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May 23, 2025

CLARA Analytics Study Highlights AI’s Role in Early Insurance Fraud Detection

A recent study by CLARA Analytics has identified new potential in the use of artificial intelligence for the early detection of fraud in property and casualty insurance claims. The research suggests that machine learning models can flag suspicious activity as early as two weeks after a claim is filed, significantly faster than traditional fraud detection methods.

Research Overview

The study, finalized in November 2024, analyzed 2,867 insurance claims filed between 2020 and 2024. CLARA Analytics used an unsupervised machine learning approach, specifically cohort modeling across claim development periods. This technique allowed the researchers to detect patterns in cost, treatment behavior, and relationships among claim participants that may signal fraud.

Key methodologies included:

  • Identification of outliers in cost and treatment.
  • Mapping of network connections between attorneys and medical providers.
  • Use of unsupervised learning to detect potential fraud indicators without relying on predefined markers.

Key Findings

Several significant outcomes emerged from the study:

  • Early detection: The model identified suspicious claims as soon as two weeks after the initial filing, ahead of standard investigative timelines.
  • SIU referral correlation: Nine percent of open claims were flagged as having high potential for referral to Special Investigation Units (SIUs), with strong alignment between model predictions and actual adjuster referrals.
  • Geographic insights: Michigan and Arizona were noted as having the highest concentration of claims with potential fraud indicators.
  • Network analysis: The model's network analysis revealed connections between attorneys and providers, which are often overlooked using traditional methods.

Broader Industry Context

The Federal Bureau of Investigation estimates insurance fraud costs the U.S. property and casualty insurance industry approximately $40 billion annually, not including medical insurance. These losses may contribute to higher premiums for consumers.

The study also referenced the "Sentinel Effect," a behavioral concept where individuals alter their actions when they know they are being observed. In the insurance context, this could mean that companies known for proactive fraud detection may deter fraudulent activity before it begins.

Technology and Future Applications

CLARA Analytics is continuing to refine its fraud detection capabilities by expanding its network analysis to include both medical and legal data sources. The company states that its AI-driven system, supported by agentic reasoning, is designed to interpret complex claims and generate actionable insights for insurers.

According to the study, the use of unsupervised learning enables the identification of novel fraud patterns that do not rely on historical indicators, potentially offering a more adaptive and comprehensive detection method.

The CLARA Analytics study presents a data-driven perspective on how artificial intelligence can support early fraud detection in insurance claims. Through machine learning and network analysis, the research suggests a path toward more timely and accurate identification of suspicious activity, potentially reducing the financial impact of fraud on the industry.

About CLARA Analytics

CLARA Analytics is the leading AI as a service (AIaaS) provider that improves casualty claims outcomes for insurance carriers, MGAs, reinsurers, and self-insured organizations. The company’s platform, CLARAty.ai, applies image recognition, natural language processing, and other AI-based techniques to unlock insights from medical notes, legal demand packages, bills, and other documents surrounding a claim. CLARA’s predictive insights give claim professionals augmented intelligence that helps them reduce claim costs and optimize outcomes for the carrier, customer and claimant. CLARA’s customers include companies from the top 25 global insurance carriers to large third-party administrators and self-insured organizations. Founded in 2017, CLARA Analytics is headquartered in California’s Silicon Valley. For more information, visit www.claraanalytics.com, and follow the company on LinkedIn and @CLARAAnalytics.

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May 23, 2025

USG Announces Hire of Helen Tvrdy in Boca Raton, FL.

USG Insurance Services, Inc., a prominent national wholesaler and MGA, is pleased to announce the addition of Helen Tvrdy to their Florida office. Tvrdy has joined the team as a Producer/Broker and will be working under the guidance of Randy Stockburger, Executive Vice President: Production Manager. usgWith over 20 years of experience in Property and Casualty insurance, Tvrdy is a seasoned underwriting professional with deep expertise in transportation risks—including General Trucking, Towing, Auto Haulers, and Hazmat operations. She has a strong command of both admitted and surplus lines markets, spanning coverages such as Auto Liability, Physical Damage, General Liability, and Excess/Umbrella. Most recently, she served as Senior Underwriter at Western Skies MGA, where she supported brokers, evaluated submissions, and contributed to profitable growth. Tvrdy is now ready to bring her leadership, technical precision, and relationship-driven approach to a forward-thinking team, offering dependable underwriting judgment, strong market insight, and a dedication to building long-term success. This move is the most recent change that USG has implemented in its plan to continue expanding its operations nationally as a leading wholesaler brokerage firm. ABOUT USG USG is a national wholesale broker and managing general agent (MGA) with offices throughout the country. It represents 300+ A-rated carriers, both admitted and non-admitted, and is an MGA for multiple top carriers, writing business in all states. USG's mission is to become the #1 provider of innovative solutions for the risk management industry, exceeding expectations with its advanced technology, creative problem-solving, and research capabilities. Stay informed and ahead of the curve — explore more industry insights and program opportunities at ProgramBusiness.com.
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May 23, 2025

