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Moving into 2025, the commercial property insurance market appears to be stabilizing, and most renewals with favorable loss histories will see single-digit rate increases (non-catastrophe (CAT) exposed assets with good loss histories can expect flat to 10% rate increases). While some complex risk profiles are still difficult to place and challenges remain in high-risk areas with persistent capacity and pricing pressures (e.g., wildfire zones), the double- or triple-digit rate increases the commercial property insurance segment saw in 2023 are less common. Although the market appears to be more stable and competitive, updated CAT models may affect the risk appetite of insurers and lead to pricing fluctuations.   Developments and Trends to Watch: Natural Disasters Through October 2024, the United States saw 24 weather and climate disasters with losses exceeding $1 billion, according to the National Oceanic and Atmospheric Administration. As of the third quarter of 2024, insured losses from natural disasters reached approximately $108 billion, with severe convective storms being the primary cause. Hurricane Helene incurred insured losses estimated between $10 billion and $15 billion, making it the costliest event in the year’s first nine months. Furthermore, projected losses from Hurricane Milton are expected to range from $30 billion to $60 billion. Overall, total insured losses for 2024 are anticipated to exceed $140 billion, indicating another year of significant financial impact from natural disasters. A Stable Reinsurance Market and Increased Capacity The reinsurance market stabilized in 2024 and is expected to recover close to pre-COVID-19-pandemic highs. This surge has been fueled by increased involvement from capital markets through instruments such as insurance-linked securities, CAT bonds and sidecar arrangements, resulting in significant growth in available capacity. Additionally, higher retentions by policyholders have contributed to lower losses for reinsurers. The increased access to reinsurance capital has enabled direct insurers to offer increased capacity for renewals or new business. High-risk accounts are taking advantage of increased capacity through shared and layered programs from international markets like London and Bermuda. Effectively, insurers have more capital available and are willing to take on portions of larger, more complex risks, making it easier for some insureds to secure coverage. Insurance-to-value (ITV) Considerations ITV calculations are critical, as they help insureds determine the appropriate amount of property coverage by assessing an asset’s actual, market and replacement value. Securing an accurate ITV calculation has been challenging; a property’s value is often affected by factors like inflation and material costs, both of which have been volatile in recent years. An accurate ITV calculation represents as close to an equal ratio as possible between the amount of insurance a business obtains and the estimated value of its commercial building or structure, thus ensuring adequate protection following potential losses. Common approaches to accurately estimating this value include getting a property appraisal from a third party firm, leveraging fixed-asset records that have been adjusted for inflation or relying on a basic benchmarking tool (e.g., dollars per square foot). • Continued interest in alternative risk financing: Alternative risk transfer options can provide more customized solutions and, in some cases, cost savings. There are several options available to risk managers, including captives, parametric coverage and structured fronting. Captives are insurance companies formed by one or more parent companies to insure their own risks rather than relying on third-party insurers. As natural disasters become more severe, parametric coverage has risen in popularity. Under such coverage, the amount a policyholder is compensated isn’t decided by the exact cost of damages sustained but by the calculated intensity of the covered event itself. Structured fronting is an insurance solution that allows insureds to manage their own risk. In these arrangements, policies are written by an insurer, but most or all the risk is passed on to the insured or another third party (e.g., a captive or reinsurer).

In the most recent Overdrive Webinar, participants learned about the challenges in the auto liability marketplace, and how it is crippling the trucking industry. Our industry expert went into depth on how the best trucking companies are out performing their peers, by leveraging a group captive program. Key Takeaways: Commercial auto insurance market continues to face challenges and explored strategic solutions for implementation. While the process may seem complex, expert support is available every step of the way. Captive programs provide a different approach to trucking companies looking for insurance. Click here to view the presentation.

How J.J. Keller Reduced Pharmacy Spend by 22% The Situation As a certified Great Place to Work®, J. J. Keller & Associates, Inc. is committed to providing high-quality, affordable healthcare for their 1,800 associates and their families. In an effort to reduce associates’ need to shoulder an increasing healthcare burden as prices increase, their approach has been to find win-win solutions whereby they employ smart healthcare consumerism as a company so their associates and their families receive the medical care they need Key Wins Why They Needed Change Despite partnering with a major health insurance provider, J. J. Keller's self-insured health plan faced mounting challenges: 14% year-over-year increase in pharmacy costs Unfulfilled promises of 20%+ cost reductions through discounts and rebates 2,700 covered members affected by rising costs Lack of transparency in vendor relationships and pricing structures Misaligned incentives with existing PBM relationship "This change was so impactful that we were able to give associates a 'premium holiday' in December to share in the savings during a costly time of year. We and our associates also have a renewed sense of faith in our ability to actually manage healthcare costs with the addition of new strategies going into 2025." Amy Jansen | J. J. Keller & Associates, Inc. The Cottingham & Butler Approach Strategic Assessment J. J. Keller engaged an external pharmacy consultant to: Evaluate existing program effectiveness Identify conflicts of interest in current partnerships Move focus away from superficial "discounts" on inflated prices PBM Transformation The company transitioned to a new pharmacy benefit manager with: Zero markup on dispensed medications No retained rebates Clinical focus on cost-effective alternatives Pass-through pricing model Independent, privately-held structure Employee Empowerment Implemented new support tools including: Direct pharmacist consultations for medication alternatives User-friendly prescription price comparison platform Automated copay assistance enrollment By focusing on transparency and alignment in their vendor partnerships, J. J. Keller transformed their pharmacy benefits program, achieving substantial cost savings while enhancing the employee healthcare experience.

