Initially part of the “One Big Beautiful Bill” (OBBB), the proposed measure sought to impose a nearly 41% tax rate on profits earned by third-party litigation funders. Critics of the industry have long argued that litigation financiers—especially international investors—pay little to no taxes on their earnings from U.S. legal proceedings.

Litigation funding, where investors provide capital for lawsuits in exchange for a share of any eventual settlement or court award, has faced increasing scrutiny from the insurance industry. Insurers claim the practice has contributed to rising legal expenses. A joint consumer report from the Insurance Information Institute (Triple-I) and Munich Re US estimates that litigation abuse costs the average American household $6,664 annually and adds $160 billion in tort-related costs for small businesses.

Insurers and their allies have pushed for regulatory and tax reforms to limit third-party litigation funding (TPLF), viewing the tax overhaul as a key opportunity to close what they call a loophole.

Jimi Grande, senior vice president of federal and political affairs for the National Association of Mutual Insurance Companies (NAMIC), described the tax increase proposal as a missed opportunity. “This would have been a win for Congress, the Trump Administration, and for American businesses and consumers,” he said in a statement to Insurance Journal.

However, just before the House was set to vote on the legislation, the Senate parliamentarian determined that the TPLF tax increase violated procedural rules for budget bills. As a result, the provision was removed from the final package.

“Thanks to misinformation, political bias, and lobbying from those profiting off America’s legal system, the Senate parliamentarian struck down the effort to close the foreign funder tax loophole,” Grande stated. “This decision leaves the door open for billions more in untaxed foreign investments to fuel excessive litigation, with American taxpayers left holding the bill as legal costs skyrocket.”

Last month, NAMIC had praised Republican lawmakers for pushing to eliminate what it called an unfair tax advantage for “exploitative funders.”

On the other side of the debate, the International Legal Finance Association (ILFA) welcomed the removal of the tax increase, calling it a “decisive win for Americans.” The global association, which represents the litigation funding industry, argued that TPLF plays an essential role in the justice system.

“Far from stopping abuse, this measure would have stripped individuals and small companies of a tool they rely on to take on powerful corporations,” ILFA said. “The real winners would have been the same large industries—like Big Tech, Big Pharma, and Big Insurance—that frequently try to dodge accountability.”

“This is more of a race to start than a race to the end,” said Tom Wilde, CEO of Indico Data. “Getting your data ready so AI can actually do something useful with it—that’s going to be the big differentiator in the next decade.”

AI in insurance—whether we’re talking agentic systems or generative tech—is still in its early stages. But Wilde sees it fundamentally changing how insurance decisions are made, from underwriting risks to handling claims.

“At the core, insurance is all about decision-making,” Wilde explained. “Should we take on this risk? How do we resolve this claim? We’re calling this the beginning of the ‘decision era.’ With the rise of cloud computing, smarter data strategies, and AI, we now have the chance to make faster, more consistent decisions across the board—especially in insurance.”

One of the major shifts Wilde is seeing? The move from relying on individual experts to building institutional expertise with AI.

“Carriers are realizing that depending solely on human expertise can only take them so far,” he said. “AI lets us scale that knowledge. It brings repeatability, transparency, and consistency to decisions. That’s a major leap forward.”

A big part of that leap comes from being able to extract value from unstructured data—something insurers have always had in abundance.

“Say you’ve got a 25-page underwriting guideline document,” Wilde said. “Now, instead of someone having to read it and figure out what to do manually, we can turn it into a live, usable data source. It becomes part of an automated workflow. That’s a huge time-saver.”

Still, even with AI becoming more embedded in underwriting and claims, humans aren’t out of the picture.

Michael Parcelli, SVP at Xceedance, emphasized that real transformation comes with balance—letting AI handle the bulk of tasks while humans step in for quality control.

“We’re not replacing humans entirely,” Parcelli said. “There will always be exceptions, auditing, and oversight. But where a person used to do 80% of the work and 20% reviewing, now it can flip—let the tools handle 80% and humans step in for the final 20%.”

This shift allows insurers to become more efficient while keeping fairness and accuracy in check.

“AI still needs human review,” he added. “It’s not infallible. Sometimes the information it gives is off or misrepresented. You need a process to refine and correct it. That’s why you’ll always need human involvement.”

Wilde echoed the need for transparency as insurers adopt more autonomous or “agentic” AI systems that make and learn from decisions on their own.

“There’s a lot of complexity behind an AI-driven decision,” he said. “Which model was used? What version? Who wrote the prompt? Who edited it? That all needs to be recorded in an audit trail so you can trace, evaluate, and improve decisions over time.”

As AI becomes more active in making decisions—and regulators start asking tough questions—insurers will need clear answers.

