• Raising your deductibles lowers your premiums. However, this is only a smart choice if you are comfortable knowing that you might end up having to pay a larger share of costs for an accident out of your own pocket.

 

What Are the Options?

The team at HUB International has helped thousands of families across New England adapt to having a teen driver in their home. We know that your child’s newfound independence is exciting but may also cause you some stress and anxiety. But we can help make sure you and your teenager are insured properly.

While there is a natural desire to look for ways to cut costs on your insurance as your teen becomes a full-time driver — and drives up the cost of your premium — it’s definitely not the time to decrease your coverage limits or eliminate optional coverages. In an effort to save money, you could leave your teen and all other drivers in your home dangerously underinsured and at financial risk should they be involved in an accident.

Instead, it’s an excellent time to review your current auto policy with your insurance agent. We strongly recommend that our clients with teens carry more coverage than the state’s minimum required auto-insurance levels and that they opt for additional coverages such as collision and comprehensive. We also want to make sure that they are taking advantage of commonly overlooked car-insurance policy options that can save them money, stress, and time, like Bundle & Save, Disappearing Deductible, and Loan/Lease Gap Endorsement.

Finally, because teen drivers are, unfortunately, an accident-prone age group, once your child gets behind the wheel, your liability risk inevitably increases. So it’s not a bad idea to consider adding an umbrella policy to your insurance solutions for those worst-case scenarios where your teen is in an accident and is found at fault for bodily injuries to others or damage to other people’s property. For a minimal investment, this type of coverage may give you the peace of mind that your savings, investments, retirement accounts, and your family’s financial future are protected from an accident-related liability claim.

HUB, along with our partners, is committed to improving driver safety. Nationwide, well over half of new drivers crash in their first two years behind the wheel. Safety Insurance has partnered with the In Control Family Foundation to improve driver safety in Massachusetts. The In Control program offers a half-day, hands-on driver skills-development program that teaches drivers to avoid the most common and serious collisions. In Control’s crash-prevention training course has been shown to reduce crashes by new drivers by 70%.

With Safety Insurance, you can save 5% on your auto insurance by completing In Control’s crash-prevention training course, as well as saving more than 70% on the course itself.

Contact HUB for all of your insurance needs, and for additional information on programs such as In Control, call (833) 462-2554.

Are Flood Zones Reliable? And Are You Covered?

By Contributor
Insurance

Water, Water Everywhere

By Peter Normand

 

According to a 2020 report from the First Year Foundation, there were 336,000 properties in Massachusetts alone that were at some level of risk for flooding. This number is 65% higher than the existing flood maps indicate.

The heavy rains of last summer and the claims that followed got me wondering what the future holds. We are beginning to feel the impacts of climate change in more severe and less predictable weather. How valid are our flood maps? What can property owners do to protect their property in an uncertain future? If you haven’t talked about flood insurance with your insurance agent yet, now is the time.

Banks require flood insurance on all properties that are located in a flood zone per existing flood maps. Why do they do this? Commercial and homeowners policies exclude flood as a cause of loss. Nearly all of my commercial insurance clients who have flood insurance have purchased it to satisfy a loan requirement. Nearly everyone else is rolling the dice — most stating that, since they aren’t in a flood zone, it’s not an issue. After a very wet summer of 2021, however, the conversation is changing, even if this summer has been drier.

Let’s start off by defining what a flood is. Floodsmart.gov notes that “flood insurance covers losses directly caused by flooding. In simple terms, a flood is an excess of water on land that is normally dry, affecting two or more acres of land or two or more properties.” Just because there is water in your basement doesn’t mean it’s a flood. In fact, water seeping into a foundation without the above definition being met would not be covered by flood insurance. When determining whether or not there is coverage, the cause of the flooding that damages your property does matter.

On the market side, there are more options than ever, with more carriers offering a flood product. This leads to more flexibility for our insureds. For example, some markets allow for multiple properties on a single policy, some carriers offer limits in excess of NFIP (National Flood Insurance Program) limits to adequately insure the value of the property, there are replacement cost (RC) and actual cash value (ACV) valuations, and more competition has created market pressure on premiums, especially for properties outside of flood zones.

With changing weather patterns and other unknowns, it’s reassuring to know that there are options. If you haven’t considered flood insurance in the past, or have been putting it off, now is the time to talk to you insurance agent. There is an expanding market with options to meet your specific exposures and needs.

 

Peter Normand is a Commercial Lines account executive and RiSC consultant with Webber & Grinnell Insurance.

Failing to Prepare for Cyberthreats Can Prove Costly

By
Insurance Special Coverage

Into the Breach

 

 

 

When hackers gained access to a large retailer’s computer network through scam emails to employees, more than 900 store locations were affected, and 2 million customers were impacted before the company was alerted by a security blogger six months later. That led to several class-action lawsuits against the company, attorney generals in multiple states opened investigations, and the affected credit-card companies issued fines.

In another case, a ransomware attack blocked all access to a regional accounting firm’s computer system, and also deleted files. After ransom was paid, it took several days to restore the applications and recover deleted files from a backup. As a result, the firm was unable to meet tax-filing deadlines, causing brand and reputation damage.

Then there was a company that provides technicians to a laptop manufacturer’s repair center. While a young woman’s laptop was in the custody of technicians at the center, her Facebook account was hacked, and several sexually explicit photos were posted to it. She negotiated a quick multi-million-dollar settlement with the laptop manufacturer, which demanded, in turn, that the staffing company compensate it for the privacy breach.

These are only three of many real-life cases detailed by the Hartford Financial Services Group as warnings that companies of any kind and any size are vulnerable to cybercrime.

“That’s where insurance comes in, to mitigate the cost of a claim,” said Chris Rivers, senior vice president of Phillips Insurance Agency in Chicopee. “Small businesses sometimes feel they have less risk than larger ones, but that’s not the case. Anybody can be hacked and be held ransom or have data get out.”

Breaches can come at all severity levels, he noted, from a simple Facebook hack to an attack that steals credit-card information or Social Security numbers from tens of thousands of consumers.

Chris Rivers

Chris Rivers

“Small businesses sometimes feel they have less risk than larger ones, but that’s not the case. Anybody can be hacked and be held ransom or have data get out.”

The Hartford reports that the average cost of a data breach in 2020 was $3.86 million, and the U.S. will account for half of all breached data in the world by 2023, when an estimated 33 billion records will have been stolen by cybercriminals.

One of the more severe types of attacks, those involving ransomware, take place every 11 seconds, and the average ransom payment increased to more than $233,000 in 2020. Such attacks result in an average of 19 days of business interruption and downtime.

Again, it’s not just large companies at risk of cyberthreats of all kinds, said Jack Dowd, vice president of Personal Lines and a commercial risk consultant for the Dowd Insurance Agencies in Holyoke.

“The percentage of small businesses that are targeted is significant,” he noted. “A lot of the people doing this know that a lot of small businesses don’t have the infrastructure in place that a larger business does and are more susceptible to attack, and that’s why they’re attacking them.

“It’s important to know, if you’re taking credit cards or you have a system where you store any type of sensitive information with clients, you’re vulnerable,” he went on. “We’ve seen them target people who wouldn’t think they’d be typical targets, and your best course of action is to protect yourself as best you can, and that would include looking into cyber insurance.”

 

Costs Pile Up

According to the Philadelphia Insurance Companies, the average cost of a data breach is $204 per lost record, with more than half of such costs attributable to lost customers and the associated public-relations expenses to rebuild an organization’s reputation.

That’s one reason why cyber insurance policies cover two distinct classes of loss: first-party and third-party.

First-party coverages include loss resulting from damage to or corruption of electronic data and computer programs; income reimbursement during the period of restoration of the computer system; customer notification, regulatory fines and penalties, and public-relations expenses; and reimbursement for extortion expenses, among others. Third-party coverages, on the other hand, include legal liability for financial damage and privacy violations involving customers, employees, and other third parties.

“Network-security liability is a coverage that will provide defense and settlement costs in the event a third-party claimant sues the insured over a failure to secure their own computer system,” Dowd explained.

Jack Dowd

Jack Dowd

“If you’re taking credit cards or you have a system where you store any type of sensitive information with clients, you’re vulnerable.”

But he warned that these expenses can total much more than the client anticipates. In fact, insurers often include sublimits on certain specific types of losses, and it’s up to the insured party to purchase higher limits.

“A lot of insurance companies give a certain amount, say $50,000, toward notifying people they’ve been hacked. But the notification costs alone, depending on the size of the client book, could be more than that. Then there’s the cost to rebuild data, the cost to secure their network … a lot of things go into cyber insurance that people don’t always consider.”

Rivers agreed. “Within the insurance industry, a lot of carriers have thrown in some smaller sublimits that weren’t there in the past. But you can always buy more, up to what you want.”

It’s easy to see why they would. The Philadelphia Insurance Companies lists many breaches over the past several years that affected thousands of customers, like the international hacking group that gained access to the computerized cash registers of a restaurant chain and stole the credit-card information of 5,000 customers, starting a flood of fraudulent purchases around the world.

Or an employee of a Massachusetts rehabilitation center who improperly disposed of 4,000 client records that contained Social Security numbers, credit- and debit-card account numbers, names, addresses, telephone numbers, and sensitive medical information. The center settled the claim with the state and agreed to pay fines and penalties as well as extending $890,000 in customer redress funds for credit monitoring on behalf of the victims.

Selective Insurance Group relates the case of a payroll employee at a plastics manufacturing company who received a spoofed email from a scammer purporting to be the CEO, requesting that the employee send all employees’ W2s immediately. Which he did, and multiple employees reported that fraudulent tax returns were filed in their name.

This last example is a case of what’s known as ‘social engineering,’ and such phishing attempts have become more savvy and authentic-looking. “They’ve gotten a little more sophisticated in recent years,” Dowd said, which is why companies, often encouraged by their insurance companies, initiate training to reduce the chances of human error causing a breach.

 

Closing the Circle

Insurance companies provide another human element to the fight against cyberthreats, Dowd said.