On Dec. 2, 2025, the IRS issued Notice 2025-68 announcing upcoming regulations and providing initial guidance regarding Trump Accounts. Created by the One Big Beautiful Bill Act (OBBBA), Trump Accounts are a new type of tax-favored savings account for children under the age of 18 that will be available in 2026. This Legal Update summarizes the guidance from Notice 2025-68, including the rules for employer contributions to Trump Accounts. General Overview Contributions to Trump Accounts may start July 4, 2026 (one year after the OBBBA’s enactment), and can be made by anyone, including the account beneficiary, parents or guardians, grandparents, employers, philanthropic contributors or any other source. Children born between 2025 and 2028 may be eligible to receive a special $1,000 contribution from the federal government through a pilot program. Taxpayers will use IRS Form 4547 to establish Trump Accounts for eligible children. This same form is used to make an election to participate in the federal government’s $1,000 pilot program. Beginning in May 2026, the IRS will send information to taxpayers who make this election to activate Trump Accounts through an authentication process. The IRS has indicated that a draft version of Form 4547 will be made available here . Special Rules Notice 2025-68 clarifies that Trump Accounts are a type of traditional individual retirement account (IRA) subject to special rules during the “ growth period ,” which is the period that ends before Jan. 1 of the calendar year in which the account beneficiary attains age 18. For example, a child born on Oct. 1, 2025, would attain age 18 on Oct. 1, 2043, and therefore the last day of the growth period for that child would be Dec. 31, 2042. After the growth period, most of these special rules cease to apply, and the rules governing traditional IRAs generally apply to Trump Accounts. The following special rules apply to Trump Accounts during the growth period: Investments: Funds may be invested only in eligible investments. An eligible investment, generally, is a mutual fund or exchange traded fund that tracks an index of primarily U.S. companies, such as the Standard and Poor’s 500 stock market index, does not use leverage, does not have annual fees and expenses of more than 0.1% of the balance of the investment in the fund, and meets other criteria that the IRS determines appropriate; Contributions: Contributions are subject to an annual limit of $5,000 (subject to cost-of-living adjustments after 2027), although certain types of contributions are not counted toward this limit, such as the federal government’s $1,000 pilot program contributions and contributions from governments or tax-exempt organizations. Contributions are not includible in the account beneficiary’s income for federal tax purposes when they are made; Distributions: Distributions are not allowed from Trump Accounts during the growth period, subject to a few limited exceptions. After the end of the growth period, distributions are generally subject to the rules that apply to traditional IRA distributions, including the 10% additional tax on early distributions if an exception does not apply (such as a distribution for qualified higher education expenses or first home purchases or distributions made after age 59 and a half); and Reporting: Trump Accounts are subject to additional reporting requirements, such as providing information regarding the source of contributions, under Internal Revenue Code (Code) Section 530A(i) during the growth period. After the growth period, the IRA reporting requirements of Code Section 408(i) apply. Employer Contributions Employers can contribute to the Trump Account of an employee or an employee’s dependent pursuant to a Code Section 128(c) Trump Account Contribution Program. These contributions are not includible in the employee’s income for federal tax purposes. Contributions are limited to $2,500 per employee per year , subject to cost-of-living adjustments after 2027. This program must be established pursuant to a written plan document and must meet certain tax rules that apply to dependent care assistance programs regarding discrimination, eligibility, notifications and benefits. Notice 2025-68 also provides the following guidance for employer-sponsored Trump Account Contribution Programs: The annual contribution limit is a per-employee limit (not a per-dependent limit). For example, if an employee has two or more children who have Trump Accounts, an employer may only contribute up to $2,500 in the aggregate for 2026 to those Trump Accounts; An employer must affirmatively indicate to the trustee of the Trump Account that the employer’s contribution is a Section 128 employer contribution excludible from the gross income of the employee; and A Trump Account Contribution Program may be offered via salary reduction under a Section 125 cafeteria plan if the contribution is made to the Trump Account of the employee’s dependent but not if the contribution is made to the Trump Account of the employee. More Guidance The Treasury and the IRS have indicated they will issue proposed regulations on a variety of topics related to Trump Accounts in the future, including the coordination of Trump Account Contribution Programs and Section 125 cafeteria plans. Employers that are interested in making Trump Account contributions should watch for additional implementation guidance, including these proposed regulations. More general information on Trump Accounts is also available at trumpaccounts.gov

The Challenge A South Carolina transportation company was stuck. Their current insurance agent couldn't secure higher cargo limits, struggled with coverage for their freight brokerage operations, and took a reactive approach to renewals. When they asked about captive insurance programs, their agent had no solutions. The company knew they needed more than just insurance - they needed a strategic partner who understood transportation and could fuel their growth. Why Cottingham & Butler Their broker research led them to Cottingham & Butler, drawn by our deep transportation expertise and proven track record with specialized carriers. When we first sat down with this company, we didn't just pitch services - we evaluated their program structure and showed exactly how we could solve their coverage challenges. We demonstrated our strategic renewal process, shared benchmark data from similar fleets, and outlined a clear path to captive insurance participation. Most importantly, we proved we had the carrier relationships to deliver results their previous agent couldn't. The Results Within one month of partnering with Cottingham & Butler: 20% reduction  on auto liability renewal Doubled cargo limits  while reducing overall rates Expanded coverage  for their freight brokerage New carrier relationships  bringing competition to their renewals Clear roadmap  for captive insurance transition What Made the Difference Industry Expertise : Our deep knowledge of transportation risks helped us identify opportunities others missed. Market Relationships : Our established carrier connections opened doors that were previously closed. Strategic Approach : Instead of reactive renewals, we implemented a proactive strategy that delivered measurable results. Analytics & Benchmarking : We provided data-driven insights showing how they compared to industry peers, validating their safety investments. The Takeaway The right insurance partnership doesn't just manage risk - it enables growth. This client went from feeling limited by their insurance program to having a competitive advantage in just 30 days. When your insurance agent becomes your ceiling instead of your foundation, it's time for a change.