“You need to be ready to show exactly how decisions were made,” Wilde warned. “That’s going to be the standard moving forward.”

Global insurance intermediary Howden Group has expanded its footprint in Japan by acquiring a 68.3% stake in Holos Holdings Co. Ltd., a top-tier retail insurance broker headquartered in Kyoto.

Established in 2001 by Kei Horii, formerly of Sony Life Insurance, Holos employs over 400 staff across 20 offices nationwide. With this acquisition, Howden Japan’s total workforce now exceeds 450 since the group’s entry into the Japanese market in 2024.

This deal significantly strengthens Howden’s ability to deliver services in both the life and general insurance sectors, targeting individuals, small-to-medium enterprises, and large corporate clients alike.

The move follows a string of strategic actions by Howden in Japan last year, including the launch of Howden Re Japan, a strategic partnership with Keystone ILS Capital, and the acquisition of the Foresight Group, which marked its entrance into Japanese retail insurance.

CEO David Howden praised the synergy between the two firms: “From the beginning, we recognized that delivering top-tier service requires deep local expertise. Holos brings just that. This union enhances our capabilities nationwide and reinforces our long-term dedication to the Japanese market.”

Holos CEO Kei Horii commented on the transition: “After 25 years of steady growth with our dedicated team and clients, we’re excited to join Howden. Merging our strengths in life insurance with Howden’s international reach and expertise in general insurance allows us to become a more trusted, client-focused insurance group.”

Howden Group, founded in 1994, operates in 56 countries with over 22,000 employees, handling approximately US$45 billion in premiums across global insurance and reinsurance markets.

Ageas UK Finalizes Saga Underwriting Business Takeover

Ageas UK, part of Belgian insurer Ageas Group, has officially completed the acquisition of Acromas Insurance Company Ltd. (AICL), the underwriting arm of Saga plc, following full regulatory clearance.

The transaction marks the beginning of a 20-year distribution agreement between Ageas and Saga Services Ltd. (SSL), focusing on motor and home insurance offerings for Saga’s mature customer base. This partnership was first revealed on December 16, 2024.

The acquisition, valued at approximately £67 million, will be paid in stages up to the launch of the operational agreement.

This deal aligns with Ageas’s “Elevate27” strategy, aimed at bolstering its non-life insurance footprint across Europe and tapping into the growing senior demographic—where Ageas already holds significant experience and market share.

Registered in Gibraltar, AICL not only underwrites for Saga Services but also supports other brands such as AA Insurance Services and RAC.

BMS Group Grows Australian Presence with Property Broker Acquisition

Specialist insurance and reinsurance broker BMS Group, headquartered in London, has acquired Corporate and Commercial Insurance Brokers, an Australian property insurance firm based in Queensland.

While financial details were not disclosed, the acquired firm has been operating since 2006, providing tailored insurance and risk management solutions to large, privately owned companies.

Founder Jeremy Murfin will transition to client director at BMS Australia, reporting to Stephen Moore, managing director of BMS Risk Solutions QLD in Brisbane. Murfin will also serve on the executive leadership team of BMS Australia.

This acquisition builds on BMS’s global expansion momentum, following recent deals that included Spanish broker Rasher and its subsidiaries in Latin America, as well as UAE-based Berms Brett Masaood, now rebranded as BMS Masaood.

Andrew Godden, CEO of BMS Australia, stated: “Jeremy has been a valued partner to BMS for over two decades. His knowledge in the property insurance sector and client advisory skills are top-notch. We’re thrilled to officially welcome him and his team into the BMS family.”

Aviva Seals £3.7B Acquisition of Direct Line, Becoming UK’s Top Motor Insurer

Aviva Plc has wrapped up its £3.7 billion ($5.1 billion) purchase of Direct Line Insurance Group Plc, officially creating the largest motor insurance provider in the UK.

The acquisition was approved by the UK’s Competition and Markets Authority (CMA) on July 1, and brings together two of the most recognized insurance brands in the country.

“This acquisition brings together fantastic brands and talented teams to better serve over 20 million customers across the UK,” said Amanda Blanc, Aviva’s Group CEO. “It advances our capital-light growth strategy and is a strong move for our shareholders. We’re confident this positions us for continued success.”

The merger, originally announced in December 2024, may lead to staff reductions of 5–7% over three years, equating to up to 2,300 job cuts, as overlapping roles are streamlined.

Senator Jeff Irwin, a Democrat representing Ann Arbor, introduced Senate Bill 328 (SB 328) on May 29. This bill mandates that any auto insurance policy issued or renewed within Michigan must have its total premium reduced by at least 10%, without allowing insurers to cut back on the benefits provided. A companion bill, Senate Bill 329 (SB 329), would prohibit insurance companies from charging reinstatement fees or higher premiums resulting from a lapse in coverage.