U.S. Property & Casualty Industry Reports Best Underwriting Results Since 2013

The U.S. property and casualty (P&C) insurance industry achieved its strongest underwriting performance in over a decade in 2024. The industry's aggregated net combined ratio fell to 96.5%, the best result since 2013, when it was 96.2%. This marks a significant improvement compared to a net combined ratio of 101.6% in 2023.

Improved Results Driven by Personal Lines

The enhanced performance was primarily attributed to improved underwriting outcomes in personal lines. These include private auto, homeowners, and farmowners insurance.

  • Personal lines net combined ratio: 96.7% in 2024, an improvement of roughly 10 percentage points year over year.
  • Homeowners insurance: Achieved its first underwriting profit since 2019. The net combined ratio improved from 110.9% in 2023 to 99.7% in 2024.
  • Flood-related losses: The federal flood insurance line reported $7.71 billion in direct incurred losses, up from $1.74 billion in 2023. Losses due to flooding are typically not covered under standard homeowners policies.
  • Private auto insurance: The net combined ratio decreased to 95.3% in 2024 from a high of 112.2% in 2022, aided by rate increases.

Commercial Lines Performance: Mixed Outcomes

Commercial business lines reported a net combined ratio of 96.3% in 2024, a marginal increase from 96.2% in 2023.

Liability Coverage Results

  • Other liability: Net combined ratio rose to 110.1%, the highest since 2016 (110.9%). This line includes general liability, commercial excess and umbrella, errors and omissions, and cyber insurance.
  • Product liability: Increased to 107.9% in 2024 from 99.8% in 2023.
  • Commercial multi-peril liability: Rose to 114.9% from 110.1%. The last sub-100% ratio for this line was recorded in 2015.
  • Medical professional liability: Improved to 103.0% from 109.8% the prior year.

Auto and Property Coverage Results

  • Commercial auto: Combined ratio improved to 107.2% in 2024, a 2.1 percentage point year-over-year gain.
    • Physical damage coverage: Reported a net combined ratio of 88.6%, improving by 7.6 percentage points from 2023.
    • Auto liability: Slight improvement to 113.0% from 113.4%.
  • Commercial property: All sub-lines showed year-over-year improvements:
    • Fire: Combined ratio decreased by 9.0 percentage points to 77.2%.
    • Commercial multi-peril non-liability: Decreased by 13.8 percentage points to 91.6%.
    • Allied lines: Net combined ratio of 93.2%.

Workers’ Compensation Remains Stable

  • Workers' compensation: Continued to be profitable with a net combined ratio of 88.8% in 2024, slightly up from 88.1% in 2023.

About the Data

The statistics referenced in this report are sourced from the Insurance Expense Exhibit within the annual P&C statutory statements filed with the National Association of Insurance Commissioners (NAIC). The data includes only U.S. statutory filers, though reported results may include business written outside of the U.S. where applicable. The industry-wide figures represent consolidated results from individual filers and were compiled by S&P Global Market Intelligence.

Stay informed and ahead of the curve — explore more industry insights and program opportunities at ProgramBusiness.com.
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May 22, 2025

Texas at Risk: Report Reveals Deepening Flood Insurance Crisis

A recent report from the Neptune Research Group paints a stark picture of the growing flood threat in Texas and the widening insurance gap that could amplify its impact. With more than 2.1 million properties projected to face flood exposure in the coming decades, and more than 200,000 properties likely to flood with near certainty, the findings emphasize the urgent need for improved flood mapping, increased insurance uptake, and strategic risk mitigation.

Flood Risk Outpaces Insurance Coverage

The data reveals a sobering reality: Texas is significantly underprepared for future flood events. According to the First Street Foundation, 1.15 million properties across the state already face at least a 1% annual chance of flooding. However, FEMA maps identify just 860,000 at-risk properties, underscoring a major shortfall in flood risk mapping accuracy.

This discrepancy leaves many Texans unaware of their true exposure. Notably, more than half of all National Flood Insurance Program (NFIP) claims since 2005 have come from areas outside FEMA-designated high-risk zones.