Cargo theft has evolved from opportunistic pilferage into sophisticated, digitally-orchestrated schemes costing the trucking industry billions. New research from the American Transportation Research Institute reveals just how serious this threat has become. How Thieves Operate Today Strategic Theft : Sophisticated schemes involving load board manipulation, identity theft, and double-brokering. Criminals pose as legitimate carriers and intercept loads digitally. This is now the most common threat facing logistics service providers. Pilferage : Partial cargo theft from trailers at rest stops or parking locations. These incidents add up quickly and are rarely recovered. Straight Theft : Physical theft of entire loads, often including trucks and trailers. What's Most at Risk Food and beverages top the list (they're consumable and untraceable), followed by electronics, automotive parts, and retail goods. Three Critical Defense Strategies 1. Build a Security Culture Educate drivers on theft prevention and situational awareness Establish strict parking and trailer drop protocols Vet carriers thoroughly and use multi-factor authentication Make security everyone's responsibility 2. Leverage Technology GPS tracking with virtual boundaries and real-time alerts when vehicles deviate from planned routes High-security locks and custom seals Facility surveillance systems Redundant tracking systems 3. Report Strategically  While 82% of carriers report theft to law enforcement, only 56% report to insurance - often due to concerns about premium increases. However, underreporting makes recovery harder and allows criminals to continue operating. How Cottingham & Butler Can Help Our transportation specialists understand the unique challenges facing motor carriers and logistics providers. We can help you: Assess your cargo theft vulnerabilities Implement prevention strategies that may reduce insurance costs Structure coverage to balance protection with budget Navigate the claims process efficiently Don't wait until you become a statistic. Contact your Cottingham & Butler representative today to discuss your cargo security and insurance strategy. Source: "The Fight Against Cargo Theft: Insights from the Trucking Industry," American Transportation Research Institute, October 2025

The winter months bring more than just cold weather and shorter days; they bring the possibility for winter storms that may result in a snow- and ice-covered landscape. While it may be a winter wonderland for some, as a property manager, snow and ice buildup means a hazard with the potential for costly liability. If you deal with either commercial or residential property, you are responsible for the side effects of winter. In legal terms, snow and ice are the same as any other hazard presented on a property, and just like any other hazard, property managers can be held liable if they cause injury. To avoid litigation resulting from winter injuries, it is important that you are vigilant in your snow and ice removal efforts. Recognizing and Preventing Hazards  Winter brings a variety of hazards that you need to prepare for; slips and falls are by far the most common injury associated with winter weather conditions. Diligent snow and ice removal can go far in keeping walkways and parking lots safe. Remove snow quickly after snowfalls, and salt regularly to keep ice from building up. Not all winter hazards are under foot, however. Icicles, along with other accumulations of frozen or heavy snow above walkways and building entrances, can cause serious injury if they fall on those below. Remove icicles and other buildup as soon as possible. If it still appears to present a hazard, consider rerouting foot traffic around the area. Performing preventative maintenance in the summer and fall can also keep you prepared for winter storms. Make sure eaves are properly installed, and check that downspouts are aimed away from walkways. If eaves leak or downspouts direct water onto walkways, snow that melts in the heat of the day has the potential to freeze and create a hazard with cooler nighttime temperatures. Transferring Responsibilities to Tenants  For smaller residential rentals, such as single family homes or duplexes, the responsibility for snow and ice removal is commonly accepted by the tenant. To make sure responsibility is clearly established in this situation, the lease should include a provision citing the tenants as responsible for any snow and ice removal. This section of the lease should also establish how long after a snowfall the tenant has to clear public areas such as sidewalks, as most municipalities have laws requiring prompt snow removal. It is important to be as specific as possible to avoid any unnecessary liability or disputes after heavy storms. Contracting Snow Removal  Based on the size and number of properties you manage and the average snowfall in your area, you may be inclined to contract out snow removal to an independent company. While this can save you the time and costs associated with managing snow removal yourself, it is important that you choose wisely to avoid complicating matters. First, make sure the contractor has sufficient resources to meet your demands. It is important that they can be onsite quickly after, or even during, a snowfall to make sure walkways and parking areas are cleared. It is also important that they have the equipment and manpower to finish the task quickly to reduce any disruption to tenants’ lives or businesses. Second, make sure the company you hire carries the proper insurance, covering both its operations and its employees. The last thing you want is to end up being liable for a worker’s injury when liability for injury is the very thing you were trying to avoid. Also, much like the lease agreement with a residential tenant, it is important to specify the conditions and time constraints for removal in writing. When contracting any type of service, it is essential to have a written contract that will guarantee you receive the services you pay for. It should be noted that hiring a removal service does not absolve you of liability. If the company you hire provides poor service, or simple does not show up at all, you are still the party responsible for any injury resulting from a winter hazard. Make sure to pick a reputable company that you can trust to do a good job, and always have a plan of action for removal if they are unable to complete the work as quickly or effectively as you require. How Cottingham & Butler Can Help Winter weather liability doesn't have to keep you up at night. At Cottingham & Butler, we specialize in helping property managers protect their businesses from seasonal risks and year-round exposures. Our risk management experts can review your current insurance coverage to ensure you're properly protected against slip-and-fall claims, property damage, and contractor-related incidents. We'll help you identify coverage gaps and recommend solutions tailored to your portfolio. Whether you manage residential or commercial properties, our proactive approach helps you minimize risk, reduce liability, and protect your bottom line when the temperature drops. Ready to winterize your risk management strategy?  Contact Cottingham & Butler today to speak with one of our property management specialists.