Joe Roth, APCIA’s Assistant Vice President for State Government Relations, has voiced strong opposition to SB 328, arguing that it would negate the positive advancements Michigan’s auto insurance market has achieved following reforms enacted in 2019 aimed at improving the state’s no-fault insurance system.

According to Roth, “Recent data from the National Association of Insurance Commissioners (NAIC) indicates that Michigan’s insurance market has been steadily improving. Insurers currently face an average of $1.04 in claims and expenses for every dollar of premium collected, reflecting a much healthier balance than in the past. However, enacting SB 328 would reverse these gains abruptly and place Michigan’s market back on an unstable trajectory similar to what California has experienced.”

Senator Irwin defends the bills as necessary measures to address what he and his fellow supporters view as unjustifiably high auto insurance rates burdening Michigan drivers. He asserts that legislative intervention is crucial to curbing insurer profits and providing relief to consumers paying elevated premiums.

“It is time for the Legislature to step up and confront the issue of excessively high car insurance costs in Michigan,” Irwin stated. SB 328 currently enjoys the backing of eight other Democratic senators and one Republican senator. The bill has been referred to the Committee on Finance, Insurance, and Consumer Protection but has not yet been scheduled for a hearing.

The APCIA emphasizes that these legislative efforts risk undoing the important progress made since the 2019 reforms. The association references a recent study conducted by AM Best, which found that between 2019 and 2022, the average cost of personal auto insurance in Michigan declined by 12%, while the national average rose by 5% over the same period.

“The legislation, if passed, would increase insurance costs for Michigan drivers and disproportionately harm working families,” Roth warned. “The 2019 reforms successfully reduced claims costs and incentivized insurers to remain active in the Michigan market, thereby offering consumers a wider array of options. SB 328 threatens to destabilize this delicate balance and inflict harm on drivers throughout the state.”

As debate continues, stakeholders and consumers alike are closely watching how these bills will shape the future of auto insurance affordability and market stability in Michigan.

“Not much, actually,” Schnitzer remarked during the early session of the 41st Annual S&P Global Ratings Insurance Conference in June.

Wilkinson had referred to the economic and geopolitical risks highlighted by Neil Stein, Managing Director & Property/Casualty Sector Lead, who included them on the rating agency’s watchlist. While Schnitzer acknowledged the impact of social inflation and the broader economic consequences of geopolitical uncertainty, he emphasized that an insurer’s approach should always focus on the long-term.

“You can’t rapidly reposition an insurance company without doing it gracefully,” Schnitzer said. “Running an insurance company requires thinking in the long term. There’s always some degree of uncertainty that we must be mindful of,” he explained, adding that the specific risks mentioned by S&P analysts were always on Travelers’ radar.

Schnitzer reflected on a moment during the initial weeks of the COVID-19 pandemic when he and Travelers’ Chief Financial Officer undertook scenario planning. “What could really hurt Travelers? What would a bad day for us look like?” They spent two weeks discussing every possible risk. “We stress-tested every aspect of our business and couldn’t find a major threat,” he stated, underlining the company’s robust business model and financial foundation. This allowed them to advance over $100 million in commissions to partners during the early days of the pandemic, helping those facing liquidity issues.

“Running a business while anticipating uncertainty is just part of our DNA,” he added.

Managing Catastrophic Risks

Schnitzer also shared insights about a strategic shift Travelers implemented over a decade ago to refine its approach to managing catastrophe (cat) risks. This foresight has been key to the company’s success, culminating in what Schnitzer described as the insurer’s best bottom line during a catastrophic year in the U.S. in 2024, posting $5 billion in net income.

Instead of managing all catastrophe risks with a single team, Travelers decided to specialize by peril. “We built separate teams for hurricanes, wind and hail, and wildfires,” Schnitzer explained. The company also invested heavily in hiring data scientists, climatologists, environmental engineers, and other specialists to enhance its understanding of various natural disasters.

The goal was two-fold: first, to become the industry leader in understanding the science behind these risks, and second, to apply that scientific knowledge to underwriting practices. Schnitzer recalled that before implementing these changes, Travelers’ losses from natural catastrophes were aligned with the company’s market share, which was considered typical. However, after these adjustments, the company significantly outperformed its market share, continuing to grow its business while managing risk effectively.

Travelers also invested heavily in its claims strategies, aiming to resolve 90% of claims within 30 days of a natural disaster. Schnitzer emphasized that this efficiency could make a huge difference for policyholders. “After a hurricane, being able to settle a claim quickly is the difference between spending the holidays in a hotel ballroom or at home,” he said.

