Arbella Mutual Insurance Co. remains committed to its independent agent distribution model amid challenges such as a complex legal environment and climate change, according to incoming chief executive officer Paul Brady.
He said the company is investing in technology, data science, and actuarial expertise to support growth within its New England market.
Brady, who has been with Arbella for 15 years, will succeed John Donohue as CEO. Donohue, who led the company for 24 years, will continue serving as board chairman and CEO of the Arbella Insurance Foundation.
Brady previously held leadership roles at Arbella, including head of claims, chief information officer, and senior vice president of operations. He began his career in information technology at Liberty Mutual.
In a report from AM Best, Brady said Arbella’s use of data and advanced modeling positions it competitively with larger national carriers. He expects insurance rates to continue rising in 2025, though at a slower pace than in recent years. In Massachusetts, he anticipates single-digit rate increases but noted that inflation and legal system costs could influence pricing trends.
Trade policies and material costs could also impact the insurance market. Brady pointed to increases in the price of auto sheet metal, which has risen by more than 50% over five years. He said ongoing tariffs could further affect auto and property claim costs.
With 12% of vehicles involved in accidents each year, a 25% increase in repair costs could contribute to higher premiums.
Experts noted that the independent distribution agent model remains a cornerstone of the US insurance industry, allowing agents to offer clients a diverse range of products from multiple carriers.
Unlike captive agents who represent a single insurer, independent insurance agents collaborate with various insurance companies to provide clients with tailored coverage options.
The total number of independent property and casualty (P&C) agencies in the US decreased slightly to 39,000 in 2024, down from 40,000 in 2022.
Despite market challenges, 75% of agencies reported revenue gains in 2024, a notable increase from 62% in 2022. However, 12% experienced revenue declines, with an average decrease of 24%.
Much like their counterparts, independent agents also faced challenges stemming from the harder market.
Triple-I notes that the industry faced one of its toughest markets in decades, characterized by rising rates and stricter underwriting standards. Independent agents navigated challenging renewals and difficulties in placing new business, with 83% acknowledging these conditions as the most challenging they've encountered.
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