Population Growth in High-Risk Zones

The Texas Water Development Board (TWDB) projects that by 2050, an additional 2.6 million people and 740,000 new buildings will be located in high-risk flood areas. Urban expansion and development trends are pushing more homes into vulnerable zones, often without corresponding insurance coverage or infrastructure improvements.

This rapid growth, combined with outdated FEMA flood maps, means newly built homes may not be subject to stricter building codes or insurance requirements, even though they face substantial risk.

Economic Impact and Insurance Shortfalls

Texas ranks second in the nation for NFIP claims, with over $11.6 billion paid on 150,000 claims in the past decade alone. Harris County is especially hard-hit, accounting for nearly 50% of NFIP payouts. Paradoxically, more than 78% of homes in the county remain uninsured.

Statewide, flood insurance coverage is alarmingly low:

  • Just 7% of residential properties have flood insurance.
  • In major inland metro areas like Dallas, Denton, and Bexar counties, coverage rates are below 1%.
  • Even in FEMA-designated high-risk areas, only 28% of residential properties carry flood insurance.

The report also highlights affordability issues. Since FEMA introduced its Risk Rating 2.0 pricing model in 2021, premiums have risen by an average of 35%, while the number of insured buildings has dropped by 30%. In some counties, flood premiums consume up to 5% of household income.

Barriers to Resilience

Efforts to reduce flood risk through major infrastructure projects are underway, but funding gaps remain a significant hurdle. The TWDB has identified more than $54.5 billion in needed flood mitigation investments. However, just $10.6 billion in funding has been secured to date.

Meanwhile, many Texas homes remain structurally vulnerable. Nearly half of all active NFIP policies cover Pre-FIRM homes, which were built before the introduction of modern floodplain management standards and are more susceptible to flood damage.

The Path Forward

Matt Duffy, President of Neptune, stresses the need for expanded flood insurance access and improved public awareness. “Texas faces a clear and growing flood risk, yet millions of properties remain without adequate insurance coverage,” he said. With climate change accelerating the frequency and intensity of storms, and a busy 2025 hurricane season predicted, closing this protection gap is more critical than ever.

The report concludes that addressing Texas’s flood insurance crisis will require:

  • Modernizing flood maps to reflect current and projected risk
  • Increasing insurance affordability and access, particularly through private market solutions
  • Investing in risk-reduction infrastructure
  • Enhancing public education about flood risk beyond FEMA-defined zones

Texas is at a pivotal moment. Without concerted public and private sector efforts to address underinsurance and infrastructure shortcomings, the state’s vulnerability to flooding and the financial devastation it brings will only intensify.

Stay informed and ahead of the curve — explore more industry insights and program opportunities at ProgramBusiness.com.
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May 22, 2025

Acrisure Raises $2.1 Billion in Bain-Led Round, Valued at $32 Billion

Acrisure, a financial services firm based in Grand Rapids, Michigan, has raised $2.1 billion in a funding round led by Bain Capital's special situations arm. The round places the company's valuation at $32 billion, which represents a 40 percent increase from its previous funding round three years ago.

Established in 2005 as an insurance brokerage, Acrisure has expanded its scope over the years to offer a range of services beyond insurance. These include payroll, cybersecurity, and employee benefits, primarily aimed at small and medium-sized businesses. The company emphasizes its strategy of providing a tech-enabled suite of financial services designed to serve as a comprehensive solution for its clients.

The funding was structured as convertible senior preferred stock. Alongside Bain Capital, other participants in the round include BDT & MSD Partners, Fidelity Management & Research Company, Apollo Funds, and Gallatin Point Capital. BDT & MSD Partners remains the largest minority shareholder.

According to CEO and co-founder Greg Williams, the capital will be used to enhance Acrisure's product offerings and to support acquisitions that expand the company's non-insurance capabilities. He noted that several acquisitions are expected to be announced soon, although he did not provide details. Additionally, a portion of the funds will be used to refinance an existing convertible preferred instrument in order to simplify the company's capital structure.

Acrisure continues to be majority-owned by its employees, with a workforce of over 19,000 people across 23 countries. While the company has considered going public in the past, Williams stated that the new funding round leaves open the option to either remain private or pursue a public listing in the future.

The firm currently generates approximately $5 billion in annual revenue and is aiming for an annual growth rate of 15 percent. Williams pointed out that the company's core business and additional services are generally resilient to economic uncertainty, making Acrisure optimistic about continued growth.

Cristian Jitianu, a partner at Bain Capital, described the timing of the investment as strategic, highlighting Acrisure's consistent revenue in an environment of heightened macroeconomic volatility.