“Claims don’t age well,” he added. “The faster we process claims, the faster we settle on a fair price, and the better it is for both our customers and our shareholders.”

Climate Change: A Small Part of the Bigger Picture

While Schnitzer described himself as a “climate change believer” with a personal commitment to addressing the issue for the sake of future generations, he clarified that, according to Travelers’ data and external research, climate change itself is only a small part of the reason for the increasing costs of catastrophic losses.

Population growth, economic inflation, and factors such as aging infrastructure and outdated building codes are more significant contributors to the rising costs of disasters. Schnitzer made it clear that while he fully supports climate action, when it comes to allocating capital, it’s essential to take a data-driven, evidence-based approach.

“You need to understand all the contributing factors before you commit capital to a solution,” he said. “This allows you to develop the best possible strategies and present data-driven solutions to policymakers, especially in the context of climate change.”

The Importance of Scale in the Future of Insurance

Schnitzer also discussed the role of scale in the future of insurance, particularly in light of Travelers’ investments in technology and artificial intelligence (AI). He explained that the increasing complexity of the industry would make it more challenging for smaller, niche players to compete.

“Scale is going to become increasingly important in the insurance industry,” Schnitzer predicted. “In the past, being small and niche could work, but that’s becoming harder and harder to sustain.”

He continued, “I don’t think Travelers is uniquely positioned, but I also don’t think there are many companies investing large sums of money in such effective ways—developing technology and AI that will transform the way we operate. We have the data to fuel that technology, and the balance sheet to manage the uncertainties and volatility in the market.”

Schnitzer noted that the growing importance of scale would affect the availability and cost of reinsurance, further consolidating premium business with large, well-capitalized companies that can leverage technology effectively.

“Over time, the industry will experience a gravitational pull, with premium consolidation moving from companies without scale to those that are both large and leveraging their scale effectively,” he added.

The Impact of AI on Insurance Operations

Earlier in the discussion, Schnitzer made a bold statement about the transformative potential of AI in insurance. “The impact of AI on the industry is going to be profound,” he said. Schnitzer highlighted practical examples of how AI is already enhancing Travelers’ operations, from AI-assisted first notice of loss to the automated processing of about half of all claims.

In particular, he shared how AI had improved the efficiency of underwriting in specialty insurance. In the past, handling submissions—often coming in unstructured formats like emails or faxes—took an average of two hours. But after integrating AI, the process now takes just two minutes.

“We’re now handling thousands of submissions more efficiently each month,” Schnitzer explained. “Our agents and brokers tell us that in many cases, the first quote gets the business. That’s a major competitive advantage for us.”

Conclusion

Schnitzer’s insights reveal a focus on long-term thinking, scale, and technological investment as the core pillars of Travelers’ strategy. By focusing on managing risks effectively, investing in specialized teams, and using advanced technologies like AI, the company aims to position itself to not just survive but thrive in an increasingly uncertain world. The message is clear: for an insurance company to succeed in the future, it must not only be able to navigate immediate challenges but also scale efficiently and think strategically for the long haul.

According to language unveiled Monday by Senate Finance Committee Chair Mike Crapo (R-Idaho), the budget reconciliation bill will include measures to tax the profits earned by litigation funding companies.

The insurance sector has frequently criticized litigation funding—where third parties invest in lawsuits in exchange for a portion of settlements or judgments—as a major factor driving up litigation expenses. Because there is no federal mandate requiring disclosure of litigation funding agreements in court proceedings, the full scope of the practice remains unclear. However, litigation financing consultant Westfleet reported that assets under management in this sector reached $16.1 billion in 2024.

Currently, third-party litigation funding (TPLF) contracts are structured so that funders can evade partial or full U.S. taxes on their earnings. Critics argue that litigation funders often pay lower taxes on their share of lawsuit awards than the plaintiffs themselves. This tax advantage is even greater for foreign investors, who reportedly avoid taxation altogether.

Related: Court Orders Begin to Reveal ‘Startling’ Data on Litigation Funding Sources

Jimi Grande, Senior Vice President of Federal and Political Affairs at the National Association of Mutual Insurance Companies (NAMIC), stated that for over a year, the trade group has viewed tax reform as a prime opportunity to tackle a major issue undermining the court system at the cost of numerous industries and consumers.

“Abuse of the legal system costs American households thousands of dollars annually, and third-party litigation funding for profit is a significant contributor to these costs,” Grande said. “We commend Senate Republicans for taking action to close this tax loophole, which has been exploited by predatory funders—many of whom are foreign—to the detriment of the U.S. judicial system and hardworking Americans.”

