In a recent statement, Ann Modica, Director of Credit Rating Criteria at AM Best, emphasized that this looming fiscal standoff arrives at a time when the broader U.S. economy is already showing signs of strain.

“The potential government shutdown coincides with increasing evidence of a slowing U.S. economy,” said Modica.
“Annual real GDP growth is projected to decline further in 2025, inflation remains stubbornly above the Federal Reserve’s 2.0% target, and the labor market is beginning to show signs of weakening.”

Modica also noted that although tensions around global trade have eased slightly in recent months, ongoing uncertainty continues to weigh heavily on corporate sentiment, potentially holding back future investment and hiring.

Insurers Face Potential Ripple Effects

AM Best cautioned that the extent to which insurers will be affected depends heavily on the duration of the shutdown. While previous shutdowns have generally been brief, the possibility of a more prolonged government freeze could present both direct and indirect challenges to the insurance industry.

The last major shutdown, which began in December 2018, stretched over 34 days, making it the longest in modern U.S. history. Even that relatively short disruption had widespread consequences, including delayed government services and an overall dip in economic activity.

In a longer shutdown, insurers could feel pressure as consumer confidence weakens, business investment stalls, and financial markets react negatively to political instability. With federal spending halted or significantly reduced during such a period, sectors tied to government contracts or regulatory services may experience operational delays or financial strain.

AM Best emphasized that, beyond the short-term effects, the longer-term implications for the U.S. economy could be more damaging, particularly in terms of global investor confidence and credit ratings.

“The most persistent effect on the U.S. economy is likely to be a loss of trust in the functionality of American political institutions,” AM Best said in its commentary.
“This erosion of confidence could place downward pressure on the nation’s sovereign credit ratings and deepen the sense of uncertainty around U.S. fiscal and economic policy.”

Flood Insurance Program Also at Risk

In addition to broader economic concerns, the insurance sector may face a more immediate issue. The National Flood Insurance Program (NFIP), which is managed by the Federal Emergency Management Agency (FEMA), is set to expire on September 30—the same day government funding runs out.

Unless Congress reauthorizes the NFIP, FEMA will be forced to halt the issuance of new flood insurance policies, which could leave homeowners and real estate markets in flood-prone areas in a difficult position.

A Climate of Uncertainty

The overarching message from AM Best is clear: the insurance industry, while resilient, is not immune to the cascading effects of political dysfunction. As the economy slows and uncertainty grows, both consumers and businesses may pull back on spending and delay long-term decisions, ultimately affecting the demand for insurance products and services.

With heightened political polarization continuing to complicate effective governance, the agency warns that even the perception of dysfunction can carry serious consequences for markets, credit ratings, and economic stability.

For now, the focus remains on Capitol Hill. The decisions made—or not made—in the hours ahead will determine whether a shutdown begins and how deeply its effects might ripple through the U.S. economy and its financial institutions.

The complaint, filed in U.S. District Court for New Jersey, accuses both vendors of negligence and breach of contract.

Background on the Breach

CoWorx, a staffing company based in New Jersey with nationwide operations, suffered a ransomware attack in 2024. At the time, it held a cyber insurance policy with ACE covering damages related to network and data breaches.

To manage its IT infrastructure, CoWorx had contracted with Congruity, a Massachusetts-based cloud services firm. Congruity was tasked with providing and managing Microsoft Windows virtual machines for CoWorx’s applications. Their responsibilities included maintaining the security of host servers and implementing proper safeguards — including multi-factor authentication (MFA) for remote access. However, according to ACE, Congruity failed to implement MFA, leaving the system open to attack.

CoWorx also hired Trustwave, a cybersecurity firm based in Illinois, to monitor its systems for threats. Trustwave installed detection and response tools on CoWorx servers and analyzed the data through its own security center, providing around-the-clock network monitoring.

How the Attack Unfolded

According to the lawsuit, on April 18, 2024, hackers gained access to a CoWorx virtual machine hosted by Congruity by using stolen login credentials. Because MFA had not been enabled, the attackers were able to log in without any additional authentication.

Although the compromised account lacked administrative privileges, the attackers were able to escalate access, extract credentials, and penetrate the host network — something ACE alleges was only possible due to flaws in how Congruity configured the virtual environment. ACE contends that the architecture should have prevented such lateral movement between guest and host systems.