Stay informed and ahead of the curve — explore more industry insights and program opportunities at ProgramBusiness.com.
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May 22, 2025

Memorial Day Weekend Weather Alert: Storms to Persist Across Central and Southern U.S.

As Memorial Day weekend approaches, many Americans are gearing up for travel, outdoor celebrations, and time with family. However, a persistent and evolving severe weather pattern threatens to disrupt plans across much of the central and southern United States. According to AccuWeather senior meteorologist Alex Sosnowski, while the most intense tornado outbreaks may subside slightly, the risk to life and property remains serious heading into the holiday.

Widespread Threats Continue Midweek

An outbreak of severe storms that began earlier in the week has already resulted in nearly 300 reports of high winds, hail, and tornadoes. These conditions extended into Tuesday night and are expected to linger into Wednesday evening across several regions.

  • Southern U.S.: The southeastern corner of the country may see enough warmth Wednesday afternoon and evening to re-energize storms. Severe weather in this area could persist until dry air eventually moves in.
  • Mid-Atlantic Region: Brief but strong thunderstorms are possible from eastern Ohio to western Pennsylvania, northern West Virginia, and Garrett County, Maryland. Hazards include strong wind gusts, large hail, a few isolated tornadoes, and the potential for flash flooding.
  • Lower Mississippi Valley: Late Wednesday night could bring another round of dangerous storms to western Tennessee, northern Mississippi, and northern Alabama.

Storm Cycle Resets Late Week

The threat doesn’t end midweek. Instead, the severe weather pattern is expected to reload, shifting focus back to the Central Plains beginning Thursday.

  • Thursday Afternoon to Night: Severe thunderstorms are forecast from central and southern Texas to southern Oklahoma and southwestern Arkansas. These storms may appear sporadic but could become particularly intense, with threats of powerful wind gusts and large hail.
  • Friday: The danger zone expands northward, affecting parts of northwestern and north-central Texas, central and western Oklahoma, western Kansas, eastern Colorado, and southwestern Nebraska. High winds, hail, flash flooding, and isolated tornadoes remain concerns.

Weekend and Memorial Day Forecast

As the weekend progresses, these storms are expected to slowly shift eastward:

  • Saturday and Sunday: Areas from the South Central states to the southern Mississippi Valley and the Gulf Coast are in line for potential storm activity.
  • Memorial Day (Monday): Severe weather could reach into the Southeastern U.S., affecting holiday celebrations and travel plans.

Stay Prepared and Informed

Those planning road trips, camping, or outdoor gatherings should remain vigilant. The greatest storm activity is expected from midday through the evening hours, when storm coverage tends to increase.

Key recommendations:

  • Monitor local forecasts daily through Memorial Day.
  • Be aware of surroundings, especially when traveling or staying in unfamiliar areas.
  • Have a weather emergency plan in place, particularly when outdoors or on the road.

Even with some decline in tornado activity, the risk of damaging weather is far from over.

Get the latest insurance market updates and discover exclusive program opportunities at ProgramBusiness.com.

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May 21, 2025

Understanding Terrorism Insurance: Lessons from the Palm Springs Fertility Clinic Bombing

The recent bombing at a fertility clinic in Palm Springs, California — identified by officials as an act of terrorism — has reopened important discussions around terrorism insurance. For insurance agents, this is a critical moment to understand how such events are classified and which clients may need better protection against these unpredictable and devastating losses.

Who Decides If an Event Is Considered Terrorism?

In the United States, an incident is classified as “terrorism” for insurance purposes under the Terrorism Risk Insurance Act (TRIA), which was first enacted in 2002 and renewed through 2027.

Here’s how it works:

  • The Secretary of the Treasury, in consultation with the Secretary of Homeland Security and the U.S. Attorney General, must certify an event as an “act of terrorism.”
  • The act must:
    • Be violent or dangerous to human life, property, or infrastructure.
    • Result in damage within the United States (or to certain U.S. interests abroad).
  • Be committed by individuals acting on behalf of a foreign interest or be intended to coerce civilians or influence government policy.
  • The financial damage must exceed a set threshold (currently $5 million in insured losses).

Without TRIA certification, most terrorism insurance policies will not be triggered — even if local authorities label an event as terrorism.

However, just because the FBI or local authorities describe an event as terrorism does not automatically activate terrorism insurance coverage.

What Is Terrorism Insurance?

Terrorism insurance is an add-on or separate policy that protects businesses from financial loss due to acts of terrorism. Coverage typically includes:

  • Property damage
  • Business interruption
  • Extra expense
  • Some liability components (if included)

Standard commercial property policies exclude terrorism unless it’s added through a certified endorsement.