What began as unsustainable funding with loss ratios exceeding 100% transformed into three consecutive years of flat premiums through strategic risk transfer. This transformation delivered $540,000 in total savings while maintaining coverage for employees and their families. The Situation A state-funded school district with approximately 200 full-time employees, faced mounting financial pressure from escalating healthcare costs. As a state-funded entity, the district lacked the ability to raise revenue independently, making cost containment critical for operational sustainability. Like many public school districts with limited funding flexibility, they needed innovative solutions to manage healthcare costs while maintaining competitive benefits essential for attracting and retaining quality educators and staff. Why They Needed Change Fragile Funding Model:  As state-funded School District they lacked the ability to raise revenue independently, creating budget constraints. Compounding Financial Pressure:  Year-over-year loss ratios exceeded 100%, straining the district's budget and threatening the long-term affordability of employee healthcare coverage. "Magnet Plan" Concerns:  The plan offered disproportionately rich coverage, making it highly attractive to families and resulting in an elevated dependent ratio (~3.5 vs. benchmark 2.0), driving unsustainable utilization. Limited Revenue Options:  Unlike private employers, the district cannot simply raise prices or fees to offset healthcare cost increases, requiring strategic cost management solutions. Competitive Necessity:  Maintaining attractive benefits packages is essential for recruiting and retaining quality educators in a competitive job market. Key Wins Loss Ratio Transformation -  Reduced loss ratios from over 100% to 70%, creating sustainable financial foundation for the healthcare plan $495,000 Premium Stabilization  - Maintained flat premiums for 3 consecutive years, avoiding significant cost increases that would have strained district budget $540,000 Total Savings-  Cumulative savings through Year 3, with $155,000 in net savings achieved in Year 1 alone Family Advantage Health Plan Success  - Strong early FAHP adoption doubled after Year 1, demonstrating employee acceptance and program effectiveness Risk Transfer Strategy  - Successfully leveraged risk transfer mechanisms to stabilize financial exposure while maintaining coverage Future Innovation Pipeline -  Positioned for next phase improvements with proposed MyAdvocate360 implementation What is Family Advantage Health Plan (FAHP)? The Family Advantage Health Plan is an innovative program that provides 100% healthcare coverage to eligible employees' families. Employees with access to a spouse's health plan can transition to dual coverage, receiving full reimbursement for out-of-pocket expenses through an HRA plus monthly premium assistance. This creates a win-win scenario where high-utilization employees gain coverage while employers save an average of $10,000 per family of four that transitions. The program requires no changes to existing plans or relationships, allowing employers to improve their risk profile and reduce costs while maintaining valuable employee benefits. The Cottingham & Butler Approach Expert Risk Analysis Our experienced consultants conducted comprehensive 3 C's analysis to understand the district's unique challenges and identify optimal risk transfer opportunities aligned with their state-funded constraints. Analyzed loss ratio trends and cost drivers Evaluated dependent ratio impacts on plan sustainability Assessed funding model limitations and budget constraints Identified risk transfer opportunities and solutions Strategic Risk Transfer Implementation Understanding the district's funding limitations, we implemented Family Advantage Health Plan as a strategic risk transfer mechanism, providing employee protection while stabilizing district costs. Designed FAHP program with $50/month per person benefit Focused on out-of-pocket cost coverage to maximize employee value Structured program to transfer risk away from primary plan Created sustainable cost model aligned with district budget realities Ongoing Optimization and Innovation Our commitment extends beyond implementation to continuous improvement, monitoring results and identifying next-phase enhancements to maintain competitive advantage. Monitored adoption rates and employee satisfaction Tracked financial performance and cost savings Identified opportunities for further optimization Developed roadmap for future innovations like MyAdvocate360 Cottingham & Butler Employee Benefits See more client success stories at cottinghamButler.com/clientsuccess

Our recent webinar, "Safety Reimagined: Setting Goals That Actually Drive Change," challenged traditional compliance-focused metrics and offered practical strategies for developing safety goals that empower your workforce, build organizational resilience, and create a culture of continuous learning rather than blame. SMSC Safety Consultant Scott Christenson provided valuable takeaways to implement in your own safety programs. If you were unable to attend or want to revisit this session, view the webinar recording now! Key Takeaways: Balance lagging and leading indicators.  Use lagging indicators to validate system performance and leading indicators to guide proactive improvement efforts Make goals learning-oriented and context-aware.  Shift from zero-harm targets to goals focused on understanding how work is actually done and improving systems based on that reality. Involve frontline workers in the process. Engage the people doing the work in creating goals to ensure they're practical, relevant, and aligned with actual working conditions. Keep goals SMART and HOP-aligned. Structure goals to be specific, measurable, achievable, relevant, and time-bound, while maintaining the adaptability needed to respond to real-world complexity. Review and adjust regularly.  Goals and indicators should be revisited frequently to ensure they remain relevant and responsive to changing conditions. Click here to view the presentation.