Four days after the intrusion, Trustwave’s monitoring software detected suspicious activity but rated the alert as “moderate” in severity. As a result, CoWorx was not notified. ACE claims this delay prevented CoWorx from backing up its data in time. Five days later, the attackers deployed ransomware, encrypting files across the system. Without backups, CoWorx had no choice but to pay for a decryption tool.

Legal Claims Against Vendors

ACE, having paid the $500,000 claim under its cyber insurance policy, is now pursuing damages from Congruity and Trustwave. The insurer is alleging:

• Negligence and gross negligence

• Breach of contract

• Breach of implied warranty

Congruity is being blamed for failing to enforce MFA and for improperly setting up a network structure that allowed attackers to gain elevated access and reach the host environment.

Trustwave is accused of mishandling the breach by underestimating its severity and failing to alert CoWorx promptly, thus preventing any chance to mitigate the damage.

ACE is requesting reimbursement of the full $500,000 payout, in addition to interest, legal expenses, and court costs.

In its latest 10-Q filing with the U.S. Securities and Exchange Commission (SEC), Progressive disclosed that it may breach Florida’s statutory profit limit for personal auto insurance over the three-year period from 2023 to 2025. Under Florida Statutes 627.066 and 627.915, insurers must report any excess profits, and the Florida Office of Insurance Regulation (OIR) may require them to refund customers or apply premium credits — a process sometimes referred to as “regurgitation” within the insurance industry.

According to the law, profits are considered excessive when an insurer’s underwriting gains over three calendar-accident years exceed the anticipated profit by more than 5% of earned premiums.

The underwriting gain is calculated by subtracting incurred losses, loss adjustment expenses (developed to an ultimate basis), administrative costs, and any policyholder dividends from the earned premium. This formula helps determine whether the company has profited more than allowed.

Progressive has not issued a public comment, but the SEC filing noted that a final determination will depend on factors like the 2025 hurricane season, which could impact loss reserves. More clarity is expected later this year.

Florida property insurers also face similar profit restrictions — typically around 4.5% — but can distribute profits through affiliated entities such as managing general agents or holding companies, a practice some lawmakers and consumer advocates criticize due to Florida’s high insurance rates. Auto insurers, however, often don’t have the same flexibility.

Progressive and other major auto carriers in Florida have recently enjoyed reduced loss adjustment costs, largely thanks to 2023 legislative reforms that ended one-way attorney fees and curbed excessive legal action over claims.

As a result, Florida’s top five auto insurers requested an average rate reduction of about 6% in 2024 — a move praised by Florida’s insurance commissioner in a recent bulletin.

Still, that may not be enough to keep Progressive below the profit cap.

“Despite these actions, it is possible that our profit for personal auto in Florida for the 2023 to 2025 period will exceed the statutory profit limit,” the company wrote in its SEC filing.

The Office of Insurance Regulation rarely enforces the excessive profits statute, but there have been exceptions. In June 2025, California Casualty Insurance Co. agreed to return or credit $341,500 to policyholders. In 2021, Nationwide Mutual Insurance was ordered to issue more than $11 million in refunds or credits due to similar violations.

Progressive did not specify how much it may owe, but the filing noted that the company has experienced “strong profitability” in its Florida personal auto line since the reforms took effect.

Other major insurers with a presence in Florida did not mention exceeding profit thresholds in their regulatory filings.

While Florida enforces profit limits, not all states do. New Jersey, for example, applies a variation of the Clifford Formula, capping profits around 3.5%, according to that state’s Division of Insurance and court rulings.

According to CSU, the injuries sustained during the February 14 incident fall under the policy’s assault and battery exclusion, which removes such claims from coverage under the event’s commercial general liability insurance.

Tragedy at a Celebration

The Super Bowl victory parade, held in downtown Kansas City to celebrate the Kansas City Chiefs’ championship win, turned tragic when gunfire broke out near Union Station, resulting in one fatality and injuries to more than 20 people. The violence sparked widespread concern over event safety and crowd control measures.

In response, multiple victims filed a lawsuit in June 2025 targeting the Kansas City Sports Commission, the City of Kansas City, Union Station, and other affiliated entities. The plaintiffs argue that their injuries were the result of systemic negligence, poor planning, and a failure to implement adequate safety measures, particularly in light of prior major events hosted by the city that saw more robust security arrangements.

Attorneys representing the victims, including the law firm Stueve Siegel Hanson, described the shooting as a “preventable calamity” that could have been avoided through appropriate foresight and diligence on the part of the event organizers.