“If you have a cyber policy, you have a place to go, a place of refuge, if you will. If you ever go to work Monday morning and your system is hacked and someone is demanding a ransom payment, you don’t know where to begin. But if you have cyber insurance, you can call the company; they’ve been through this many times, and they’ll tell you exactly what to do. It gives you a starting point you wouldn’t have otherwise.”

When quoting a policy, he added, an agency might run a test of the company’s system and let it know of any holes that need to be closed, Dowd added. “Even if you don’t proceed with coverage, at least you know you have those entry points, and you can pass it on to a person able to close those gaps for you.”

Insurers may also supply clients with training and quarterly check-ins, he added. “They’ll have your employees take these quizzes that will supply them with real-life incidents that happen in the cyber world, and have them identify the errors or signs that they were fake or malicious; they can actually give you some real-life practice on that.”

Rivers said many insurers provide an online help center, but many clients don’t use that resource, instead hiring a computer specialist to make sure the company has the correct virus and malware protection and that there are no gaps in security, in both the hardware and human realms.

However they delegate it, keeping up to date with the latest threats, strategies, and technology is critical, he added. Even though there’s a cost associated with that, it can pale compared to the cost of a breach.

“It’s something that is out there, and everyone can be impacted by it, no matter how small or how big they may be,” Rivers told BusinessWest. “The reputation of a company can certainly be impacted by it. It’s something people don’t always think about — or want to think about. They say, ‘I only have a couple computers; it can’t happen to me.’ But it can.”

 

Joseph Bednar can be reached at [email protected]

How Inflated Material Costs Affect Insurance Premiums

By Contributor
Insurance

On the Rise

By Lisa Johnson

 

You have probably noticed higher prices in many areas of your life. From gas to groceries, prices are going up, with the U.S reaching inflation levels never seen before — and the insurance industry is not immune to this trend. Across the industry in most markets and with most insurance companies, whether you’ve had a claim or not, home-insurance premiums are rising due to a variety of factors.

Many of these factors are out of your control, as well as your agent’s and insurance company’s. Many current conditions, including increased costs of material and labor, as well as an ongoing shortage of workers, mean you may see a rise in your premiums at renewal time.

Home-insurance rates are determined by the likelihood of a homeowner filing a claim and the potential risks involved. Rates are driven by numerous standard factors, including amount of coverage needed, age of the home, location, liability issues, and previous claims. Other influences caused by national trends also contribute to rates.

Why are home-insurance rates going up? The biggest cause is the rise in inflation. When prices rise, the cost of living and owning a home increases, which in turn influences home insurance rates. These rate increases are happening in insurance companies across the country.

Home-insurance premiums can be affected by influences outside of your control. Various nationwide factors are impacting the cost to rebuild homes, leading to the need for more coverage in case of a claim. Some of the trends that are driving up costs include higher material costs and supply-chain issues. For instance, materials to rebuild homes are up 26%. Labor shortages are resulting in longer construction and claims-handling times, which also impact the cost of claims.

 

Higher Material Costs

From record high prices to shortages of materials, the home-building industry has seen lengthy delays, increased prices, and a large number of postponed projects. These higher prices for construction projects, renovations, and repairs lead to higher costs for homeowners.

With the price of building materials — such as drywall, shingles, lumber, and copper wiring — up an average of 26%, homes have become more expensive to fix and replace. According to a survey by the National Assoc. of Home Builders, this is the largest single-year increase in the survey’s history. Ninety-three percent of contractors are impacted by the increased price of materials, which leads to higher replacement costs when insurance claims are filed.

 

Increased Shipping Costs and Delays

The pandemic has impacted almost every part of the global supply chain, causing shipping delays and higher prices. When shipping ports get overwhelmed and backed up, it impacts the time it takes to get materials to homeowners and the cost of delivering the materials.

From appliances to plumbing fixtures, it’s taken weeks and months longer to get building supplies, which previously had taken days to procure. In fact, 94% of Fortune 1000 companies have reported supply-chain disruptions from COVID-19.

Globally, RBC Capital Markets reported that 77% of ports are experiencing abnormally long times to turn around traffic. In fact, Freightos.com marketplace data shows that, in September 2021, China-to-U.S. ocean shipments took an average of 73 days to arrive at their final destination, 83% longer than in September 2019.

 

Higher Labor Costs

Builders often hire subcontractors who handle electrical, drywall, plumbing, and other areas of construction. With the current labor shortages, higher costs are needed to secure skilled laborers or obtain the needed materials. This, in turn, has forced home builders to factor in higher costs for construction and remodeling work.

Eighty-nine percent of contractors are having a hard time finding craft workers, and 88% of firms are experiencing project delays. Additionally, the U.S. is seeing a drop in the number of Americans becoming tradespeople. The National Electrical Contractors Association reports that 7,000 electricians join the field annually, but 10,000 retire. This shortfall results in higher prices and longer wait times for home projects.

 

Auto Insurance Affected, Too

Home insurance isn’t the only coverage impacted by current trends. Auto insurance is also experiencing increases due to national trends. Used-car prices are up 40%, the cost of labor for repairs is up, car parts are costlier and harder to obtain due to supply-chain issues, and rental car costs are up 30%. These factors and others are contributing to a rise in auto-insurance rates.

It might be time to review your home and auto policies with an agent to make sure your coverages are appropriate in the current inflationary market.

 

Lisa Johnson is chief operating officer for Amherst-based Encharter Insurance; (413) 658-3410.

 

Sources: NAHB, AGC, Accenture, U.S. Bureau of Labor Statistics, AutoRentalNews, CCC Intelligent Solutions, CNBC. All products are underwritten by The Hanover Insurance Company or one of its insurance company subsidiaries or affiliates. This material is provided for informational purposes only and does not provide any coverage.

 

Industry Trends Report Shows Signs of a Revolution in Auto Insurance

By Contributor
Insurance

Changing Rules of the Road

LexisNexis Risk Solutions recently released its 2022 U.S. Auto Insurance Trends Report, which aggregates annual market data about driving behaviors, auto-insurance shopping, underwriting, and claims to help insurers better navigate myriad evolving trends impacting the U.S. auto-insurance industry.

This year’s report analyzes 2021 data, detailing how the industry continues to navigate the aftermath of pandemic-induced supply shortages, inflation, and new driving behaviors, and provides insights for insurance carriers to help improve their workflows with an eye on streamlining consumer experience.

One of the big questions within the U.S. auto-insurance industry heading into 2021 was whether it would see a rebound to more normal driving and shopping patterns, or if the industry is undergoing a revolution in the wake of the pandemic that would compel insurers to think about the policy life cycle differently.

“The jury is still very much out on the long-term effects of these market trends impacting the auto-insurance industry,” said Adam Pichon, vice president and general manager of Auto and Home Insurance at LexisNexis Risk Solutions. “While we have seen some traditional patterns re-emerge with respect to miles driven and insurance shopping volumes, we saw another roller-coaster year due to volatile activity in claims severity, insurance switching, more serious traffic violations, and vehicle purchasing due to macroeconomic conditions.

“Add to that increasing consumer interest in telematics data and an active regulatory and legislative environment,” he went on, “and we are seeing more signs of a revolution in the industry than a rebound. Insurers who arm themselves with accurate and comprehensive data are poised to price and rate more accurately, handle claims more efficiently, and improve customer experience in the face of evolving market stressors.”

 

Another Turbulent Year

Auto-insurance shopping and new policy-growth numbers were volatile for the second year in a row, shaped largely by continued pandemic-related influences.

• Changes in driving behavior — including riskier driving behaviors such as distracted driving — created a notable shift in the driving-violation data mix reported. An abnormal rise in major speeding violations coincided with another yearly increase in traffic fatalities.

• Claims severity increased even as more normal driving patterns returned, particularly in the second half of the year. While severity of claims have increased, the number of ‘touches’ required to close a claim has not improved, with 29% of consumers reporting having to speak with three or more people to get their claim settled.

• Vehicle shortages and supply-chain issues led to reduced car sales and slowed the adoption of advanced driver-assistance systems after gains in recent years. And with fewer cars available, vehicle purchases were suppressed, which meant auto-insurance shopping was down, as vehicle purchases account for as many as one in three auto insurance shopping events.

• Miles driven, which is a strong predictor of loss cost frequency, rebounded to traditional seasonal patterns exhibited in 2019, and carriers could see a significant benefit in more accurate and frequent mileage readings from connected vehicles.

• According to a December 2021 LexisNexis Risk Solutions survey of U.S. consumers, 71% are interested in the of use telematics-enabled usage-based insurance for purposes of discounts. However, consumer adoption remains much lower, presenting a significant opportunity for both consumers and insurers.

• Changes in the regulatory environment are putting pressure on core rating variables as some states are introducing legislation designed to restrict the types of data used for risk-based insurance scoring. This could be harmful to consumers, as 85% of new U.S. consumer auto-insurance policies issued to consumers in 2021 benefited from products that leverage data and analytics.

“When you consider all the variables at play, I do think the assertion by LexisNexis Risk Solutions that we are in a revolution of sorts in the insurance industry is apt,” said Karlyn Carnahan, head of Insurance, North America at Celent. “Like no time I can ever recall, insurers are reliant on data and analytics to not only assess risk, but also to provide a more seamless experience for the customer from point of quote all the way through the claims process. Across the insurance continuum, data is oil that keeps the engine running.”

 

Considerations for the Road Ahead

We could be headed for another year of vehicle and insurance shopping volatility in year-over-year growth rates. Additionally, current economic uncertainty and continued risky driving behaviors suggest claims severity will remain high. Finally, LexisNexis Risk Solutions will continue to watch the regulatory environment closely in support of consumers and carriers.

“The insurance industry is in a critical phase,” Pichon said. “There are so many unknowns, and insurers, no matter the size, who adapt by using data and analytics to enhance their workflows and meet customers where they are will be positioned to make better, more informed decisions and gain market share.”