Related: Most Americans Support Legal Reforms Targeting Practices Like Litigation Funding: Survey

The American Property Casualty Insurers Association (APCIA) has also prioritized combating legal system abuses, including TPLF. Regarding the recent legislative effort, Sam Whitfield, APCIA’s Senior Vice President of Federal Government Relations, told Insurance Journal, “Closing this tax loophole is vital to restoring fairness in the civil justice system and reducing costs. APCIA applauds the Senate for backing reasonable reforms against legal system abuses and including this legislation in the reconciliation package.”

A recent consumer guide on legal system abuse by the Insurance Information Institute (Triple-I) and Munich Re US estimates that legal system abuse adds about $6,664 annually to the cost of goods and services for each American household, and imposes $160 billion in tort costs on small businesses.

Earlier this month, Representative Kevin Hern (R-Okla.) introduced HR 3512, known as the Tackling Predatory Litigation Funding Act. Senator Thom Tillis (R-N.C.) has introduced a companion bill in the Senate. Both proposals focus on taxation, aiming to levy litigation funders’ profits at the highest individual income tax rate of 37% plus an additional 3.8%.

At present, the state’s Department of Insurance covers the average $3,075 expense for each arbitration hearing. Insurance Commissioner Andrew Mais believes that making insurers responsible for part of these costs could discourage unnecessary arbitration.

These arbitration hearings occur when mediation fails to resolve disagreements regarding automobile physical damage and property damage liability claims, where liability and coverage issues are not contested.

Under the new law, insurers would be required to reimburse the state $3,075 for each arbitration hearing where the claimant prevails, unless the claimant had declined a pre-arbitration offer from the insurer that was equal to or greater than the arbitration award.

According to the bill’s legislative analysis, the department conducts about 29 arbitration hearings annually, with roughly 15 resulting in decisions favorable to the claimant. This change could generate reimbursements of approximately $35,000 in fiscal year 2026 and just under $50,000 each year thereafter starting in fiscal year 2027.

State analysts believe this reimbursement rule may reduce the total number of hearings by incentivizing insurers to settle disputes before arbitration to avoid paying the fee. Commissioner Mais supports the bill for this reason, stating it will promote “pre-arbitration resolution of automobile physical damage claims, leading to a more efficient process for both consumers and insurers.”

While the Department of Insurance’s current annual budget exceeds $35 million, and the cost associated with these arbitration hearings is relatively small, insurance industry groups have raised concerns about the measure. They argue that insurers already fund the department’s operations through assessments, so arbitration costs should be managed within the department’s budget rather than billed separately.

Representatives from the Insurance Association of Connecticut, the American Property and Casualty Insurance Association, and the National Association of Mutual Insurance Companies expressed uncertainty to lawmakers about whether any other state imposes separate fees on insurers for similar arbitration hearings.

Instead of charging insurers separately, these groups suggested collaborating with the insurance department to ensure it receives adequate funding through its existing budget.

The bill is now with Governor Ned Lamont, who has 15 days from June 4 to either sign or veto it. If no action is taken, the bill will automatically become law on October 1, 2025.

According to the insurance department, the current arbitration fee structure includes a non-refundable $925 fee plus a $1,350 arbitrator fee, totaling $2,275 due when a case is referred to the American Arbitration Association (AAA). If the case settles or is withdrawn before an arbitrator is assigned, AAA refunds the $1,350 arbitrator fee, leaving a $925 net cost to the department. However, if the case proceeds to arbitration, an additional $800 administrative fee is charged, raising the total cost to $3,075 ($2,275 plus $800).

Based in Daytona Beach, Florida, Brown & Brown will be purchasing RSC Topco Inc., the Boston-headquartered holding company for Accession—currently one of the largest privately owned insurance brokerages in the United States.

Risk Strategies ranked 11th on Insurance Journal’s 2024 list of Top 100 Property/Casualty Agencies.

Upon the deal’s expected completion in the third quarter of 2025, Risk Strategies will be integrated into Brown & Brown’s retail division. John Mina, CEO of Accession, is set to join the senior leadership team within the retail segment.

In addition, Brown & Brown plans to establish a new specialty distribution division to include its programs and wholesale brokerage services. This new unit will be led by Steve Boyd and Chris Walker, and One80 Intermediaries will become part of the group. Matt Power will assume a leadership role within the newly formed segment.

Founded in 1997, Accession has over 5,300 employees across the United States and Canada and generated approximately $1.7 billion in revenue in 2024. Risk Strategies’ 2024 placement on Insurance Journal’s Top 100 P/C Agencies reported about $1.3 billion in property/casualty revenue. The company’s total written premium for the year reached $8.55 billion, with $7.8 billion from commercial lines.