Insurance Policy Details and Exclusion

In its recent complaint, CSU seeks a declaratory judgment that it is not obligated to provide legal defense or financial coverage in connection with the lawsuit. The insurer issued a special event commercial general liability policy to KCSC, which carried coverage limits of $1 million per occurrence and a $5 million general aggregate limit.

Importantly, the City of Kansas City and Union Station Kansas City were also named as additional insureds under the terms of this policy.

However, CSU points to a specific endorsement in the policy that excludes coverage for any claims related to assault or battery. This includes not only direct actions but also claims alleging failure to prevent such acts or negligent hiring, supervision, or training of security personnel.

CSU argues that the allegations made in the victims’ lawsuit — which center around lapses in event planning, security preparation, and crowd control — clearly fall under the policy’s exclusion clause, and therefore, no coverage or defense obligation applies.

What the Lawsuit Alleges

The underlying lawsuit contends that event organizers and public officials failed to prepare adequately for a crowd of that magnitude and did not implement reasonable safety precautions. It accuses the defendants of failing to ensure sufficient law enforcement presence and crowd monitoring, particularly around high-traffic areas like Union Station.

The lawsuit seeks unspecified damages, including compensation for physical and emotional trauma endured by the victims.

Legal and Financial Ramifications

If the court sides with CSU, the Kansas City Sports Commission and other insured parties may have to fund their own legal defenses and potentially pay out damages, should they be found liable in court.

The legal battle over whether insurers are obligated to cover violent incidents like mass shootings under event liability policies is increasingly coming into focus. This case could serve as a precedent for how future insurance disputes involving public event violence are resolved — particularly concerning exclusionary language in standard liability coverage.

It also raises broader questions about how cities and event organizers can balance celebration with public safety, and what role insurance should play when preventable tragedies occur at large-scale public gatherings.

U.S. District Judge Marc Treadwell ruled this week that the plaintiffs did not successfully show a shared unlawful practice by GEICO, nor did they adequately demonstrate how they were denied overtime pay. The court also noted inconsistencies across various call centers and that some claims were too old to pursue under the three-year statute of limitations.

“For this reason alone, Plaintiffs’ motion should be denied,” Judge Treadwell wrote in his decision.

The lead plaintiff, Chris Rice, and his legal team claimed that over 1,000 sales employees from 12 GEICO call centers—including locations in Macon, Georgia, and Lakeland, Florida—were underpaid due to the insurer’s procedures. According to U.S. 11th Circuit Court of Appeals standards, plaintiffs must prove that others in the proposed group should be notified of the lawsuit to decide whether they want to opt in.

However, the plaintiffs adjusted their legal approach and did not respond directly to several key arguments made by GEICO’s defense team, the judge noted.

Court documents explained that GEICO relied on software platforms such as Cisco Finesse, AWS Anytime Connect, and Workday to monitor employee activity and hours worked.

“Plaintiffs initially alleged GEICO based compensation solely on time logged into Finesse,” the judge explained. If that were true, it would imply that workers weren’t paid for tasks performed outside of the Finesse system—such as powering up their computers, signing into necessary programs, fixing technical issues, or preparing for customer calls.

The Fair Labor Standards Act (FLSA) mandates that most employers must compensate hourly staff for computer boot-up and related time.

But the plaintiffs’ legal team—based in Atlanta, Birmingham, and Nashville—“recently conceded that the data show no relationship between Finesse login time and time tracked in Workday, aligning with GEICO’s evidence,” the judge pointed out.

Later, the plaintiffs asserted that managers had told employees to report a fixed 38.75 hours per week, regardless of their actual work time. That claim, however, lacked supporting evidence, according to the court.

An expert analysis revealed that employees often received pay for more time than they were logged into the Finesse system. Some testimonies suggested supervisors instructed remote workers—those working from home—not to record time spent resolving connectivity or equipment issues, but this directive did not apply to in-office staff.

In the end, Judge Treadwell denied the motion for conditional class certification—but did so without prejudice, meaning the plaintiffs may revise their arguments and refile the motion at a later time.

The deal, which places Ardonagh’s valuation at $14 billion, saw overwhelming interest from co-investors linked to Stone Point, as well as partners from Madison Dearborn Partners (MDP) and HPS Investment Partners (HPS).

Stone Point has emerged as a major shareholder in Ardonagh, joining the ranks of MDP, HPS, and other global institutional investors, including a wholly owned subsidiary of the Abu Dhabi Investment Authority (ADIA).