Which Types of Businesses Usually Carry Terrorism Coverage?

Industries and businesses that tend to be more risk-sensitive or high-profile are more likely to purchase terrorism insurance. These include:

  • Financial institutions
  • Healthcare providers and hospitals (especially large systems)
  • Government contractors
  • Hotels, malls, and entertainment venues
  • Religious institutions
  • Media companies
  • Critical infrastructure and energy facilities

Fertility clinics, while not commonly targeted, are part of the healthcare sector and sometimes engage in controversial services (such as in vitro fertilization, embryo storage, etc.). This makes them potential candidates for terrorism coverage, especially in urban or politically sensitive areas.

If the Palm Springs fertility clinic held terrorism coverage, its ability to recover from the bombing, for property loss and business interruption, will depend on:

  • Whether the act is officially certified under TRIA, and
  • Whether the clinic opted into terrorism coverage when purchasing its commercial insurance.

What Now?

The Palm Springs bombing has opened up a difficult but necessary conversation: What kinds of businesses are genuinely at risk for acts of terrorism? And are we doing enough to protect them?

Here are key points that now feel more urgent:

Reevaluating Risk Profiles

The attack didn’t target a government building or financial institution — it struck a fertility clinic. This incident highlights that any business tied to emotionally charged or controversial topics, such as reproductive services, may face heightened risk, regardless of size or visibility.

Looking Beyond Labels

Just because authorities or media call something “terrorism” doesn’t mean it triggers insurance. Under U.S. law, terrorism must be officially certified by the federal government to activate coverage. That distinction can mean the difference between full recovery and devastating loss.

Considering Location and Symbolism

Businesses located in urban centers, politically sensitive regions, or symbolically significant buildings may be more vulnerable. It’s not just about geography — it’s also about perceived meaning or cultural relevance.

Accounting for Non-Physical Losses

The damage from an attack often extends beyond broken windows. Disruptions to daily operations, reputational harm, psychological impacts, and business interruptions can leave lasting scars, especially for service-oriented sectors like healthcare.

Exploring Resources and Recovery Tools

Local and federal agencies may offer short-term relief, as seen in Palm Springs, where EngagePalmSprings.com and the Small Business Administration are rallying to provide information and aid. However, such support is often temporary and unpredictable, highlighting the value of structured risk planning.

Final Thought

As events like the Palm Springs bombing show, acts of violence, particularly when tied to ideological motives, are no longer confined to predictable targets. Insurance agents must stay proactive in assessing terrorism risk with clients, even in industries like fertility care that might not immediately appear at risk.

Stay informed and ahead of the curve — explore more industry insights and program opportunities at ProgramBusiness.com.
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May 21, 2025

Nearmap to Acquire itel, Creating a Unified Property Intelligence Powerhouse for Insurance

Nearmap, a leading property intelligence provider, announced on May 20, 2025, its acquisition of itel, a trusted provider of property claims solutions. This strategic combination merges two respected brands in the insurance industry to form a powerful, integrated platform supporting the full insurance lifecycle — from underwriting to claims settlement.

A Comprehensive Solution for Insurers

This acquisition joins Nearmap’s aerial imagery and property intelligence capabilities with itel’s ground-level data and analysis services. itel specializes in building material pricing and repair-versus-replace assessments—critical elements in efficient, accurate property claims handling.

Together, the companies aim to deliver an end-to-end platform that empowers insurers to:

  • Process claims more quickly
  • Make smarter and more defensible settlement decisions
  • Improve underwriting accuracy
  • Support proactive risk mitigation efforts

The integration of these capabilities will give insurance carriers a single, independent source of reliable insights across entire property portfolios.

Leadership and Investment

The combined company will be led by Andy Watt, current CEO of Nearmap. itel’s CEO, Brian Matthews, will continue to oversee itel operations through the deal’s closing and will join the company’s Board of Directors. The leadership team will feature executives from both organizations, combining industry knowledge and operational expertise.

Thoma Bravo, a prominent software investment firm, will serve as the lead strategic investor in the merged entity. Thoma Bravo has been a long-term partner to Nearmap and is well-positioned to help accelerate innovation and growth across the new, combined platform.

Industry Impact

This move represents a significant evolution in how insurers approach property risk. The combined Nearmap-itel platform will streamline insurance workflows and reduce friction for carriers, adjusters, and policyholders by unifying data from aerial imagery and on-the-ground assessments.

The shared focus on speed, accuracy, and independence positions the platform as a true “source of certainty” for the insurance sector, improving outcomes and reducing delays throughout both underwriting and claims processes.