Sam Hanmer Is Finding Satisfaction in His Second Act

By Contributor
Insurance Special Coverage

A Policy of Purpose

After a long career growing FieldEddy (later HUB International New England) into one of the region’s most notable insurance success stories, Sam Hanmer called it quits, figuring he’d enjoy an early retirement. But he didn’t, in fact, enjoy it. So, three years later, with a renewed sense of passion and purpose, he got back in the game, purchasing two local agencies, with the intention to grow them further, with an eye toward cultivating the next generation of leadership.

By Stephen Carter

If not for the pandemic, Sam Hanmer said, he might have stayed retired.

Or maybe not.

A long stretch when COVID-19 largely shut down the world certainly didn’t add to whatever enjoyment his retirement years — which began in the spring of 2018 — were bringing him, but the truth, he admitted, is that early retirement simply didn’t suit him.

“Quite honestly, I was hanging around doing nothing every day and had a lack of purpose in my life,” said Hanmer, whose more than three-decade career in insurance was highlighted by the rapid growth of FieldEddy in the early years of this century and its acquisition by Hub International in 2014. “I said, ‘OK, I have to go do something. This is crazy; I’m too young. None of my friends are retired. I’m a golfer, but not a passionate golfer.’ So retirement didn’t sit well with me.”

As noted, COVID didn’t help — Hanmer’s bulldog, Santino, was his “pandemic dog,” a companion during those isolating months — and not even the golf courses were open for a while. Simply put, he was restless.

“I figured, I’ve got plenty of earning years left, so I went back to what I know,” he said, noting that he honored his non-compete agreement with HUB before jumping back into the insurance business. After bidding on another agency and falling short, he purchased the two locations of LeBel, Lavigne & Deady Insurance (in Chicopee and Springfield) in May 2021, rebranding them as the Rush Insurance Group. Then, in November, he bought Towne Insurance Agency in Agawam, changing the name to Towne Insurance Group; it may eventually be part of the Rush name as well.

“I got back in the business,” he said. “I needed something to do, and it’s what I knew.”

Back in the 1980s, when Hanmer graduated from UMass Amherst, his father was the majority owner of a firm known then as Field, Eddy, and Bulkley, but Hanmer didn’t go to work for him right away. When he later joined the family business, he started in sales but moved to the financial side when the treasurer suffered a heart attack and had to leave the company for some time. After his father retired in 1995, Hanmer stepped into the role of CEO.

It wasn’t long before he started to capitalize on a trend within the industry — many small, mom-and-pop operations struggling to adjust to changes and technology began looking in earnest for exit strategies — to grow by acquisition.

insurance business with a new venture

Sam Hanmer tried retirement, but it didn’t suit him, so he returned to the insurance business with a new venture

Over the next two decades, the firm acquired a number of agencies, including the Curtis and Hodskins agencies in Monson, Aliengena in Palmer, LDS in Three Rivers, Meadows in East Longmeadow, Remillard in South Hadley, Buckley Bridge in Windsor Locks, and both BPI and Lawson, Marino & Bertera in Springfield.

The 160-year-old firm, later branded FieldEddy, was still growing its footprint when it became part of the HUB International family in 2014, where Hanmer remained in a leadership role for three and a half years, then retired.

For a while, anyway.

 

A Different Perspective

Looking back to his un-retirement decision early last year, Hanmer figures it was probably inevitable, pandemic or not.

“I’m very happy I made the call to do it. I’ve had people, friends in the business, say, ‘why did you get back into this business?’ But it’s a good business, it really is, and they know it.

“But after a while, it can get old,” he went on. “So for me, taking three years off and coming back was a like a recharge. I was in the business 30-something years, and after 30 years, anything can get a little tiring. You take a few years off and realize — in my case, at least — retirement wasn’t working, and you come back with a different lens because you had three years off. So I’m excited and having fun in the business — probably more fun now than I had back in the day.”

Hanmer has navigated a number of changes in the sector, including the rise of direct writers like Geico and Progressive, who poured into Massachusetts after state regulations were changed to stimulate competition. But Hanmer, like other independent agents, has always countered that evolution by emphasizing the value of relationships in his business.

“The direct writers have captured a fair amount of the Massachusetts business, and you saw a big pitch years ago about online sales from direct writers. Now you see Geico offices popping up because they finally understand it is a relationship business. Geico’s done phenomenally; they don’t have to put offices up, but they’re starting to build offices you can walk into. And Progressive probably does 80% of their business through independent agents. People don’t know that.”

The other factor that’s been affecting the insurance world over the past 20 years — and remains a factor today — is consolidation, and there’s a place, Hanmer said, for locally owned companies in that landscape.

“Consolidation has been happening in all sectors, and that’s very much the case in the insurance-agency world,” he noted. “Everything is going to the nationals, and the local insurance agencies are dwindling. But we’re still local people.”

The main challenge is one of scale, he said, noting that the size of HUB certainly helped the former FieldEddy grow its business because of the buying power of a national firm. “And they have a lot of what I would call specialty units that focus on a particular sector. It’s powerful. It served us well.

“But I still think there are a group of middle-market buyers, smaller businesses that get lost in the shuffle with the nationals, and I think there’s a big opportunity for smaller local agencies to capture that business,” he went on. “A lot of national players actually walk away from that business. And in Western Mass., that’s 90% of businesses.”

So, against the backdrop of continued consolidation and with his accumulated years of experience, Hanmer saw an opportunity to be successful.

“It certainly was a scary thought to get back in, and come up with some capital in order to get back in, knowing that things have changed in three years — although they didn’t change as much as I thought they would have.”

Elaborating, he said he discussed coming back with friends and colleagues, and they led him to believe the business had changed quite a bit, even in the three years he was away.

“And there is change in the system environment, in the software we use, some of the peripheral things, but the actual dynamics of the business didn’t change. Once I got back in, I said, ‘this is what I anticipated.’”

It’s a landscape where relationship building and the consultative approach still matter, he explained.

“That’s never gone away. I’d rather be your consultant than your salesman. If someone buys from me, great, but if they don’t, and I’ve helped them, that’s fine too, because at some point, that will come around. Maybe they’ll talk to a friend. Even if I don’t ever get their business, that approach works. It doesn’t necessarily work quickly, but this is a marathon, not a sprint.”

He paused for a moment. “Well, I’m sprinting a little bit, because there will be retirement at some point ahead of me.”

 

Leaving a Legacy

For now, though, Hanmer is focused on growing his three offices, which offer personal, commercial, and employee-benefit lines — the latter being new for both agencies.

“My makeup isn’t to sit back. I absolutely plan on growing it through organic growth and organic sales and through further acquisitions, for sure,” he told BusinessWest. But he wants to leave his enterprise in healthy shape when that second retirement does come around — and, presumably, sticks.

“I’m hoping this time around to create something where a perpetuation might be internal instead of selling it externally to a national brand. If I can get a few young guys — and women — in here who are passionate about the business and want to keep it going, I would definitely perpetuate it internally, just create a little annunity for myself, as opposed to just cashing out. That’s the plan. Plans change, but that’s the plan.”

Bringing in young professionals is a national challenge, however.

“It’s hard. This industry is struggling to attract young people who want to be in the insurance business. It’s hard to get young people energized or even want to talk to you. They’d rather be in a dot-com; they’d rather be in a startup in Boston. There’s all kinds of things they’d rather do than sell insurance.”

One reason is that insurance isn’t an instant-gratification career, he explained.

“It’s a recurring-revenue business, which means your first few years are tough because you have to build a book of business. It’s a commission-based business, so once you build your business, you can create a recurring-revenue compensation program. It can be lucrative if you stick it out, but most people won’t stick it out because the first few years are lean. If they can manage through their first few years and have thick enough skin not to worry about the public perception of insurance, it can be a very lucrative job.”

The negative perception arises, Hanmer said, because insurance is something everyone needs, but they don’t want to pay for it. “They love having it when they have a problem, but if they’ve never had a problem, they say, ‘I can’t believe I spent all this money on insurance.’”

Hanmer found he needed insurance, too — not the product, but the career. He needed it more, in fact, than putting on a green or puttering around a house, or whatever activities he and Santino — who now goes to work with his owner every day — might get up to.

In other words, Hanmer needed to feel the spark of working again, so that’s what he did. And he found that spark.

“I definitely made the right decision,” he said. “I’m really happy.”

Homeowners Insurance Isn’t a One-size-fits-all Proposition

By Contributor
Michael Long
Insurance

What’s Covered?

By Mark Morris

Michael Long

Michael Long says inflation in the cost of construction materials is complicating the equation of replacement protection.

 

When preparing a homeowners policy, insurance companies want to know all the details. They’re not being nosy — they just want to accurately cover any potential loss, even the unexpected ones.

Indeed, insurance agents who spoke with BusinessWest said every homeowners policy begins with a worksheet that captures anything and everything about the home. Inquiries range from the obvious — like the age of the house, square footage, and condition of the roof — to details about the kitchen counters (formica or granite?), whether rooms feature hardwood floors or carpeting, as well as many other questions.

“We ask for lots of details so we can get a true estimate of the home to properly gauge the replacement value,” said Trish Vassallo, director of Operations for Encharter Insurance in Amherst, noting that policies are based on what it would cost to replace the home and its contents if there was an event that resulted in the total loss of the home, such as a devastating fire or tornado.

Insurance companies also try to factor in cost increases in building supplies and labor, so some offer homeowners policies with extended replacement protection that will cover 25% or 50% above the insured amount of the home.

Michael Long, CEO of the Axia Group in Springfield, explained that, with recent hyperinflation in building materials and labor, extended coverage may not be enough. Lumber has experienced a massive increase in price since the beginning of the pandemic, driven by supply-chain issues and an increase in demand. One measure for estimating building costs is the price for a board foot of lumber.

“Customers ask us why their policies increase each year, and the answer is the inflation guard, which keeps the policy in line with current construction costs.”

“Not long ago, a thousand board feet of lumber cost $345,” Long said. “It’s now up to $1,600 per thousand board feet.” That’s why one of the first conversations Long has with his clients is to make them aware of policies that offer guaranteed replacement costs that will cover rebuilding a home no matter what happens to the price of materials and labor.