“Joining forces with Risk Strategies and One80 gives us an exceptional opportunity to combine strengths and expand our growth trajectory,” said J. Powell Brown, president and CEO of Brown & Brown, in a statement released on June 10.

He added, “The businesses built by Mike Christian and John Mina on the retail side, and by Matt Power in the wholesale and program space, offer capabilities that complement and enhance what we already do. Integrating their expertise with Brown & Brown will allow us to expand our market access and customer offerings in a meaningful way. Together, we’ll be even stronger.”

Reflecting on the decision to partner with Brown & Brown, Mina said, “When we started looking at our next major chapter, it was critical that any potential partner be fully aligned with our goals—to grow, innovate, lead, and uphold the values that define our culture. Brown & Brown checks all those boxes.”

With nearly $4.3 billion in revenue, Brown & Brown is the seventh largest insurance brokerage globally, according to AM Best’s 2024 rankings. The acquisition aligns with a wave of recent consolidation activity among the world’s top brokers.

Arthur J. Gallagher recently agreed to buy AssuredPartners for $13.45 billion in cash to strengthen its U.S. middle-market presence. Gallagher’s deal follows two other major transactions in the space: Marsh McLennan’s $7.75 billion acquisition of McGriff Insurance Services in November 2024 and Aon’s $13 billion purchase of NFP in April 2025.

Earlier in 2025, Gallagher also finalized the acquisition of Woodruff Sawyer for $1.2 billion.

Despite these blockbuster deals, M&A activity in the insurance sector slowed during the first quarter of 2025. According to investment bank OPTIS Partners, Q1 was the slowest for insurance agency M&A since Q2 2020. However, the firm suggested that Gallagher’s acquisition of Woodruff Sawyer could mark the beginning of a new surge in large-scale transactions this year.

The lawmakers effectively overturned the high court’s decision that changed the way temporary partial disability benefits are awarded. Insurance industry experts warned that this court-initiated change could have driven up workers’ compensation claim costs by as much as 265% for both public and private employers.

In March, the Connecticut Supreme Court reversed established precedent in Gardner v. Dept. of Mental Health & Addiction Services. The ruling determined that workers’ compensation administrative law judges (ALJs) have the authority to grant temporary partial disability benefits for up to 520 weeks, rather than requiring those benefits to be converted to permanent partial disability benefits after the claimant reaches maximum medical improvement.

In response, lawmakers included a provision in a supplemental budget bill to eliminate the ALJ’s discretion to award temporary partial disability benefits and prevent the expected rise in costs tied to the ruling, which would have impacted both the state and numerous self-insured municipalities.

The legislative correction was quickly approved by the Judiciary Committee and incorporated into the budget measure (HB 6863) addressing state budget overruns.

According to a legislative analysis, this fix could save the state more than $4 million annually, though the exact savings may fluctuate depending on the number of cases and rulings by administrative law judges.

Connecticut Court Restores Discretion to Administrative Law Judges in Workers’ Compensation Cases

Representative Jack Fazzino (D-Meriden), vice chair of the Judiciary Committee, described the potential impact of Gardner on the state and local governments as “really very radical.”

Eric George, president of the Insurance Association of Connecticut, told the Connecticut Mirror that municipalities, insurers, businesses, trial attorneys, and labor groups swiftly reached consensus that action was necessary. “That does not happen often,” George noted.

The Gardner decision overturned both a 2024 state appellate court ruling and an earlier workers’ compensation board decision that favored the injured worker’s employer—the state Department of Mental Health—which had argued that administrative law judges lacked such discretion. The Supreme Court justices interpreted the “clear and unambiguous language” of the statute (§ 31-308) to mean that the ALJ “may” but is not required to award permanent partial disability benefits once maximum medical improvement is reached.

The court also rejected the employer’s argument that legislative amendments made in 1993 altered the statute’s wording or meaning regarding the judge’s discretion. Additionally, the court dismissed claims that legislative history of those amendments changed the interpretation.

The Workers’ Compensation Commission employs 15 administrative law judges who handle dispute resolution hearings across its eight district offices.

This 57% figure marks the highest insurance shopping rate ever recorded in the 19-year history of the study. While shopping rates spiked early in 2024 as a direct response to soaring insurance premiums, they remained high even as the rate of increases cooled throughout the year. J.D. Power attributes this persistent activity to a growing consumer awareness of options and a willingness to switch insurers for better prices or service.