Deal Timeline and Advisors

The acquisition is expected to close in the second quarter of 2025, pending customary conditions. Financial details have not been disclosed. Legal and financial advisors involved in the transaction include:

  • Goodwin Procter (legal counsel to Nearmap and Thoma Bravo)
  • Raymond James and Bank of America (financial advisors to itel)
  • Latham & Watkins (legal counsel to itel)

This acquisition marks a significant step forward for the property insurance industry, promising enhanced capabilities, streamlined operations, and better service across the board.

About Nearmap Nearmap is the location intelligence provider customers rely on for consistent, reliable, high- resolution imagery, insights, and answers to create meaningful change in the world. The Betterview and ImpactResponse platforms by Nearmap are integrated technology solutions built for insurers applying proprietary AI and computer vision to high-resolution aerial imagery and geospatial data, generating highly accurate property intelligence. Insurance companies are empowered with on-demand insights throughout the policy lifecycle that increase quoting speed and accuracy, optimize underwriting efficiency, enhance property risk mitigation, and expedite claims. Nearmap is the only full stack provider of location intelligence—from camera, to capture, to processing, as utilized in the Betterview and ImpactResponse platforms. For more information, please visit www.nearmap.com. About itel itel is a data and technology company that is a source for certainty in the property insurance claims process. itel serves as an independent intermediary to insurers, adjusters, contractors and homeowners, providing objective data and expert analysis that optimize the claims process. With itel, claims are settled accurately, fairly and with greater efficiency. For more information, please visit www.itelinc.com. About Thoma Bravo Thoma Bravo is one of the largest software-focused investors in the world, with over US$179 billion in assets under management as of December 31, 2024. Through its private equity, growth equity and credit strategies, the firm invests in growth-oriented, innovative companies operating in the software and technology sectors. Leveraging Thoma Bravo's deep sector knowledge and strategic and operational expertise, the firm collaborates with its portfolio companies to implement operating best practices and drive growth initiatives. Over the past 20+ years, the firm has acquired or invested in approximately 520 companies representing approximately US$275 billion in enterprise value (including control and non-control investments). The firm has offices in ChicagoDallasLondonMiamiNew York and San Francisco. For more information, visit Thoma Bravo's website at thomabravo.com.
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May 21, 2025

Climate Risk: The Sixth “C” of Credit Worth Watching

As the climate crisis accelerates, its impact on financial stability, particularly in the mortgage lending sector, is becoming undeniable. Traditionally, mortgage lenders have leaned on homeowners insurance as a safeguard against natural disaster-related defaults. But with the rising frequency and intensity of extreme weather, that safety net is unraveling. A new report by First Street Foundation introduces a critical addition to the traditional credit risk framework: Climate, the Sixth “C” of Credit.

Why Climate Risk Now Belongs in Credit Analysis

Lenders have historically relied on the five Cs of credit — character, capacity, capital, collateral, and conditions—as time-tested metrics to evaluate a borrower’s risk. However, climate change is disrupting the assumptions baked into these models. First Street’s 13th National Risk Assessment reveals how disasters like flooding, hurricanes, and wildfires are producing “hidden credit losses” that lenders’ conventional models fail to anticipate.

For example, lenders misjudged the foreclosure risk of affected properties after Hurricane Sandy, underestimating losses by up to $68 million. These weren’t just errors — they were costly blind spots. The report shows that foreclosures tied to climate events, particularly floods outside FEMA-designated flood zones, are significantly higher, by more than 50 percentage points, than those inside zones where flood insurance is mandatory.

The Insurance Crisis and Its Ripple Effects

As the insurance industry grapples with record-breaking losses — $546.2 billion in 2023 alone — insurers are retreating from high-risk areas or drastically increasing premiums. That leaves more homeowners exposed and financially vulnerable. And when the cost of coverage rises, so do defaults. According to the report, every 1 percentage-point increase in homeowners insurance premiums correlates with a 1.05 percentage-point increase in foreclosure rates.

While wind and wildfire damages are generally covered and directly reimbursed to lenders, floods continue to present the greatest threat. NFIP limits haven't kept pace with real property values or reconstruction costs, driving a widening protection gap.

Billions at Stake in the Decade Ahead

First Street projects that climate-driven credit losses could reach $1.2 billion by the end of 2025, roughly 6.7% of all foreclosure credit losses. If trends continue without changes in lending standards or climate mitigation, that number could balloon to $5.4 billion annually by 2035.