With this diversified investor base, Ardonagh is poised to capitalize on a variety of growth opportunities within the global property and casualty (P/C) insurance market through its extensive platform of businesses, each with a robust regional market presence.

Founded in 2017, Ardonagh was created by merging several UK insurance businesses, which gave rise to a diversified group offering wholesale, retail, and specialist insurance solutions. Since its formation, Ardonagh has evolved into a top-20 global broking entity, placing approximately $18 billion in premiums and operating throughout the entire insurance distribution value chain.

The closing of this investment comes on the heels of several key developments in Ardonagh’s growth trajectory, including a number of strategic acquisitions in 2024. The company completed the sale of its personal lines business to Markerstudy in June 2024, followed by the A$2.3 billion take-private of Australia’s PSC Insurance Group in October 2024. These transactions were part of a broader effort to complete 68 acquisitions across multiple regions within that year.

More recently, Ardonagh simplified its capital structure through a successful refinancing in February 2025. In March 2025, the group launched Ardonagh Intelligence, marking a new phase in its strategy to leverage machine learning and data enrichment across its businesses to deliver enhanced value to its vast customer base.

David Ross, CEO of The Ardonagh Group, commented on the deal: “Stone Point’s investment, alongside the success of the co-investment process, is a powerful vote of confidence in Ardonagh. In the face of global economic challenges, our distinctive proposition, proven track record, and global platform attracted world-class investors who share our long-term vision.”

Ross added, “We are thrilled to welcome Stone Point into this next chapter of our growth, along with our long-standing partners whose support has been instrumental in helping us reach a $14 billion valuation. With such robust financial backing, Ardonagh is uniquely positioned to seize future growth opportunities and continue delivering value for our clients, investors, and employees.”

Jim Carey, co-CEO of Stone Point, shared his enthusiasm: “We are excited to partner with Ardonagh, alongside MDP, HPS, and ADIA. Ardonagh has emerged as a prominent platform in the global insurance distribution market, and we are confident in the company’s potential for continued growth.”

Fenchurch Advisory Partners, Goldman Sachs Investment Banking & Co. LLC, and Morgan Stanley & Co. LLC are serving as financial advisors to Ardonagh, while Paul, Weiss, Rifkind, Wharton & Garrison LLP is acting as its legal advisor. Debevoise & Plimpton LLP is representing Stone Point in the transaction.

According to the company, the outage, which began on June 7, was initiated as a precautionary measure to contain a potential security threat. Erie Insurance emphasized that “there is no evidence of ransomware” and confirmed that there are no signs of ongoing malicious activity. Despite these assurances, the company has not confirmed whether a data breach occurred, but it is continuing to investigate the situation and is working to determine whether any customer data may have been compromised.

The insurer stated that its efforts to restore full system functionality are being carried out in a phased manner, with a focus on key areas like local agents, claims processing, and customer support. This approach ensures that customer service remains a priority while the systems are carefully restored.

While Erie Insurance is making progress, another insurer, Philadelphia Insurance Companies, is also working to recover from its own network outage, which began on June 9 after suspicious activity was detected. This outage has disrupted phone lines, email communication, and online applications, creating challenges for both customers and employees.

Philadelphia Insurance clarified that, contrary to some media reports, its systems were not encrypted and the incident did not involve ransomware. Most of the company’s core business systems have now been restored, and a number of Philadelphia employees have regained access to key tools, such as email. However, the company noted that a complete return to full operational capacity would take time. It reassured agents and policyholders that it is working tirelessly to restore normal operations as soon as possible.

If it is determined that customer data was accessed during the breach, Philadelphia Insurance has committed to notifying the individuals whose information was potentially compromised.

Neither Erie Insurance nor Philadelphia Insurance has provided specific details regarding the source or scale of the cybersecurity incidents that led to these outages. However, Google’s Threat Intelligence Group has suggested that the hacker group Scattered Spider may be behind these incidents, pointing out that the group seems to have shifted its focus from retail targets to insurance companies. This group is also believed to be involved in a recent potential data breach at insurer Aflac.

As both insurers continue their recovery efforts, their focus remains on restoring systems to ensure that customers and agents can access services and manage their accounts with minimal disruption.

In its “Quarterly Property Report January–March 2025,” Verisk Analytics revealed that the total number of property insurance claims filed during the first three months of the year fell to the lowest quarterly level observed in the past five years. This drop continued a downward trajectory in claims frequency that began in 2023. However, this positive trend in volume was overshadowed by a dramatic spike in claims severity, particularly in states impacted by severe natural disasters.