Written by Brooke Boddicker, Benefits Communications Manager Open enrollment season doesn't have to be overwhelming for you or your employees. The key to success lies in how you communicate. Here are five best practices to help your benefits information break through the noise and drive meaningful engagement.   1. Use Multiple Channels Your workforce is diverse, and your communication strategy should be too. While some prefer digital channels, others might prefer tangible print materials. The right mix depends on your specific employee population, so choose channels that genuinely reach and engage your people. 2. Communicate in Phases Effective benefits communication follows a three-phase approach: announce early, prompt action during enrollment, and send reminders as deadlines approach. Repetition isn't redundant – it's strategic. Employees need time to digest information, discuss options with family, and make informed decisions. Early, repeated messaging significantly increases engagement and comprehension. 3. Keep the Language Simple Employees don't need to become benefits experts to get the coverage they need. Strip away the jargon and use bite-sized formats, real-world scenarios, and everyday language that connects benefits to their actual purpose in employees' lives. 4. Personalize Generic benefits materials get generic results. When communications reflect your company's brand and culture, they build credibility and trust.  5. Include Clear Calls to Action Don't leave employees wondering what to do next. Every communication should point them toward their next step, whether that's reviewing benefit summaries, enrolling in coverage, or contacting HR. Clear calls to action empower employees to take control of their benefits choices while preventing information overload in announcement materials.   Poor communication costs organizations an estimated $1.2 trillion annually in lost productivity (2022 Grammarly and the Harris Poll). But effective benefits communication does more than save money. It shows employees they're valued, improves satisfaction, and builds trust. When you make benefits information clear, accessible, and relevant, you're not just checking a compliance box. You're helping your people make decisions that protect their health, finances, families, and more. Need help developing a benefits communication strategy that breaks through? Contact our team to learn how we can support you and your company. https://www.cottinghambutler.com/hrefficiency

Written by Emily Glanz, VP Sales - Risk Management for the September/October 2025 issue of CFMA Building Profits. The construction risk landscape in 2025 and heading into 2026 is anything but static. Between billion-dollar storms, evolving underwriting appetites, and the rise of AI-powered everything, it’s proving to be a wild ride. This article translates insurance “legalese” into practical language to help leaders in construction navigate what’s happening and prepare for what’s next. Whether you’re a contractor trying to make sense of your builder’s risk renewal, a broker looking to see how others are viewing the market, or an underwriter wondering if you’re the only one still using a fax machine (you’re not), this article is for you. PROPERTY INSURANCE Commercial Property In 2025, the U.S. commercial property and builder’s risk insurance market is balancing volatility from climate-driven events with emerging construction innovation. Those forces have infused carrier optimism and a renewed willingness to deploy capacity and capital. Early in 2024, the property market began to show clearer signs of a shift, marked by rate relief and increased carrier appetite. However, weather-related events have not slowed, nor have they become less costly. According to Gallagher Re and reported by the Insurance Information Institute, global catastrophe losses at the end of 2024 totaled at least $402 billion, with 37.6% of those losses insured. 1  In the first half of 2025 alone, the U.S. reported over $100 billion in insured losses, with $19 billion driven primarily by convective storms and the Southern California wildfire. 2 Despite these challenges, the property market continues to show signs of rate relief and stabilization. Capacity is expanding, leading to increased competition and resulting in decreased rates, lower deductibles, and broader coverage, particularly for well-managed risks. Even historically difficult to insure properties in coastal regions have seen rate softening in 2025. For more, see Exhibit 1. Insurers are increasingly managing their exposure through quota share structures. This approach provides a buffer for both insureds and reinsurers. However, properties with prior losses or significant catastrophic exposure continue to face elevated rates and tighter underwriting terms. While the broader commercial property insurance market is showing signs of softening, contractors may not experience the same level of benefit. For the most part, due to lower total insured values, contractors have been relatively insulated from the harshest impacts of the hard market cycle. Property insurance often represents a smaller portion of their total cost of risk, which has helped shield them from steep premium increases. However, this also presents a catch-22: with lower premiums and modest property schedules, contractors have less leverage to negotiate significant rate reductions, even in a softening market. Additionally, many admitted carriers are still retroactively adjusting property valuations to account for inflationary pressures, which can offset potential savings. As a result, contractors should temper expectations for substantial premium decreases, especially when their property spend is minimal relative to their overall risk profile. Builder’s Risk Specific to the builder’s risk property market, Amwins 3  notes that projects classified as “difficult to place” fall into three primary categories: large wood frame construction, catastrophe-exposed construction, and catastrophe-exposed wood frame construction. Encouragingly, broader property market trends are beginning to influence these more complex placements, though underwriting scrutiny remains high. Carriers are prioritizing high-quality submissions that include complete and consistent data, clear jobsite planning and design, and strong security protocols throughout the construction process. In short, complete, consistent, and timely data up front enables efficient underwriting and drives more favorable results. Specific to risk engineering and underwriting, technology is playing an increasingly important role in risk assessment. Insureds that implement water flow detection systems, AI-powered security, and damage mitigation tools are viewed more favorably by underwriters. Water losses have continued to be a major driver in four-wall construction, so proactive measures and technology advancements can certainly yield a favorable underwriting result. 