While guaranteed replacement might be worthwhile for high-value homes, it can be expensive coverage. A more affordable way to keep pace with rebuilding costs comes in the form of policies with inflation-guard endorsements. Trish Woodbury, Personal Lines manager for McClure Insurance Agency in West Springfield, explained that policies with inflation-guard coverage are designed to increase the limits of what the insurance company will pay based on the costs of materials.

“Customers ask us why their policies increase each year, and the answer is the inflation guard, which keeps the policy in line with current construction costs,” she said.

Customers also ask Woodbury why the estimated replacement cost on a homeowners policy is so different than the market value of the home. The main reason is that market value is driven by the ups and downs of the real-estate market and is calculated using the house as well as the lot it sits on.

“The estimated replacement cost is based on all the specs of your house and the amount the insurance company will pay to bring you back to where you were before the incident that caused your loss,” Woodbury said. “We often have to explain the difference because it’s a far different number than the market value.”

That’s why including everything in the house from top to bottom is essential to having it insured. For example, if people fail to report they have a finished basement out of concern they may have to pay higher taxes, they won’t have coverage for a loss.

“We are not trying to uncover a tax increase for the towns; our concerns are, if you have a devastating loss, we want to make you whole again,” Vassallo said. “If you have a finished basement, we want to know how finished — is there a TV room, workout equipment, is there a bathroom down there? These are all important factors so we can come up with the appropriate replacement value and include it.”

 

Water, Water Everywhere

The most common claim for a homeowners policy is water damage from a leaking roof, burst pipe, or faulty toilet. Long pointed out that, if a burst pipe happens when no one is home, damage can be substantial, and the claim can be huge, even approaching six figures.

Because water-damage claims are so common and expensive, Woodbury said homeowners can now install devices to prevent a severe incident.

“One of the devices is an automatic water shutoff when a leak is detected,” Woodbury said. “Insurance companies have begun offering discounts to homeowners who install these.”

Damage from flooding is not covered under a traditional homeowners policy. Insurance companies define flooding as water from the surface and below, usually entering through the foundation of a house. If a homeowner has a mortgage and their house is in a high-risk zone for flooding, they are required to have flood insurance. Long pointed out that changing weather patterns may require a new way to think about flooding.

“Most people figure, if they are not near a river or other body of water, they’re OK,” he said. “If we received 42 inches of rain and your house is on a hill, it could still receive flood damage that would not be covered by a traditional insurance policy.”

“Without umbrella coverage, if you tried to sell your house while there was a personal-liability judgment against you, the creditors could go after the proceeds from the sale.”

Woodbury added that anyone can buy flood insurance, and if a house is not in a high-risk zone, the homeowner will receive a preferred rating and a lower price for the coverage. “It’s available to everyone, and we’ve been encouraging people to consider it.”

In addition to covering the dwelling unit, homeowners policies will also cover personal property — up to a point. If there are special items such as expensive jewelry or fine art, the best approach is to add a coverage rider for those items. As an example of why riders make sense, Vassallo gave an example of someone who owns a $75,000 baby grand piano.

“If you had a total loss, such as a fire, and your content limits are $200,000, replacing the piano would take a huge chunk of that $200,000, leaving you a much smaller balance to cover everything else,” she said. Thus, purchasing an inexpensive insurance rider for the piano gives it full coverage with no deductible, and it no longer affects the personal-property limit. “So, it becomes a separate item that we want to keep separate.”

Another type of policy associated with homeowners insurance is umbrella coverage. These are personal liability policies that provide coverage when the limits of a homeowners and auto insurance policy aren’t enough to pay a claim.

Umbrella coverage was once thought to be necessary for homeowners who have a dog, a swimming pool, or a young driver. Vassallo said. But with payments for personal-injury claims going higher all the time, everyone should consider the added protection of such a policy. “We even suggest it for renters because you never know who’s going to sue you.”

Some people feel they don’t need an umbrella policy because the Homestead Act protects them, Long said. But while it prevents creditors from taking a person’s home, the act’s protection stops there.

“Without umbrella coverage, if you tried to sell your house while there was a personal-liability judgment against you, the creditors could go after the proceeds from the sale,” he noted.

Water damage may top the list of common claims, but Long said dog-bite claims are growing in number. A typical homeowners policy can provide some coverage, but he strongly recommends dog owners have an umbrella policy, as the average claim for a dog bite is $40,000 — and people with a dog-bite claim often pay much more for homeowners policies in the future.

For many years, companies have maintained lists of dogs they will not insure under a homeowners policy. Woodbury pointed out that the list is driven by the number of claims they see for certain breeds.

“The lists change, too,” she said. “Because companies have seen fewer claims on German shepherds and huskies, they have come off some lists.”

Before purchasing a dog, Long recommends homeowners call their insurance agent, especially if they are not set on a particular breed. “Your agent can give you the current list of dogs the companies will not cover with insurance.”

 

Remote Control

While many people work from home these days, that work can take many forms. A person working full-time for a company is different than someone who operates a home-based business. Vassallo said homeowners policies are not intended to protect business exposure, so a person who runs a business out of their home needs to see their agent for a rider to their home policy.

Liability can become an issue if customers come to the home. It’s not unusual for tax accountants, music teachers, and others to have people at their home for business reasons. In insurance terms, that’s a liability exposure that can be addressed with a separate commercial rider for protection.

“Otherwise, using the example of the music teacher, if a student or parent slipped and fell, the teacher would have no protection,” Vassallo said.

Home ownership brings with it plenty of physical hazards. Insurance companies have begun offering protection for virtual hazards such as identity theft and cyberattacks.

Long said cyberattacks are growing at a rate of 200% every year. One of the top schemes is phishing — when a fraudster sends an e-mail that appears to be from a reputable company and encourages the receiver to click on links that compromise their security. But cyberattacks have moved away from laptops and phones and can now impact other areas of the house.

“Hackers are known to access data through WiFi-enabled thermostats,” Long said, adding that those who own WiFi-enabled refrigerators have also experienced attacks by hackers who use the appliance to mint cryptocurrency, such as bitcoin. “Many policies offer identity theft, and we are now strongly recommending our clients to add cyber protection.”

Before a homeowners policy comes up for renewal, agents will contact their customers to make sure their coverage stays up to date. It’s important for insurers to know about improvements such as a kitchen renovation.

“If you’ve upgraded to granite counters, it will now cost more to rebuild your home if you had a claim,” Woodbury said. “We want to make sure the limits on the policy keep up with the cost of rebuilding your house.”

Obviously, homeowners are not looking to pay more for coverage, and there are options for those who are interested only in price. Vassallo tries to help her customers understand why having sufficient coverage is so important.

“This is probably the largest asset they will ever own,” she said, “so let’s make sure we properly protect it.”

Mergers and Acquisitions Continue to Dominate the Insurance Industry

By
Timm Marini
Insurance Special Coverage

Come Together

Timm Marini

Timm Marini says HUB has become more “laser-focused” in the way it grows.

If you think you’ve seen more headlines than usual lately about insurance agencies being bought and sold, you’re not mistaken. In fact, 2021 was the fifth straight record-setting year for M&A activity in the insurance world. The reasons range from federal fiscal trends to a desire to broaden an agency’s expertise; from pandemic fatigue to the aging of the Baby Boomers who built and grew many of these firms. The idea, area leaders say, is to grow strategically, with customer service and company culture at front of mind.

HUB International is no stranger to mergers and acquisitions in the insurance world; they have long been a key element of the company’s growth, nationally and globally.

“For us and some of the bigger acquirers, we’re getting more laser-focused in what we do,” said Timm Marini, president of HUB International New England. “It used to be you acquired to grow — and grow profitably. And then it became geographic expansion, where you wanted to find some agencies in places where you weren’t.

“In the last 18 to 24 months, it’s gotten more laser-like,” he went on. “When I say that, I mean looking for specialists or looking for specialty shops that may bring in different disciplines, like medical malpractice, life sciences, startup companies, or financial services. In the last two years, we’ve acquired 50 investment firms across the country, four or five of them in New England alone.”

Still, even at a firm with that kind of record, the sheer pace of M&A activity in recent years has been striking, Marini said. Last year, a record 798 insurance agencies were sold in the U.S. — breaking the previous records of 711 in 2020, 653 in 2019, 580 in 2018, and 557 in 2017.

“Part of that was the pending increase in taxes — people were nervous the tax rate was going to go up significantly, and that may have given some of them the impetus to sell,” he noted.

Phil Trem, president of Financial Advisory for Marsh Berry, a leading M&A advisory firm for the insurance industry, noted the same dynamic.

“The heightened activity can be traced back to a number of different factors. Firms who sold believed that they might be negatively impacted by a potential federal capital-gains tax increase and a shift in expectations by the insured community,” he wrote on the firm’s blog. “While tax legislation was not enacted in 2021, there are still looming concerns that it could happen at some point in 2022. Will it be retroactive? Anything is possible, but at this point concern about a significant tax increase has waned.”

But other factors have been in play as well, Marini said. “I also think there’s some COVID fatigue in the marketplace, folks dealing with all the extra issues we’ve all had to deal with. Plus, honestly, the multiples folks are paying for these companies are significant.”

John Dowd, president and CEO of the Dowd Agencies, agreed, calling the current landscape a “feeding frenzy” marked by “irrational exuberance” on the part of buyers. “We look at what’s a good fit, what’s a fair price. We’re not going to chase.”

Dowd, whose own firm has made some key additions recently (more on that later), sees a demographic shift in play as well.

“Baby Boomers, who built this modern-day economy and have been a powerful force in every industry across the country, have been retiring to the tune of 2 or 3 million a year. That obviously includes every segment of the economy, including insurance agencies,” he noted. “A lot of agency owners have reached the point of retirement, and if they don’t have an internal succession or perpetuation plan in place, they might look to sell to somebody. That’s what’s going on out there.”