What’s driving this surge? The combination of:

  • Uninsured or underinsured properties in flood-prone areas
  • Stagnant home-price growth in climate-vulnerable regions
  • Macroeconomic volatility, including inflation and recession risks
  • Increased borrower exposure due to shifting insurance burdens

Integrating Climate Data into Lending Decisions

The report urges lenders to incorporate high-resolution climate data into risk models. Tools like First Street’s Flood Model (FS-FM) and Macroeconomic Implications Model (FS-MIM) allow for better forecasting of long-term foreclosure risk tied to climate pressures.

Failing to adapt comes with steep costs. Not only do foreclosures strain borrowers, but they also expose banks and mortgage investors to unrecognized losses, jeopardizing broader financial system stability.

Redefining Creditworthiness

Climate risk is no longer a hypothetical threat — it’s a measurable, material factor that influences borrower resilience, property value, and portfolio performance. As such, it deserves a formal place in credit risk assessment. Lenders, insurers, and investors must evolve their models and strategies now, or risk being blindsided by the rising tide of climate-driven losses.

Stay informed and ahead of the curve — explore more industry insights and program opportunities at ProgramBusiness.com.
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May 20, 2025

Owens Insurance Agency and Stokes Farnham Insurance Agency Join World Insurance Associates

World Insurance Associates LLC (“World”), a Top 50 U.S. insurance brokerage, has taken a significant step forward in its national expansion strategy with the acquisition of Owens Insurance Agency and Stokes Farnham Insurance Agency, both based in South Carolina. The acquisition officially took effect on January 1, 2025.

A Legacy of Service in the Carolinas

Owens Insurance Agency has been a trusted name in South Carolina’s upstate region since 1952. With a strong commitment to community values and a diversified portfolio — including commercial, personal, life, health, and bond insurance — Owens has established itself as a cornerstone of local insurance services. In recent years, the agency expanded through Stokes Farnham Insurance Agency in Travelers Rest, further cementing its presence in the region.

“Over the years, Owens Insurance Agency and Stokes Farnham Insurance Agency have continued to grow in size and strength,” said Christopher Crist, Owner of Owens Insurance Agency. “However, we still believe in quality customer service, giving back to the community, and helping out our neighbors.”

A Strategic Step Toward Enhanced Offerings

The leadership teams at both agencies expressed confidence in the transition, citing the opportunity to offer expanded products and services to clients while maintaining their commitment to personalized service.

“We implement the changes that are necessary to meet the needs of our clients in South Carolina, and nationwide,” said Shane Lynn, Owner of Stokes Farnham Insurance Agency. “We are confident that joining World will allow us to provide our clients with even more services and products. They are a great organization, and we look forward to being a part of the World family.”

Strengthening the World Network

With the addition of Owens and Stokes Farnham, World Insurance continues to reinforce its network of expert agencies across the country, particularly in the Southeast. The firm is recognized for integrating regionally respected agencies and enhancing their capabilities through advanced resources, expanded carrier access, and national infrastructure.

“On behalf of World, I would like to welcome Owens and Stokes Farnham,” said Rich Eknoian, CEO and Co-Founder of World. “Their team of insurance professionals provides comprehensive insurance to their clients while providing the highest level of customer service. I know they will continue to be successful as part of World.”

About the Transaction

A network of legal and financial advisors supported the deal. Giordano, Halleran & Ciesla provided legal counsel, and Sica Fletcher advised World. Owens was represented by Nelson Mullins Riley & Scarborough LLP, with FrontRidge Advisors serving as financial advisor. Terms of the transaction were not disclosed.

As Owens Insurance Agency and Stokes Farnham Insurance Agency become part of the World Insurance Associates family, clients can expect continuity in service, with the added benefit of national-level support and solutions.

About World Insurance Associates LLC
World Insurance Associates (World) is a nationally ranked financial services organization headquartered in Iselin, N.J., that serves its clients from more than 300 offices across the U.S. and U.K. World's comprehensive network of brokers and specialists empower people to make informed decisions to improve their risk management outcomes, modernize their benefits programs, and help achieve their long-term financial goals. Using data-driven analytics, World's advisors innovate new products and solutions tailored to clients' needs across commercial and personal insurance and bonds, employee and executive benefits, wealth management and retirement plan services, private client services, and payroll & HR solutions. For more information, please visit www.worldinsurance.com.

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May 20, 2025

Q1 2025 Commercial Insurance Trends: Market Softens, But Litigation Keeps Pressure on Auto and Umbrella Lines

The commercial insurance market began 2025 with a shift in momentum — signaling signs of softening for many lines of business and account sizes. According to The Council of Insurance Agents & Brokers’ Q1 2025 P/C Market Survey, average premium increases slowed across the board, though certain sectors remain under pressure due to escalating litigation dynamics.