4 Meanwhile, project starts have slowed, particularly in the multifamily sector, as developers respond to tighter margins and macroeconomic headwinds. Building material sustainability is also gaining momentum as a strategic priority. Insurers are developing specialized products that support green building initiatives, including climate-resilient infrastructures and environmental-, social-, and governance-aligned construction practices. Using these methods can reduce absolute property losses in catastrophic events. From an insurance perspective, innovative solutions such as parametric insurance and alternative risk transfer mechanisms are gaining traction, offering faster recovery options and potentially providing new sources of capital for high-risk projects. Looking ahead, the market is expected to remain competitive, though caution is warranted. While rate relief may continue for favorable risks, the frequency and severity of natural catastrophes will continue to influence underwriting decisions. The long-term trajectory of rate relief amid uncontrollable catastrophic losses remains uncertain. Still, many in the industry recognize that current market conditions, while still volatile, present a window of opportunity. COMMERCIAL CASUALTY Auto The commercial auto liability insurance market in 2025 remains one of the most chronically challenging lines within property and casualty. According to the Council of Insurance Agents & Brokers (CIAB), auto liability posted an average rate increase of 10.4% in Q1 2025, the highest among all major property and casualty lines. 5  This marks 55 consecutive quarters of rate hikes, 6  which emphasizes how imbalanced the market is. Despite sustained double-digit rate increases, carriers continue to struggle with losses that consistently outpace premium growth. This leaves little room for relief, especially for insureds with large fleets, poor loss histories, or exposures tied to “gray fleet” operations. “Gray fleet” refers to vehicles not owned by a company but used for business purposes, typically employee-owned vehicles driven for work-related tasks. While these vehicles may not appear on a company’s balance sheet, they represent a significant liability exposure. As gray fleet usage grows, insurers are placing greater emphasis on how organizations manage this risk, including: Collecting insurance declarations from employee-owned vehicles Running motor vehicle records Implementing driver qualification standards Enforcing minimum age requirements (often excluding drivers under 25) Requiring 1-3 years of clean driving history One of the most alarming trends in commercial auto is the escalation of jury awards. The median commercial auto liability verdict has surged to $23.8 million, according to Captives Insure. 7 Nuclear and thermonuclear verdicts are also damaging to umbrella and excess liability layers, which are often triggered by catastrophic auto claims. Several interrelated factors continue to fuel the challenges in this line: Litigation and social inflation:  The rise of third-party litigation funding — an industry expected to be worth $30 billion by 2028 8  — has extended the duration and cost of legal battles. Plaintiff attorneys increasingly use psychological tactics, such as the reptilian theory, to ultimately cloud a juror’s judgement with emotional distress by casting the defendant as a threat to society. Distracted driving : Drivers aged 26-36 account for nearly half of all distracted driving incidents. 9  According to the National Highway Traffic Safety Administration, taking your eyes off the road for just five seconds at 55 mph is equivalent to driving the length of a football field blindfolded. 10  These behaviors are linked to 108% higher loss costs. 11 Driver shortages:  The ongoing shortage of qualified commercial drivers has led to increased reliance on less experienced operators, contributing to higher accident frequency and severity. Vehicle complexity and repair costs:  Modern vehicles equipped with advanced driver-assistance systems are significantly more expensive to repair. Supply chain disruptions and labor shortages have only exacerbated these costs. In response to these pressures, insurers are tightening underwriting standards, raising attachment points on liability towers, and adopting more conservative reserving practices. Insurers are increasingly turning to telematics, AI-driven underwriting, and predictive analytics to better assess and price risk. Many are explicitly excluding named drivers, requiring stricter driver qualification criteria and years of experience, and requiring insureds to frequently review their fleet safety protocols. “Best in Class contractors are taking a proactive stance on auto liability,” says TJ Greenwood of Safety Management Services Company, who works closely with members of the CSIL construction captive. “We’re seeing three key strategies make a real difference: First, leveraging technology (cameras, GPS, speed tracking, and telematics) to create accountability and unlock documentation that may be critical when incidents occur. Second, implementing a strong driver qualification program that mirrors the rigor of CDL standards but applies to every company driver. And third, reassessing personal use of company vehicles. What was once considered a company “perk” necessitates higher scrutiny, especially when employees are performing personal tasks in a vehicle bearing the company logo.” “The benefit of working within a loss-sensitive program, like a captive, is that members can go even further by partnering with their insurance carriers to unlock next level claim strategies. First call settlement programs can resolve qualifying claims within hours, often before attorney involvement. This may allow for a dramatic reduction in indemnity and expense. Additionally, commercial auto-focused predictive analytics identify high-severity claims early and provide rapid resolution protocol that should reduce settlements on flagged claims.” While other lines of insurance are beginning to show signs of softening, commercial auto remains firmly in a hard market cycle. The outlook for 2025 suggests continued rate pressure, particularly for accounts with large fleets, poor loss experience, or operations in high-risk jurisdictions. General Liability While the general liability (GL) insurance market remains relatively stable compared to auto liability, contractors face a more nuanced reality. According to CIAB, GL premiums rose by an average of 4.2% in Q1 2025, 12  reflecting moderate firming driven largely by social inflation and increased loss severity across industries. For most insureds, this translates to manageable increases, unless they operate in high-risk sectors or have adverse loss histories. For contractors, however, the story is more layered. The construction industry is experiencing a surge in dispute frequency, complexity, and value, which directly impacts how underwriters assess GL exposure. According to the 2024 Construction Disputes Report from Arcadis, the average value of construction disputes in North America rose to $43 million in 2023 (Exhibit 2). The average time to resolve disputes also increased to 14.4 months, underscoring the growing complexity of claims. 