John Dowd

John Dowd

“A lot of agency owners have reached the point of retirement, and if they don’t have an internal succession or perpetuation plan in place, they might look to sell to somebody.”

As for that feeding frenzy, Dowd and Marini both noted that agencies are being sold for multiples of the EBITDA (earnings before interest, tax, depreciation, and amortization) valuation formula that would have been uncommon just a decade ago.

“Our business models haven’t changed, so why have these multiples suddenly gone so much higher?” Dowd wondered. “It’s causing people to maybe sell sooner than they had planned, thinking the multiples will go away sometime, and they don’t want to miss out on an opportunity to monetize their asset.”

 

Pathways to Growth

There are two ways of growing an insurance company, Dowd told BusinessWest. One is organic.

“That’s what we do every day, trying to attract more customers and certainly hold onto and retain those we already have,” he said. “Then there’s growth through acquisition. Our philosophy and strategy is to do both. Any business plan is going to focus on growth, profitability, and retention. When you put together your growth plan and have a healthy balance of organic growth and growth through acquisition at a pace you can accommodate and not stress your staff and your balance sheet, that’s what we consider a good, strong, healthy philosophy for growth.”

Marini said HUB has made targeted investments in niche-specific talent as a way to better serve customers, but has also not shied away from acquiring good-sized firms in the region — like the Insurance Center of New England in 2019, a move he called a strong “cultural mesh” at the time, similar to the one HUB found when it acquired his former firm, Field Eddy, five years earlier.

Over the past year or so, the Dowd Agencies acquired two local agencies, J. Raymond Lussier Insurance and Wilcox Insurance Agency, citing a similar cultural fit.

“When I talk about a good fit, it’s book of business, carrier representation, geographic location, and, most important, cultural fit,” Dowd said. “By that, I mean, are the current owners sharing the same philosophy that we have in terms of how they treat clients and how they treat staff? When there’s a good match in those two areas from a cultural standpoint, we can begin to move forward with analyzing the proposal that’s on the table.

“Not every prospective agency is a good fit for acquisition,” he went on. “We know the metrics we look for, and we have to check the boxes before we start to move forward. We can’t grow for the sake of growing; we have to do it incrementally and selectively. That’s our philosophy. We see people out there acquiring agencies all over the place; they’ve got their own philosophy, and we have ours.”

Elaborating, he called Lussier and Wilcox good examples of strong cultural fits. “We’ve known these owners for years. We know how important a priority their customers were. It was very important to these owners that their clients, who they worked very hard to build over the years, are going to be well cared for by the new owners, treated similarly and respected and serviced at the level they had become accustomed to.

Phil Trem

Phil Trem

“The build-versus-join decision is bringing a lot of firms to the deal table. This dynamic is not going away, and the market will likely continue to be very robust.”

“The proof is in the pudding,” Dowd added. “Lussier came on a year ago, and Wilcox was six months ago, and they have blended beautifully with our staff. We’ve had some get-togethers as a team where everyone gets to meet and know one another.

“That careful vetting is really important so there’s not any disruption to service to clients, that it’s seamless and smooth, and everyone is comfortable,” he went on, “because people get anxious when there’s change. It’s natural. To the extent we can, we want to address and dispel those concerns before, during, and after the transition. And it’s worked well.”

A larger agency with a broader range of specific expertise is important to customers these days, Marini said.

“Customers are demanding more service for the same dollar amount,” he noted. “And then, industry experts who know the nuances of different coverages can negotiate better premium deals with their carriers.”

It’s a win-win, in other words.

“One major driver of sellers coming to the table is evolving expectations of brokers’ clients, the buyers of insurance,” Trem wrote. “Since the beginning of the pandemic, insureds have created an expectation that their broker act as a consultant, not just someone who helps purchase insurance coverages. The end client is looking for someone who can help provide strategic guidance, risk management, and/or mitigation services.

“This creates a conundrum for insurance brokers who must keep investing in tools, resources, and talent in order to effectively compete,” he went on. “Independent brokers have to decide whether they want to use their cash flow to make these investments or partner with a firm that has already done it. The build-versus-join decision is bringing a lot of firms to the deal table. This dynamic is not going away, and the market will likely continue to be very robust.”

 

Bigger and Better

Building broader and deeper expertise in an insurance agency is one way to counter the bottom-line-focused direct writers, Marini said, especially on the personal-lines side, where they continue to grow market share in New England. And not just expertise, but relationships.

“We don’t want to be big just to be big; that thinking was 10 or 15 years ago. Now it’s getting big to be good, or just being good … and part of that model is having independent expertise, services, and claim advocacy like never before.”

He noted that HUB has won some national awards for its COVID-related communication about how the industry should react and deal with all the different challenges the pandemic has wrought. “We’ve had some competing brokers, large companies, bigger than us, grabbing those materials for their customers. We didn’t protect it; we shared it.”

Dowd agreed that M&A activity often focuses on what it brings to customers, from a broader carrier mix to specific expertise. While the mergers with Lussier and Wilcox focused more on the shared culture, he added, any benefit to customers is a factor when considering an acquisition.

Nationally, those mergers and acquisitions will continue to be a major story in the insurance world. After five straight years of setting new records for M&A activity, Trem doesn’t see a major slowdown in 2022.

“Buyers and investors are continuing to push their way into the marketplace,” he wrote. “If anything, the pandemic reminded the financial community what a great investment the insurance distribution space is and that demand is greater than ever before. It is a very favorable seller’s market because there is still more demand than there is quality supply.”

 

Joseph Bednar can be reached at [email protected]

Few Homeowners Have Flood Insurance, but Should They?

By
Insurance Special Coverage

Rising Tide

After a summer of heavy rains in Massachusetts — and across the Northeast, for that matter — plenty of homeowners discovered their insurance policies don’t cover flood damage, and many are no doubt considering whether they should add such coverage. And it’s a question that may be raised even more often in the future, as climate change produces stronger and more frequent storms.

Last week, President Biden sat with state government officials to talk about the growing dangers of hurricanes and floods.

“For decades, scientists have warned that extreme weather would be more extreme and climate change was here. And we’re living through it now,” he said. “We don’t have any more time.”

But it wasn’t Florida he was visiting, or Louisiana or Mississippi. It was New Jersey, which had just experienced, according to one county commissioner, its fourth 100-year storm in the past two decades. The event turned tragic, with close to 40 people dead in New Jersey and New York, many trapped in basements and cars.

In other words, the effects of climate change on storms is no longer a problem for other regions. It’s a problem for the Northeast, too.

And it’s on the minds of those in the insurance industry.

“What was once a 100-year flood is now a 10-year flood,” said Trish Vassallo, director of Operations at Encharter Insurance in Amherst. “We’re seeing things now that we never anticipated.”

Trish Vassallo

Trish Vassallo

“What was once a 100-year flood is now a 10-year flood. We’re seeing things now that we never anticipated.”

Western Mass. residents know this well after a summer of often-incessant rain, punctuated by a few big storms that left a trail of flooded basements in their wake — most of which were not covered by insurance. But it doesn’t have to be that way.

“A homeowners’ policy is going to provide coverage for a hurricane or tornado — which is on everyone’s mind this time of year,” Vassallo said. “We’re covering for wind damage and hail. If the whole house blows away, we’re covering for that as well.

“But flooding is always going to be excluded,” she went on. “You need to purchase a specific flood policy. The basic policy is from the ground up — not the flood coming in from the surface.”

There are two types of coverage homeowners can add to their policy to cover floods, Vassallo noted. Flood insurance covers water damage that results from water that has already hit the ground, pouring in from oversaturated yards, flooded streets, or overflowing rivers, streams, or ponds. Meanwhile, water backup coverage reimburses the homeowner for water that backs into the home through an outside sewer or drain.

“The key phrase is surface and/or groundwater coming into the building,” said David Griffin Jr. senior vice president at the Dowd Agencies in Holyoke. “If a pipe bursts, causing water damage, or water gets in through the roof, or a tree falls through the house and water comes in behind it, that’s all covered [by a basic policy]. But if water from outside the home comes in — if the yard floods and starts to spill into the basement — you’ll need a flood policy to respond to that.”

David Griffin Jr.

David Griffin Jr.

“We’ve had so much water this summer — it’s unprecedented, and it’s becoming an issue for everybody.”

While add-ons like earthquake insurance don’t sell big in New England for a reason, flood insurance is becoming an “absolute necessity,” Vassallo said, noting that it’s required in Massachusetts for mortgages in designated flood zones. “A person no longer has the option; mortgages require it. You can’t close on a loan without it.”

Griffin said his team recently ran some numbers and found that only 3.5% of all homeowners in Massachusetts have a flooding policy. Considering that flood-zone requirement, the percentage of people who aren’t forced to buy the coverage but opt for it anyway is strikingly low.

Will a summer of heavy rain — or talk of more intense storms in the future — change that? Insurance professionals are watching closely.

 

A Disconnect?

While flooding from rushing water and rain is generally not covered by regular homeowners’ insurance policies, floods remain the most common and most destructive natural disaster in the U.S., according to the National Assoc. of Insurance Commissioners.

From 1988 through 2017, flood damage in the U.S. cost almost $200 billion, according to the Natural Academy of Sciences, and the increase in precipitation due partly to climate change was responsible for $73 billion, or more than a third of that, Investopedia reported this month. These figures include all property damage, not just homes.

Nonetheless, only about 15% of homes in the U.S. are insured against floods, according to both a report from the reinsurance company Swiss Re and a survey by the Insurance Information Institute.

Dowd said homeowners should take a five- to 10-year perspective on what potential flood damage would actually cost. “Do I want to spend 800 bucks a year on a flood-insurance policy? Over 10 years, that’s $8,000. What’s the likelihood of having a loss beyond that if I have to self-insure? You can look at insurance as a long-term budget item.”

Consumers can access a cost estimator, where they can input data about their home, including its age, location, construction style, square footage, and contents, and get back replacement-cost numbers that can help guide policy decisions, Dowd said.

And current events may affect that formula; these days, in the case of major, widespread damage, homeowners may run into supply-chain issues and shortages of wood and other materials, which can significantly jack up costs.