Overall Premium Trends Show Signs of Relief

Premiums rose by an average of 4.2% across all account sizes in Q1 2025 — a notable 22% decrease from the 5.4% increase reported in the previous quarter. While this marks the 30th consecutive quarter of premium growth, the deceleration suggests increasing flexibility from carriers and a potential shift toward a more competitive market environment.

Middle Market Leads the Softening

The most pronounced change was seen in medium-sized accounts, where average premium increases dropped from 6.4% in Q4 2024 to 3.6% in Q1 2025 — a 42% decline. Industry respondents noted that insurers are beginning to re-engage with the middle market, with more underwriters willing to negotiate and compete. One broker from the Northwestern U.S. stated plainly, “Carriers were starting to re-engage in the middle market.”

Market Softening in Most Lines — Except Auto and Umbrella

The softening trend extended into most lines of business. Five lines even recorded premium decreases:

  • Cyber
  • Directors & Officers (D&O)
  • Employment Practices Liability
  • Terrorism
  • Workers’ Compensation

This broad softening is attributed in part to increased carrier competition and a noticeable influx in underwriting capacity. For instance, D&O coverage has become more accessible thanks to a more crowded marketplace — a trend highlighted in a recent May 2025 state of the D&O market report.

Litigation Funding Fuels Pressure in High-Risk Lines

Despite these positive shifts, commercial auto and umbrella insurance remain stubbornly hard. These lines experienced the largest premium increases, with auto up 10.4% and umbrella up 9.5%. The driving force? Third-party litigation funding (TPLF).

TPLF — where outside investors finance lawsuits in exchange for a share of the settlement — continues to elevate both the frequency and severity of claims. Respondents across the industry pointed to TPLF’s impact not just on premium hikes but also on changes in policy terms, including reduced limits and tighter underwriting.

As one respondent from a large Southwestern brokerage firm put it, “Third-party litigation funding is hurting the consumer.” In response, underwriters are becoming more cautious — and in some cases, refusing to offer limits altogether for high-risk segments.

What Agents Should Watch Moving Forward

While the market shows encouraging signs of softening, especially for mid-market clients and most major lines, agents should remain vigilant. Litigation trends — particularly those tied to commercial transportation and excess liability — are shaping premium structures and availability more than ever before.

For clients in sectors affected by high-verdict litigation risk, early planning, clear communication, and proactive risk management will be essential to navigating tightening terms. Meanwhile, the softening in cyber, D&O, and EPLI could offer opportunities for clients to revisit coverage levels and pricing with a fresh perspective.

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May 20, 2025

California Launches Smoke Claims & Remediation Task Force to Address Wildfire Aftermath

California Insurance Commissioner Ricardo Lara has announced the formation of a new Smoke Claims & Remediation Task Force within the California Department of Insurance. The initiative responds to growing concerns over inconsistent handling of smoke damage claims following recent devastating wildfires.

Addressing a Longstanding Gap in Smoke Damage Standards

For more than three decades, California lacked uniform guidelines for evaluating and settling insurance claims related to smoke damage. Commissioner Lara acknowledged the consequences: delays, confusion, and families returning to homes that may not be safe. The newly formed Task Force aims to develop science-based standards to address these challenges and improve outcomes for affected residents.

Wildfire Smoke Impacts Are Expanding

While previous wildfires in places like Santa Rosa and Paradise left lasting damage, today’s wildfire smoke reaches farther into urban areas, affecting densely populated communities. With no established statewide protocols, insurers have varied in their response, sometimes denying smoke claims altogether or requiring homeowners to clean visible damage before claims are even considered.

Recent Directives to Insurers

In March, Commissioner Lara issued a formal Bulletin mandating that insurers fully investigate and pay legitimate smoke damage claims. The California FAIR Plan, the state’s insurer of last resort, received a separate directive to follow the same standard.

Task Force Goals and Membership

The Smoke Claims & Remediation Task Force will include a range of stakeholders, including:

  • Public health and environmental health professionals
  • Smoke remediation specialists
  • Fire safety experts
  • Consumer advocates

Together, the group will recommend:

  • Uniform standards for inspecting, testing, and remediating smoke-damaged properties
  • Guidelines for determining the health and safety status of affected structures
  • Roles for state and local agencies in enforcing the standards and mitigating fraudulent claims

Task Force members are currently being appointed, with the first meeting to follow the full announcement of participants.

Support for Impacted Consumers

Residents with questions about insurance coverage or damage claims can reach the California Department of Insurance at 800-927-4357 or visit insurance.ca.gov for live chat and email support.

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