13 The most common causes of disputes — errors or omissions in contract documents and failure to understand or comply with contractual obligations — are directly tied to GL exposures. These issues often lead to bodily injury or property damage claims, especially when project delays, scope changes, or quality issues arise. This is affecting insurance programs because contractors are increasingly being scrutinized not just for their safety records, but for how they manage contractual risk, documentation, and dispute resolution. Consequently, underwriters are paying closer attention to: Contract language and risk transfer mechanisms Claims history involving subcontractor disputes or third-party injuries Use of digital tools for documentation and project controls The Arcadis report emphasizes that contract and specification reviews and risk management are the top two techniques for avoiding disputes. 14  These practices are also critical in demonstrating to insurers that a contractor is a lower risk GL exposure. As an outlook for contractors, it is reasonable to expect that while GL may not be experiencing the same volatility as auto or umbrella, contractors should not assume stability means limited information will suffice. The intersection of legal risk, project complexity, and dispute trends means that GL programs must be proactively managed. Umbrella & Excess Liability In 2025, the umbrella and excess liability market continues to feel the compounding effects of rising severity in underlying lines, particularly auto liability. According to CIAB, umbrella premiums rose by an average of 9.5% in Q1 2025, 15  reflecting ongoing pressure from catastrophic verdicts and limited carrier appetite for high-limit placements (Exhibit 3). For contractors, this is especially problematic. Large fleets, subcontractor-heavy operations, and complex project scopes increase the likelihood of high-severity claims that pierce primary layers. As a result, underwriters are not only raising rates but also reducing available capacity, particularly for accounts with transportation exposure or adverse loss histories. As a result, contractors must now approach umbrella placements with the same submission standard that is applied to primary lines. Insurers are scrutinizing driver qualification standards, gray fleet controls, and contractual indemnity language to assess how well risk is managed across the organization. Additionally, the rise in construction defect disputes adds another layer of concern, as bodily injury or property damage claims stemming from project delays or jobsite incidents can quickly escalate into excess limits. For contractors, the key to navigating this environment lies in proactive risk management, tight documentation, and early engagement with brokers and carriers to structure programs that reflect both the true exposures of their operations with the market’s evolving expectations. Workers’ Comp Workers’ comp continues to stand out as one of the most resilient and consistently performing lines in the commercial insurance market. In 2025, average rate changes have ranged from modest decreases to low-single-digit increases, with the CIAB Q1 2025 report noting an average rate reduction of -2.6%. 16  This stability offers contractors a degree of predictability and relief amid the volatility seen in auto, umbrella, and GL lines. Strong underwriting results and favorable loss ratios have helped maintain this trend, making workers’ comp a line of opportunity where proactive safety and claims management can still yield tangible financial benefits. However, the construction industry’s unique risk profile can wrinkle this picture. According to the Claims and Litigation Management Alliance, workers’ comp accounts for over 70% of all claims in construction, with nearly $11.4 billion in annual losses tied to serious nonfatal injuries. The top causes of falls, overexertion, and being struck by objects, are compounded by mental health challenges, including stress, fatigue, and substance misuse. These causes not only affect claim frequency and severity but also contribute to longer recovery times and higher total costs of risk. For contractors, the emphasis should be on comprehensive safety programs, early intervention, and strong and engaged claims handling to improve outcomes and control costs in an otherwise favorable pricing environment. 17 ANCILLARY LINES Contractor Professional & Pollution Liability Commonly viewed as an unusual pairing, contractor professional and pollution liability continues to be packaged together by insurers. A key driver is the low frequency of claims experienced on both lines of coverage. Additionally, combining the two coverages and sharing the policy aggregate limit of liability provides notable premium savings to the insured compared with purchasing separate towers of coverage. In 2025-26, many contractors are reevaluating their approach, opting for higher limits and increased self-insured retentions to better prepare for catastrophic exposures. The most prolific type of pollution claim continues to be centered around indoor air, particularly mold. As such, some carriers may assign a claims-made trigger for mold or apply an increased retention to this exposure. Exclusions related to per- and polyfluoroalkyl substances and perfluorooctanoic acid are still relatively rare within the pollution market but are a trend that will be closely monitored in the future. On the professional side, claims associated with construction management continue to be the leading source of professional liability claims. Carriers are still willing to provide the first-party coverages of rectification and protective indemnity at full policy limits, although this trend may change with the growth of high-value rectification claims. Finally, particularly for subcontractors, a notable enhancement is the increase of carriers willing to provide affirmative coverage for faulty work (often termed “faulty workmanship” in policy language). Coverage is either included or added via endorsement, but no two carrier forms are alike. Coverage commonly includes a third-party trigger that will respond to allegations of property damage originating from work performed by the insured. This trend began in 2024 and continues to be under the watchful eye in 2025 and into 2026. Subcontractor Default Insurance In the U.S. market, subcontractor default insurance rates remain stable despite a noticeable uptick in defaults among small- to mid-sized subcontractors. Increased competition, driven by new insurers and capacity deployment, has helped maintain flat pricing while improving coverage terms. Additionally, submissions have increased as GCs continue to enter the market as their revenues increase and awareness of this coverage opportunity grows. Management Directors and officers and employment practices liability continue to face elevated claims frequency and severity; driven by wage and hour litigation, social inflation, and a chronically litigious environment. 18 Chris Bertola, Senior Vice President of RT ProExec, highlights a key driver:  “Private Attorneys General Act  (PAGA) claims in Southern California have seen a significant increase as of late. This rise is primarily attributed to the law enabling employees to file lawsuits on behalf of themselves and others for labor code violations. Employers in Southern California face heightened scrutiny and potential financial liabilities due to these claims.” While the market shows signs of rate stabilization, with a notable drop in increases compared to the peak in 2020, 19  underwriting remains cautious, especially in litigious states like California, New York, and Florida, with emerging difficulty in Illinois and Texas. 