“If you haven’t looked at your limits in a while and they’re $325,000 and it actually costs $425,000 to replace it, you don’t want that kind of gap in case of a total loss,” he noted. “It’s important to be on top of that.”

But protecting a home from water damage — or any other disaster — extends beyond the policy itself, Vassallo said.

“We talk about preparedness — making sure people do the right thing to limit their losses,” she noted, which includes everything from securing movable items to cutting back tree branches that threaten windows and roofs. “This is something we deal with on a day-to-day basis here in New England. You want to limit your damage as a homeowner.

Griffin agreed. “There’s always a level of preparedness you need to have in order to limit damages in a storm. That’s something you want to think about — it can sometimes eliminate bad things.”

Meanwhile, after an incident occurs, the homeowner can take steps to minimize further damage while documenting their losses.

“Always take photos of loss of everything, and make immediate emergency repairs — put that blue tarp on the roof to prevent rain damage,” Vassallo said. “If you do need to make emergency repairs, most insurance companies will honor the photographs. I would recommend you retain damaged materials, which can prevent questions from arising. If you rip out the rug in the house, you don’t want the adjuster to pay you for builder’s grade, when you had a high-grade rug. That’s stuff we deal with all the time.”

The homeowner is expected to not just respond quickly to minimize damage, but to help prevent it as well, she noted. That means regularly cleaning gutters so they’re not backed up with leaves during heavy summer rains, which can lead to water pouring into the foundation and leaking into the basement — or contributing to ice dams in the winter.

In other words, “if you have gutters, clean them — but be careful on that ladder,” Vassallo said. “If you can do your preventive work ahead of time, you’re ahead of the game.”

 

Warning Signs

As he noted earlier, flooding has been on Griffin’s mind lately.

“Typically, this is the time of year when we see the biggest uptick in those types of claims, especially in New England,” he said. “We also see it in March, when the ground is frozen, and we may get two or three inches of rain, which slides across the frozen ground and into your home. But we’ve had so much water this summer — it’s unprecedented, and it’s becoming an issue for everybody.”

He said carriers have been sounding the alarm about this topic. “Storms are getting a lot stronger. It’s definitely something that’s been noted on the carriers’ end.”

They’re not alone, of course.

“Every part of the country is getting hit by extreme weather. And we’re now living in real time what the country’s going to look like,” Biden said in New Jersey last week. “We can’t turn it back very much, but we can prevent it from getting worse.”

And make sure we’re properly insured against the next big storm.

 

Joseph Bednar can be reached at [email protected]

Berkshire Insurance Group Announces Sale to Brown & Brown

By
Insurance

Expanding the Footprint

 

Berkshire Hills Bancorp Inc. and Brown & Brown Inc. recently announced the execution of a definitive agreement for the sale of the assets and operations of Berkshire Insurance Group Inc. (BIG), a subsidiary of Berkshire Hills, to Brown & Brown of Massachusetts, LLC, a subsidiary of Brown & Brown. The transaction is subject to customary conditions and is expected to be completed in the third quarter.

BIG has been providing insurance coverage to customers across the Northeast since its inception in 2000, growing into one of the largest insurance agencies in Western Mass. It provides personal and commercial property and casualty insurance solutions.

Sean Gray

Sean Gray

“Berkshire has entered into an exciting partnership with Brown & Brown through which we will be able to serve our customers better with an expanded offering of insurance solutions.”

“Consistent with Berkshire’s Exciting Strategic Transformation (BEST) program, this transaction allows us to simplify our operating model, repurpose valuable resources, and redeploy capital to support core businesses and strategic initiatives that will enhance long-term stakeholder value,” Berkshire Bank CEO Nitin Mhatre said. “As a result of this transaction, we will record a net gain on sale of approximately $0.55 per share on a GAAP basis in the third quarter, and anticipate $0.02 lower earnings per share in the second half of 2021.”

Sean Gray, president and COO of Berkshire Bank, added that “Berkshire has entered into an exciting partnership with Brown & Brown through which we will be able to serve our customers better with an expanded offering of insurance solutions. I also want to thank the dedicated team of employees at BIG, whom I’ve had the privilege of working alongside for the past 10 years, for their contributions to Berkshire and all our communities. I know they will continue to serve Berkshire customers well in their new roles with Brown & Brown.”

Brown & Brown has offered positions to existing BIG employees, resulting in no job eliminations. Following the acquisition, BIG will become a new standalone operation within Brown & Brown’s retail segment under the leadership of John Flaherty.

BIG’s offices in Greenfield, Longmeadow, Pittsfield, Stockbridge, and Westfield will continue to operate from their current locations, and its other locations will physically combine with existing Brown & Brown offices. In addition, through a partner relationship, Berkshire Bank will continue to refer customers to Brown & Brown. Don McGowan, a regional president in Brown & Brown’s retail segment with responsibility for various offices in Massachusetts and the Northeast, will oversee the new combined operations.

Don McGowan

Don McGowan

“This transaction allows us to further expand our footprint in Massachusetts with several new strategic locations that we believe enable us to better serve our customers.”

“This transaction allows us to further expand our footprint in Massachusetts with several new strategic locations that we believe enable us to better serve our customers,” McGowan said. “We are excited to welcome all of the talented BIG teammates to the Brown & Brown organization and look forward to finding fresh opportunities to offer a wide range of insurance products and services to new and existing customers.”

RBC Capital Markets is acting as financial advisor to Berkshire, and Luse Gorman, P.C. is acting as legal advisor to Berkshire on this transaction.

Berkshire Hills Bancorp is the parent of Berkshire Bank. Headquartered in Boston, the bank has $12.3 billion in assets and operates 115 banking offices, primarily in New England and New York. Brown & Brown Inc. is an insurance brokerage firm delivering risk-management solutions to individuals and businesses, and boasting more than 300 locations across the U.S. and select global markets.

New Challenges Emerge in Employee Benefits — but More Options, Too

By Contributor
Insurance Special Coverage

Give and Take

With five generations in today’s workforce, employee benefits are no one-size-fits-all proposition — yet, they remain a key issue for employers looking to attract and retain a skilled workforce. Striking a balance between what employees want and what the business can afford is certainly a challenge — but the flexibility and options available to employers these days makes the task a little easier to navigate.

By Mark Morris

Between demographic changes in the workforce and the impact of the pandemic, employers face multiple challenges these days in offering health insurance and other benefits to their workers.

In the U.S., 49% of people receive health-insurance coverage through their employer. According to the Kaiser Family Foundation, that percentage represents approximately 156 million Americans. Many of those workers also receive coverage for dental care and disability, as well as access to a retirement plan as part of a complete benefits package.

And, despite the increasing costs of health insurance, employers are not cutting back on this essential coverage, said Peter Miller, partner with Millbrook Benefits and Insurance Services in Springfield.

“They are trying to strike a balance between offering a benefits package that is attractive to new hires, while also trying to control costs and keep the business running,” he noted.

Traditional benefits, such as healthcare coverage and retirement plans, have always been important to employees. According to Patrick Leary, vice president of Work Benefits Research at LIMRA in Windsor, Conn., traditional benefits make up the core of an employer’s value proposition to employees.

In putting together a benefits package, an employer decides whether a particular offering will be paid 100% by the employer, or use a cost-sharing approach in which employees contribute as well. A third option, known as a voluntary benefit, is completely paid for by the employee.

LIMRA provides research for the insurance and financial-services industry. One significant trend Leary has studied is the expanding demographics of the workplace.

“There are now five generations in the labor force,” he said. “The oldest workers are staying longer, while Gen Z is just beginning to enter the workforce.”

Each generation has different benefit needs, and they are all looking to their employer to address them. Voluntary benefits are one way for an employer to accommodate different needs among a diverse employee population.

Peter Miller

Peter Miller

“They are trying to strike a balance between offering a benefits package that is attractive to new hires, while also trying to control costs and keep the business running.”

“A company can offer a broad-based plan where some benefits appeal to younger workers and some to older,” Leary said. “Because they are voluntary benefits, the employer can address the various needs of their employees without increasing their costs.”

He emphasized the importance of employers working with a benefits consultant to find the right mix. “Part of the process involves the employer understanding their current employees and the types of workers they plan to recruit for the future.”

Employers typically add benefits to make their companies more attractive to the specific types of workers they seek. For example, Miller has been discussing benefit packages with a tech company looking to attract engineering graduates from prominent colleges. While traditional benefits are important, flexible work arrangements and college debt-repayment programs also have a strong appeal to this group.

“It’s important for employers to think outside the box to make themselves more attractive to the people they’re trying to hire,” he said.

College debt repayment offered as a formal benefit is relatively new, but it’s quickly becoming a popular benefit as more graduates enter the workforce saddled with large debt obligations.

Meredith Wise, president of the Employers Assoc. of the NorthEast, said employers are using different tactics to help new employees manage their student-loan debt. Some employers offer a hiring bonus so new employees can pay off a chunk of their student loan.

Another approach allows employees to pay down their debt and contribute to their retirement savings at the same time. Based on his conversations with employers, Leary said the 401(k)/student-loan payment approach strongly resonates with young employees.

“The amount the employee pays each month toward their debt is matched up to 5% by the employer in a 401(k) plan,” Wise said. “This is helpful to young workers who would not normally be thinking about their retirement savings because they are saddled with debt.”

 

What COVID Wrought

There’s nothing quite like a worldwide pandemic to remind everyone of the importance of having healthcare coverage. After 14 months of operating during the pandemic, the benefits professionals BusinessWest spoke with cited two notable trends: an increase in telehealth offerings and usage, as well as an increased demand for mental-health services.

“There’s definitely been an increase in utilization for traditional medicine and mental health,” Miller said.

Wise agreed. “Employers are looking at the mental-health benefits covered under their policies and, in many cases, are augmenting those benefits with employee-assistance programs,” she noted.

A survey released in March by America’s Health Insurance Plans reported that 56% of employees said their telehealth and mental-health services are more valuable now than they were a year ago, before COVID-19.”

