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

“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

“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.”