20 RT ProExec adds that AI-related risks are reshaping management-liability exposures, prompting carriers to reassess coverage terms and exclusions. 21  Overall, this may impact contractors adopting digital tools and automation. Cyber As cyberattacks grow more frequent and sophisticated, stronger security frameworks have helped keep claims costs manageable. This has led to mostly flat renewals or modest rate reductions for many insureds. Beyond ransomware attacks, according to Coalition, 60% of cyber claims involve social engineering schemes like business email compromise and funds transfer fraud, where attackers intercept payment requests from subcontractors, vendors, or owners. 22  These types of losses often come with sublimits and varying coverage terms. Looking ahead, cyber insurers are expected to tighten underwriting further by requiring continued evidence of ransomware preparedness and staying alert to emerging attack vectors. CONCLUSION If you’ve made it this far, then you deserve credit, or maybe just another cup of coffee. What this year’s market has shown is that volatility isn’t going away, but neither is innovation. From climate-driven property losses to litigation trends and underwriting resets, the landscape is demanding more from all of us: more information, more collaboration, and more intention in how risk is approached. Now is the time to reaffirm the partnerships that help you see around corners, revisit your risk strategy with fresh eyes, and stay curious, because the Best-in- Class risks aren’t just built on strong foundations, they’re built on shared insight, proactive planning, and a willingness to adapt. EMILY GLANZ  is a Vice President who specializes in Construction Risk Management at Cottingham & Butler ( cottinghambutler.com ) in Dubuque, IA, with nearly 15 years of experience in consulting middle-market construction companies. Emily actively participates in industry associations and is a frequent speaker for the International Risk Management Institute (IRMI) as well as regional CFMA conferences, and is appointed to the “Big I” Ask An Expert Panel, where she advises other agents on coverage questions. Emily has also authored risk management blogs and articles for industry publications. She can be reached at  eglanz@cottinghambutler.com . Endnotes 1.  insuranceindustryblog.iii.org/2025-tornadoes-highlight-convective-storm-losses . 2.  insurancejournal.com/news/international/2025/07/16/831840.htm . 3.  amwins.com/resources-and-insights/market-insights/article/state-of-the-market--builder-s-risk-insurance-h1-2025 . 4.  assets.aon.com/-/media/files/aon/reports/2025/2025-global-construction-insurance-and-surety-market-report.pdf . 5.  ciab.com/resources/news-releasemost-lines-of-business-softening-litigation-influencing-others-the-councils-q1-2025-p-c-market-survey-shows . 6.  insurancejournal.com/magazines/mageditorsnote/2025/03/10/814555.htm . 7.  captives.insure/insights/nuclear-and-thermonuclear-verdicts . 8.  insuranceindustryblog.iii.org/reining-in-third-party-litigation-funding-gains-traction-nationwide . 9.  insurancejournal.com/news/national/2025/06/16/827711.htm . 10.  nhtsa.gov/risky-driving/distracted-driving . 11.  insurancejournal.com/news/national/2025/06/16/827711.htm . 12.  ciab.com/resources/news-releasemost-lines-of-business-softening-litigationin-fluencing-others-the-councils-q1-2025-p-c-market-survey-shows . 13.  arcadis.com/en-us/insights/blog/united-states/benjamin-eiss/2024/disputes-in-the-digital-age-findings-of-the-2024-construction-disputes-report . 14. Ibid. 15.  ciab.com/resources/news-releasemost-lines-of-business-softening-litigationin-fluencing-others-the-councils-q1-2025-p-c-market-survey-shows . 16. Ibid. 17.  theclm.org/Magazine/articles/rough-road-ahead-construction-2025-insurance-litigation/3211 . 18.  feeinsurance.com/blog/2024/1/12/2024-commercial-insurance-market-outlook . 19.  ciab.com/resources/news-releasemost-lines-of-business-softening-litigationin-fluencing-others-the-councils-q1-2025-p-c-market-survey-shows . 20.  blog.ryanspecialty.com/april-2025-u.s.-professional-executive-liability-insurance-market-report . 21.  blog.ryanspecialty.com/summer-2025-rt-proexec-insights . 22.  coalitioninc.com/announcements/2025-cyber-claims-report Copyright © 2025 by the Construction Financial Management Association (CEMA). All rights reserved. This article first appeared in CFMA Building Profits (a member-only benefit) and is reprinted with permission.

Written by: Brian Popelmayer, Risk Management Consultant - Hotel Insurance Vertical Leader I just returned from the 2025 Lodging Conference, and three recurring themes dominated my insurance conversations with fellow hoteliers. These aren’t just casual observations; they reflect growing frustration and real financial exposure across the industry. Here's what you need to know: 1. Lack of Creativity in Insurance Programs Hoteliers are tired of cookie-cutter solutions. The consensus? Brokers are recycling the same carriers year after year. Once the deal is closed, innovation fades. In a dynamic risk environment, this stagnation is dangerous. Only 12% of hotel owners say their broker proactively brings new risk solutions to the table annually. That’s a missed opportunity in a market where emerging threats from cyberattacks to social inflation are rewriting the rules. 2. Insurance Rates Continue to Rise Since the pandemic, insurance costs have skyrocketed. On average, U.S. hotel insurance rates have increased by 105% and some segments have seen even sharper spikes. Property insurance is finally stabilizing in 2025, but… Excess Liability rates are climbing fast, with hikes of 8–20% depending on location and risk profile. Resort hotels in high-risk zones pay up to $1,200 per available room annually. 3. Gaps in Coverage and Lawsuit Exposure This is where things get serious. Nuclear verdicts (over $10M) are at a 15-year high. Many hoteliers I spoke with aren’t confident they’re covered for high-risk exposures like: Legionnaires’ Disease – Multi-million-dollar settlements reported. Carbon Monoxide Poisoning – $15M awarded in a Montana case. Human Trafficking & Abuse – Often excluded or underinsured. How Cottingham & Butler Can Help Specialized Hospitality Expertise  — Our hotel insurance team understands the unique risks you face and designs coverage specifically for hotel operations. Proprietary Risk Assessment  — We conduct a comprehensive review that goes beyond standard insurance to uncover gaps that could threaten your business. Strategic Market Access  — We leverage our carrier relationships to bring you competitive premiums and innovative coverage solutions year after year. Proactive Loss Prevention  — We help protect your guests, staff, and bottom line through customized safety programs, on-site training, and compliance support. Dedicated Claims Advocacy  — Our claims team provides 24/7 response and aggressive advocacy to resolve claims quickly and control costs. Brian Popelmayer Hotel Insurance Vertical Leader 847.370.0379 BPopelmayer@cottinghambutler.com