Offering wellness programs as a benefit is another trend that has gained popularity in the last several years. “Employers are adding or increasing benefits around wellness, nutrition, stress management, and other areas,” Wise said.

In addition to health wellness, Leary said employers are increasingly offering financial wellness programs as a benefit.

Patrick Leary

Patrick Leary

“Some older employees might be sandwiched between taking care of their children and their parents at the same time, while others are looking at their planning needs for retirement.”

“If an employee is stressed out about their personal finances, it affects their productivity at work,” he said, pointing out that financial wellness is a benefit that can help employees at every stage of their careers by providing guidance tailored to their individual needs.

“It’s a chance to help younger employees get off to a good start and to check in with older Millennials, now approaching their 40s, about retirement planning and the telehealth benefit they can access,” Leary explained. “Some older employees might be sandwiched between taking care of their children and their parents at the same time, while others are looking at their planning needs for retirement.”

Because employees have so many different needs, communication around benefit offerings becomes essential. As COVID disrupted so many other norms, it also caused significant changes in benefit communications. But in this particular case, Miller said, the change was an improvement.

For years, the model for enrolling employees into a company’s benefit plan involved on-site meetings and speaking directly with as many employees as possible to make sure all their questions and concerns were addressed. Miller said the strong in-person presence continued even after the actual enrollments were done online.

“We’re doing many of our open-enrollment meetings now on Zoom,” he said. “One advantage is that you can gather employees no matter where they are for the live presentation, and they can ask questions, either by shouting them out or using the chat box.”

For employees who may be on vacation or traveling, the Zoom meeting is recorded and uploaded to a video-sharing platform like YouTube.

“Lots of people want to discuss their benefit options with their spouse,” Miller said. “Now they can, because everyone can access the presentation whenever they want.”

Miller said the video gives employers a tool they can use for the entire plan year. “When a new hire comes in, they can be directed to the link and listen in on the entire employee-benefit presentation. The video approach was one of the few positive developments that resulted from adjusting to COVID concerns.”

Sometimes, a new employee benefit can emerge from a catastrophe. At the onset of COVID, Leary said, employers were frantically setting people up at home just to keep their businesses in operation.

“Several months later, they began seeing the benefits of having people work from home,” Leary said. “While many are discussing a hybrid approach, where employees split their time between the office and home, working from home to some degree is now undeniable.”

Because his business lends itself to working remotely, Miller said his employees definitely perceive it as a benefit.

“If you asked me last February if working from home would be feasible, I would have said ‘no way,’” he noted. “But it not only works, it works very well.”

 

Help Wanted

These days, employers need every benefit they can offer when recruiting new employees. Despite businesses itching to expand, Miller said, employers face new challenges in doing so. “I’ve been doing this nearly 30 years, and I don’t ever remember so many different employers saying they can’t get good people.”

Local employers he’s speaking with are increasingly hiring workers from other states to meet their needs.

“My clients are looking for health plans that are more robust and have a national presence,” Miller said. “I’m hearing that from employers right here in Western Mass.”

For many, traditional benefits remain important, but they make up only a part of the employment experience. Leary said the move to remote work means employers and benefit consultants need to think in new ways to communicate benefits and enroll employees in a new hybrid environment.

“You can make the argument that flexible work schedules and the ability to work autonomously without having a manager look over your shoulder are also benefits that go beyond traditional health, dental, and disability plans,” Miller said.

It’s a trend to keep an eye on — one of many employers need to consider as they determine which benefits will attract and retain employees in a changing economy — while making sense for the company’s bottom line.

Borawski Insurance Builds on 90-year Tradition of Service

By
From left, Bob Borawski, Dave Malek, and Mark Rosa, the leadership team at Borawski Insurance.
Insurance

Cover Story

From left, Bob Borawski, Dave Malek, and Mark Rosa, the leadership team at Borawski Insurance.

From left, Bob Borawski, Dave Malek, and Mark Rosa, the leadership team at Borawski Insurance.

As he talked about insurance, and also about the agency started by his grandfather almost 91 years ago, Bob Borawski drew a number of analogies to the banking industry.

Specifically, he referenced an ongoing pattern of mergers, acquisitions, and overall consolidation that has left fewer players, and far fewer smaller, independent agencies.

In banking, said Borawski, who has been on the board at Florence Bank for many years now, this activity has created opportunities for those players with a track record of strong customer service and the ability to fill a void left by those agencies swallowed up by larger interests with fewer ties to — and employees living in — the 413. At the same time, while rates and prices are always important in banking, relationships are more important.

And, by and large, it’s the same in insurance, Borawski said.

“Anyone can give a rate that’s a half or five-eighths of a percentage point less,” he said in reference to banks. “But beyond the rate, you want to have a good relationship with your client. Like an independent bank, we have a focus on being independent — we’ve chosen not to be gobbled up by one of the larger players because we think independence is important. We still think people appreciate being local.”

Dave Malek, vice president of the company, who came aboard nearly 30 years ago, agreed.

“It really is all about relationships,” he noted. “And I think that is what gets lost when you get swallowed up by a larger conglomerate.”

In essence, Borawski said, he, Malek, and the other 15 employees at this company launched at the height of the Great Depression in 1930, are continuing a pattern of personalized customer service and relationship building that was started by his grandfather, Alexander Borawski, and continued by his father, Robert.

“These days, people are always saying, ‘we can save you…,’ ‘we can save you…,’ ‘we can save you…’ — and that’s great until something goes wrong and all that savings took coverages away and didn’t provide what you should have had.”

And this pattern has served the company well, especially when it comes to commercial lines, where the Borawski company has built a large and diverse portfolio that continues to grow.

Indeed, at present, commercial accounts comprise roughly 75% of the book of business, said Malek, adding that the portfolio includes everything from manufacturers to auto dealers; nonprofits to general contractors.

And this commercial business has spawned growth in numerous areas, especially employee benefits but also personal lines, said Borawski, adding that the ability to provide a wide range of products and services to customers has been a formula for growth going back nine decades, but especially in the past 30 years as the company has sharpened its focus on its commercial portfolio.

The first and second generations of leadership at Borawski Insurance: Alexander Borawski, left, and Robert Borawski.

The first and second generations of leadership at Borawski Insurance: Alexander Borawski, left, and Robert Borawski.

Overall, this agency has been conducting business in much the same way it has since the doors opened, even if COVID-19 forced some changes when it came to where employees were working and how work was done.

Moving forward, the business plan calls for simply “more of the same,” said Borawski, adding that the company intends to take full advantage of the trend toward consolidation within the industry and continue its focus on relationship building.

“You’re either moving forward or moving backward, and our plan is to continue to grow our way — organically,” he said, adding that he believes the company is certainly well-positioned to achieve that goal.

For this issue and its focus on insurance, BusinessWest talked with several team members at Borawski to get a full understanding of not only where it’s been, but where it wants to go and how it intends to get there.

 

Independent Thinking

Borawski told BusinessWest that, upon graduating from Stonehill College in 1980, he had no plans to join the family business. Instead, he went to work for then-emerging office-supply company W.B. Mason as a salesperson.

“There were probably 35 people there at the time; I really liked it and had no intention of leaving,” he said, adding that his career took a critical turn a few years later when, while he was home for Thanksgiving, his father, who joined the agency in the early ’60s, commenced a discussion on succession.

“He said, ‘what am I going to do with this business?’ and we continued to talk,” Borawski recalled, adding that, soon thereafter, he came back home to join the company as a salesperson; eventually, he would succeed his father as president in 1992.

By then, he was also working to take a friendship on the golf course with Malek to a much different level. The two were members at what was Hickory Ridge Country Club in Amherst (the club closed a few years ago), and while talking golf and shop — Malek had been in the insurance business for roughly a decade by then — a discussion commenced about Malek coming to the Borawski agency and “helping build something,” Bob said.

That something was the aforementioned commercial-lines division that has grown so dramatically over time.

“We made a lot of cold calls over those years,” said Borawski, adding that, in addition to that time-honored strategy, the business has benefited tremendously from referrals that have led to new customers of all sizes in both the commercial- and personal-lines sides of the business.

Overall, the company has decided to grow organically, not through acquisition, as many others have. Again, as in banking, growing organically means, to a large extent, taking customers from other players, something that’s accomplished through hard work, a strong track record, a deep portfolio of products and services, relationships with carriers (Borawski works with more than 30 of them), and — here comes that phrase again — relationship building.

“Business just doesn’t fly in the door — you’ve got to go find it,” he explained. “You have to hunt it and track it.”

That’s because the competition, as in banking, is fierce. To stand out, an agency has to possess those qualities listed above, said all those we spoke with, and especially a desire to work with clients to find solutions for them, not just get a signature at the bottom of a policy — or series of policies.

“One of the things that we try to do differently is evaluate someone’s insurance program, and not just from the perspective of price,” Malek said. “It’s important to understand what their needs are and what we’re trying to provide for them, rather than just focus on the bottom-line price, because, in most cases, that doesn’t end up working out.

“Insurance is an intangible. You can’t touch or feel it until you need it. And we try to get people to understand just that — that everything is great until something goes wrong. And when it goes wrong, you need to know that you’re going to be put back to where you were prior to that.”

“You get what you pay for, and we work to get people to pay for the right coverage,” he went on. “These days, people are always saying, ‘we can save you…,’ ‘we can save you…,’ ‘we can save you…’ — and that’s great until something goes wrong and all that savings took coverages away and didn’t provide what you should have had. No one goes to the cheapest doctor for a reason.”

Mark Rosa, senior account executive, agreed, and noted that he and others in similar positions at the company strive to be advisors, not merely salespeople.

“It’s not just a game of show and tell and salesmanship — we want to advise as well,” he noted, adding that business owners who are experts at whatever business sector they have chosen are not necessarily — and not likely to be — experts on the many different insurance and employee-benefit products available today and which ones might be best for their company.

This desire to advise is another strong attribute that has served the company well during this time of consolidation within the industry, said Rosa, adding that, with those mergers and acquisitions, a personal brand of service is generally lost, creating opportunity for those who can still provide it.