“Auto insurance rate taking reached multi-decade highs in the first quarter of 2024, which put record numbers of customers into the market shopping for lower-priced policies as the year progressed,” said Stephen Crewdson, Managing Director of Insurance Business Intelligence at J.D. Power. “As rate activity began to fall in the second half of 2024, many shoppers were successful at finding lower-priced policies. That combination of increased shopping and less rate taking created a bit of a snowball effect for much of the year, but we are seeing signs that shopping rates are starting to normalize.”

Bundling and Customer Retention

An important trend emerging from the study is the role of policy bundling in both cost savings and customer retention. Roughly one-third (33%) of insurance shoppers reported that they were looking to bundle their auto insurance with homeowners or renters insurance to secure better deals. Bundling not only helps consumers save money, but it also appears to benefit insurers, as bundled policyholders stay with their insurers longer — averaging 7 years versus just 5.5 years for non-bundled customers.

Rise of Embedded Insurance

Another developing trend posing both opportunities and challenges for traditional insurers is the rise in consumer interest in embedded insurance — policies offered directly through automobile dealerships, manufacturers, or finance companies. According to the study, 37% of customers expressed interest in buying auto insurance at the point of sale or directly from their vehicle provider. This model offers convenience and simplicity, especially for younger generations.

Interest is particularly high among Gen Y and Gen Z consumers (47%), and among those who cite customer service as their top reason for shopping for new policies (48%). This growing preference for embedded insurance reflects a broader shift in how consumers expect to interact with services — prioritizing seamless, digitally integrated experiences.

Telematics and Usage-Based Insurance Programs

In the search for lower rates, some drivers are turning to Usage-Based Insurance (UBI) programs, which use telematics to monitor driving habits, mileage, and safety to adjust premiums. While 17% of insurers offered UBI options in 2024, this is a slight rise from 15% the previous year but a notable decline from 22% in 2023.

Though UBI can offer significant discounts to safe drivers, its adoption appears to have plateaued. The decline may be due to privacy concerns, lack of awareness, or complexity in usage, suggesting that while interest remains, insurers may need to better communicate the benefits and ease of participation in such programs.

What This Means for the Auto Insurance Industry

The J.D. Power study, which surveyed over 12,720 auto insurance customers who had requested a quote from a competing insurer in the past six months, provides deep insights into evolving consumer behaviors. Conducted from April 2024 to January 2025, the study paints a clear picture of a highly active and discerning insurance customer base.

Key takeaways for insurers include:

• Price sensitivity is still a dominant driver of shopping behavior, even as rates stabilize.

• Customer retention strategies, such as bundling, should be prioritized to reduce churn.

• Embedded insurance and digital distribution channels are gaining popularity, especially among younger, tech-savvy customers.

• UBI programs, though promising in theory, need better positioning and education to regain traction.

As the insurance industry looks ahead to the rest of 2025, understanding and adapting to these shifting dynamics will be crucial. Insurers that invest in personalization, digital engagement, and transparent pricing models will likely emerge as the winners in an increasingly competitive marketplace.

This development marks a significant milestone in SMBC’s financial recovery strategy after Western sanctions — imposed in response to Russia’s invasion of Ukraine — forced aircraft lessors to terminate contracts with Russian airlines. SMBC, headquartered in Dublin and owned by a Japanese consortium including Sumitomo Corporation and Sumitomo Mitsui Financial Group, was among several global lessors caught in the crossfire.

Background: Sanctions and Stalled Jets

In 2022, SMBC recorded a $1.6 billion impairment — a proactive financial move to absorb the full expected loss from 34 aircraft that became effectively stranded within Russian territory. These jets, originally leased to Russian carriers, became inaccessible to foreign lessors due to the European Union’s sanctions, which banned the export of aircraft and parts to Russia and terminated leasing contracts.

While the jets remained under the control of Russian airlines, lessors turned to their contingent insurance coverage, often referred to as “war risk” or “confiscation insurance,” to recoup their financial losses.

SMBC was one of six major lessors that had initiated legal proceedings in the Irish courts against their insurers. However, the legal battle concluded last month when the plaintiffs withdrew the case following a series of successful settlements, paving the way for significant cash inflows to the affected firms.

Record-Setting Profits and Stable Core Operations

Outside of insurance recoveries, SMBC’s core business has remained resilient. For the fiscal year ending March 2025, the company reported a 22% year-over-year increase in pre-tax profits, reaching a record $563 million — and that figure excludes the benefit of the insurance settlements.

According to the report, core lease rental revenue rose modestly by 3%, totaling $2 billion. Additionally, SMBC capitalized on strong demand for used aircraft by executing asset sales totaling $1.9 billion, which included the sale of 48 older aircraft. This strategic move not only optimized the company’s portfolio but also injected fresh liquidity into its balance sheet.