“From a new-business standpoint, many people have made up their mind that they want to go somewhere else,” he explained. “It doesn’t take much for a client to figure out that things won’t be the same as they used to be. They figure that out pretty quickly, and that’s when the phone starts to ring.”

 

Bottom Line

While there are certainly many direct comparisons between banking and insurance, there are some important differences as well, Malek explained.

“Insurance is an intangible,” he noted. “You can’t touch or feel it until you need it. And we try to get people to understand just that — that everything is great until something goes wrong. And when it goes wrong, you need to know that you’re going to be put back to where you were prior to that.

“One of the things that we pride ourselves on is that we’re able to give people that sense of comfort to understand that their business is going to run just as if nothing happened,” he went on, adding that not all agencies can successfully provide this level of comfort.

Those that can think independently — in every sense of that phrase — can do it better than others. And that’s what has allowed this company to thrive for almost a century now, and prompt it to look toward the future with no plans to change how it does business.

 

George O’Brien can be reached at [email protected]

Pandemic Alters Lifestyles — and, Sometimes, Home-insurance Needs

By Contributor
Christine Fleury
Insurance Special Coverage

Are You Covered?

By Mark Morris

Christine Fleury

Christine Fleury says making alterations to the home — a common sight during the pandemic — could change insurance needs.

Call it the great migration indoors.

When the pandemic first hit, many people were forced to quickly convert their homes into offices, schools, and entertainment centers. Some in the insurance industry predicted this might lead to more homeowners insurance claims. In reality, it didn’t.

Similarly, as people spend more time in their homes, they also depend more on their water, electrical, and heating systems to work. While some insurance claims have been filed due to these systems failing after increased use, the increase has not been notable.

In fact, Christine Fleury, Personal Lines manager at Encharter Insurance in Amherst, said companies have actually seen a decrease in severe claims from homeowners. “As people spend more time at home, they are catching that large loss before it happens.”

Corey Murphy agreed, noting that, because people are home, they are noticing and taking care of seemingly minor problems like leaky gutters.

“As people spend more time at home, they are catching that large loss before it happens.”

“As people pay more attention to fixing the small issues, they prevent the larger problems from ever happening. A little preventive maintenance goes a long way,” the president of First American Insurance Agency in Chicopee noted.

Most homeowners insurance claims are the result of severe weather incidents. When COVID-19 first hit, winter was ending, and warm weather soon followed. Bill Trudeau, executive vice president and partner at HUB International New England in Agawam, said the mild winter this year has helped keep claims down.

“Other than a couple isolated wind events, the weather has behaved itself, and that means claims have tended to be in line with company projections.”

The pandemic has thrown a few wrinkles into the home-insurance picture this year, however.

For instance, many homeowners were motivated to invest in substantial improvements to their homes. Home construction and improvement contractors point directly to being cooped up in the house as the main motivator for people choosing to make improvements to their property.

What impact does all this renovation work have on the homeowners insurance carried on the house? The answer depends on what improvements are made and what kind of coverage is already in place.

Everyone BusinessWest spoke with agreed that, for small or cosmetic improvements, there is no need to contact an insurance agent. Some larger projects, however, may require altering or increasing a home’s coverage.

“Adding square footage to your home, doing a full remodel, or building a garage would all be reasons to consult your agent to make sure you have enough coverage,” Fleury said.

Even if they are not taking on home improvement projects, Trudeau advises people to call their insurance agent at least every couple of years so they understand the coverage that’s in place and whether they may need additional coverage.

“You can work with your agent to run a cost estimator,” Trudeau said. “It’s a software tool that takes the data from your home, including any upgrades, then shows you the current replacement cost if it was all suddenly gone.”

With the lifestyle changes wrought by the pandemic, it’s more important than ever to make sure the home — and everyone in it — are protected. Here are some key factors to consider.

 

Home Work

While they may not have set foot in the office in months, people who work from home are still protected from on-the-job injuries by workers’ compensation coverage. Office workers tend not to get injured on the job, but the coverage is in place if there is an incident.

“There has never been a distinction between whether employee actions emanate from an office at the company or from an office at the person’s home,” Trudeau said. “Because this coverage is broader in scope, COVID did not force us to make changes to workers’ comp plans.”

Bill Trudeau

Bill Trudeau says claims have been kept in check recently by a mild winter.

It’s not unusual for people working from home to have a computer, monitor, and even a printer that belongs to their employer. Murphy said some jobs may require employees to have additional business assets in the home, so it might be wise to make sure everything is covered. “Most policies will pay a little toward assets being home, but it’s usually a minimal amount.”

With homes serving as business offices and classrooms, more people — and their pets — are home at the same time. According to Trudeau, homeowners’ insurance policies consider any issues with an animal as a “strict liability event,” meaning there is no way to defend the action.

“If someone knocks on your door and your dog bites them, it generally means the insurance company pays the claim,” he explained, adding that, as people acquire more pets, the likelihood of claims increases. Most insurance companies keep a list of dog breeds they will not cover because those breeds have higher incident rates.

“You can work with your agent to run a cost estimator. It’s a software tool that takes the data from your home, including any upgrades, then shows you the current replacement cost if it was all suddenly gone.”

Murphy encourages pet owners to speak with their agent because these restrictions can vary widely among insurers. “Just because one company doesn’t want to cover your breed of dog, check with another company; it’s not a universal list.”

Whether they have pets or not, Fleury advises her clients to carry personal liability coverage, commonly known as an umbrella policy, that supplements both homeowners and auto coverage.

“When we write home and auto policies for a customer, we always recommend buying personal liability coverage as well because it gives you that additional safety net,” she said. A typical umbrella policy costs less than $200 but can provide up to $1 million in additional liability coverage when the limits of homeowners or auto coverage are exceeded.

While dog bites and leaking water pipes are obvious reasons to carry homeowners insurance, it can be much harder to detect a leak when personal data is compromised. A significant increase in identity theft has motivated insurance companies to begin offering identity-theft protection as part of their homeowners policies.

“With everyone at home and increased online activity, it’s more important than ever to safeguard your privacy from someone getting into your system and doing real damage,” Trudeau said.

Apart from identity-theft insurance, he advises everyone to follow best practices such as using multi-factor authentication. For example, when working on an important account online, a code is sent to the user’s personal phone that must be entered to gain access.

Corey Murphy

As people pay attention to small issues in the home, Corey Murphy says, they can prevent larger issues from ever arising.

When fraudsters accesses online bank accounts, they often add a payee into the account. Trudeau advises customers to check with their bank to make sure it uses multi-factor authentication to prevent an outsider from accessing their accounts and to make sure it’s turned on at home.

“If someone has logged into your computer and they don’t have your phone, they can’t get that code,” he said.

Fleury said her agency includes identity-theft coverage in all its homeowners policies. “We feel it is important insurance and recommend at least $5,000 worth of coverage for identity theft.”

 

From a Distance

The pandemic has changed the insurance business in other ways. Typically, when a homeowner files an insurance claim, an adjuster will visit the home and walk through to personally inspect the damage. With COVID-19 concerns, that’s happening much less often.

“In some ways, COVID is moving insurance companies along the digital side of things,” Murphy said. “They are allowing homeowners with a claim to submit photos and even have video calls if the insurer is set up for it.”

The trend toward relying on consumer photos rather than a visit by an adjuster follows what’s been happening on the auto-insurance side for some time.

“If someone knocks on your door and your dog bites them, it generally means the insurance company pays the claim.”

“Many auto insurers have created apps where the person making the claim takes a photo of the damage, uploads it for an adjuster to review, and then the payment is processed,” Fleury said.

The move toward more digital interaction is no surprise to Trudeau.

“Long before COVID, people e-mailed pictures and documents to us,” he said. “Companies have simply accelerated the move to modernization by using many tools they already had.”

Murphy likes to remind customers that every insurance company offers something a little different that their competitors. That’s why it’s important to put some thought into selecting a homeowners insurance policy.

“People need to assess what they have, in terms of their house and what’s in it, and then speak with an agent about what needs to be covered,” he said, adding that it’s about matching a person’s situation with the company that can best provide coverage for their needs — especially at a time when those needs, and demands on the home, are still in flux.

The Dowd Agencies Merges with J. Raymond Lussier Insurance

By Contributor
Lussier-Dowd’s new office
Insurance

Expanding the Footprint

Lussier-Dowd’s new office

Lussier-Dowd’s new office at 181 Park Ave. in West Springfield expands the merged company’s footprint to six locations.

The Dowd Agencies and the J. Raymond Lussier Insurance Agency announced last week they have merged their operations and will be known as Lussier-Dowd Insurance.

The merger and addition of a branch in West Springfield expands Dowd’s footprint to six offices located throughout the Pioneer Valley. The new office, located at 181 Park Ave., is minutes from Routes 5 and 20, and Interstates 91, 291 and 391. An open house will be planned at a later date.

“We’re excited for the Lussier Agency to be part of our team. I have known the Lussier family for many years, and they have always been a highly professional, customer-driven insurance agency,” said John Dowd Jr., president and CEO of the Dowd Agencies. “We are also excited to have a location in the fine town of West Springfield.”

The West Springfield office will be a full-service insurance agency providing personal, commercial, wealth-management, and employee-benefits products and services.

A native of West Springfield, David Griffin Jr., vice president of the Dowd Agencies, said he is excited about his company planting roots in his hometown. “I was born and raised in West Side, so it is particularly exciting for me. More importantly, West Side is a great and vibrant town here in Western Mass.”

The Lussier-Dowd Insurance Agency is open Monday through Friday, from 8 a.m. to 4:30 p.m., and can be reached by calling (413) 737-5359.

A full-service agency, the Dowd Agencies has been helping individuals and businesses in Western Mass. with their personal insurance, commercial insurance, employee benefits, and financial needs for more than 120 years. Established in Holyoke in 1898, the Dowd Agencies is the oldest insurance agency in Massachusetts with operations and management under continuous family ownership.