Industry-Wide Implications and the Path Ahead

SMBC’s financial recovery is emblematic of a broader trend among aircraft lessors impacted by the war in Ukraine. Several peers, including AerCap and Avolon, have also been pursuing settlements with insurers, reflecting a growing acceptance among industry stakeholders that reclaiming physical aircraft from Russia may be unattainable.

While the loss of aircraft remains a significant blow, the ability to recover funds through insurance has mitigated long-term damage. The precedent set by SMBC and others may also influence how future lease contracts and insurance policies are drafted — with a stronger emphasis on geopolitical risk clauses.

Looking ahead, SMBC appears well-positioned to continue growing in a recovering aviation market. With increased profitability, a more streamlined fleet, and a major portion of Russian-related losses now covered, the company has demonstrated not just resilience, but also a sharp ability to navigate extraordinary challenges.

Conclusion

The $1.41 billion in insurance proceeds stands as both a recovery and a vindication of risk management strategies employed by SMBC Aviation Capital. While the jets may remain grounded in Russia, the company’s financial results show that its global ambitions are still very much in flight.

Insurance is a contract, represented by a policy, in which a policyholder receives financial protection or reimbursement against losses from an insurance company. The company pools clients’ risks to make payments more affordable for the insured. Most people have some insurance: for their car, their house, their healthcare, or their life. Insurance policies hedge against financial losses resulting from accidents, injury, or property damage. Insurance also helps cover costs associated with liability (legal responsibility) for damage or injury caused to a third party

KEY TAKEAWAYS

• Insurance is a contract (policy) in which an insurer indemnifies another against losses from specific contingencies or perils.
• There are many types of insurance policies. Life, health, homeowners, and auto are among the most common forms of insurance.
• The core components that make up most insurance policies are the premium, deductible, and policy limits.

How Insurance Works

Many insurance policy types are available, and virtually any individual or business can find an insurance company willing to insure them—for a price. Common personal insurance policy types are auto, health, homeowners, and life insurance. Most individuals in the United States have at least one of these types of insurance, and car insurance is required by state law.

Businesses obtain insurance policies for field-specific risks, For example, a fast-food restaurant’s policy may cover an employee’s injuries from cooking with a deep fryer. Medical malpractice insurance covers injury- or death-related liability claims resulting from the health care provider’s negligence or malpractice. Businesses may be required by state law to buy specific insurance coverages.

There are also insurance policies available for very specific needs, such as kidnap, ransom and extortion insurance (K&R), identity theft insurance, and wedding liability and cancellation insurance.

Insurance Policy Components

Understanding how insurance works can help you choose a policy. For instance, comprehensive coverage may or may not be the right type of auto insurance for you. Three components of any insurance type are the premium, policy limit, and deductible.

Premium

A policy’s premium is its price, typically a monthly cost. Often, an insurer takes multiple factors into account to set a premium. Here are a few examples

• Auto insurance premiums: Your history of property and auto claims, age and location, creditworthiness, and many other factors that may vary by state.
• Home insurance premiums: The value of your home, personal belongings, location, claims history, and coverage amounts.
• Health insurance premiums: Age, sex, location, health status, and coverage levels.
• Life insurance premiums: Age, sex, tobacco use, health, and amount of coverage.

Much depends on the insurer’s perception of your risk for a claim. For example, suppose you own several expensive automobiles and have a history of reckless driving. In that case, you will likely pay more for an auto policy than someone with a single midrange sedan and a perfect driving record. However, different insurers may charge different premiums for similar policies. So finding the price that is right for you requires some legwork.

Policy Limit

The policy limit is the maximum amount an insurer will pay for a covered loss under a policy. Maximums may be set per period (e.g., annual or policy term), per loss or injury, or over the life of the policy, also known as the lifetime maximum.

Typically, higher limits carry higher premiums. For a general life insurance policy, the maximum amount that the insurer will pay is referred to as the face value. This is the amount paid to your beneficiary upon your death.

The federal Affordable Care Act (ACA) prevents ACA-compliant plans from instituting a lifetime limit for essential healthcare benefits such as family planning, maternity services, and pediatric care.4

Deductible

The deductible is a specific amount you pay out of pocket before the insurer pays a claim. Deductibles serve as deterrents to large volumes of small and insignificant claims.

For example, a $1,000 deductible means you pay the first $1,000 toward any claims. Suppose your car’s damage totals $2,000. You pay the first $1,000, and your insurer pays the remaining $1,000.

Deductibles can apply per policy or claim, depending on the insurer and the type of policy. Health plans may have an individual deductible and a family deductible. Policies with high deductibles are typically less expensive because the high out-of-pocket expense generally results in fewer small claims.