Wildfires Drive Severity Surge in California

While numerous weather-related events impacted the U.S., it was the devastating wildfires in California — namely the Palisades and Eaton fires — that most significantly impacted claims severity and overall loss costs. Together, these two major fires generated an estimated 48,000 claims, resulting in a staggering $10 billion in total insured losses.

Verisk reported that the average claim estimate for wildfire-related losses in California reached approximately $337,000, a figure that dwarfs typical property loss values. This contributed to a 1,805% year-over-year increase in the replacement cost value (RCV) for California alone when compared to Q1 2024.

Nationwide, the average RCV jumped by 46% compared to the same quarter in the previous year, reflecting the extreme cost of rebuilding and repairing properties, especially in fire-prone regions. This significant uptick in loss costs was a key highlight of the quarter, despite the drop in claim frequency.

Lower Severity in Most States Balances National Trends

While California skewed the national numbers with record-breaking fire losses, the majority of U.S. states actually reported declines in severity. According to Verisk’s data, 33 states experienced reduced average loss costs compared to Q1 2024.

States such as Maine, Delaware, Montana, and Oregon posted particularly steep declines in severity, ranging from 80% to 95%, which helped moderate the national severity average. These reductions were largely attributed to milder weather conditions and fewer catastrophic events in those areas.

Total Claim Volume Down — But CAT Claims Hold Steady

Despite widespread natural disasters, overall claim volume declined by approximately 7% in Q1 2025 compared to the same period in 2024. The drop was largely attributed to a reduction in non-catastrophe (non-CAT) claims, even as catastrophe-related (CAT) claims remained relatively stable.

Among individual states, Texas led the nation in terms of total claims filed, reporting around 161,000 claims. Following Texas were California with 96,600 claims, Florida (48,500), Missouri (48,200), North Carolina (36,000), and Pennsylvania (35,700).

Texas not only topped the chart in total volume but also accounted for a substantial share — 95% of all Q1 CAT events — largely fueled by severe wind and hail storms.

Tornado Alley Sees CAT Claims Surge

Several states in Tornado Alley and beyond experienced sharp increases in catastrophe-related claims during the first quarter, driven largely by tornadoes, hailstorms, and damaging winds. Notable spikes in CAT claims were observed in:

• Kentucky and Nebraska: Both states saw CAT claim increases exceeding 200%

• Oklahoma: Reported a 45% increase in catastrophe claims

These increases were tied to a rise in violent spring storms and tornado outbreaks that swept across the central U.S. during early 2025.

Pacific Northwest Sees Claims Drop

In contrast, many states in the Pacific Northwest experienced a substantial decrease in weather-related claims. Milder winter conditions contributed to sharp reductions in common seasonal hazards. Verisk’s report showed:

• Washington: 99% drop in freeze-related claims

• Oregon: 98% decrease in ice and snow claims

• Maine: 98% decline in wind-related claims

These dramatic reductions were attributed to an unusually warm and calm winter season across much of the northern tier of the country.

Labor Cost Increases Slow Down

In addition to trends in claim frequency and severity, Verisk’s report noted a moderation in billable labor cost growth across the U.S. for Q1 2025. Labor costs rose by 1.06%, down from 1.42% growth reported in the prior quarter (Q4 2024).

This slowdown in labor inflation may offer temporary relief to insurers and policyholders contending with high replacement costs, though it remains uncertain how long this trend will persist.

Trade and Immigration Policies Pose Risks to Construction Costs

The report also cautioned that ongoing U.S. immigration and trade policies could introduce volatility to the construction and rebuilding sectors.

• Around 28% of U.S. lumber, 24% of concrete, and 36% of gypsum used in construction are imported.

• Additionally, 26% of the construction workforce is composed of immigrant labor.

Given this reliance on global supply chains and foreign labor, changes in tariffs or immigration enforcement could significantly impact the cost and pace of reconstruction following major disasters.

Key Takeaways

• Claim Volume: Fell to a five-year low, primarily due to fewer non-CAT claims

• Claim Severity: Surged, especially in California due to wildfire losses

• California Wildfires: Drove a 1,805% increase in RCV; average wildfire claim hit $337,000

• Texas: Led U.S. in both total and catastrophe claims

• Tornado Activity: Boosted CAT claims significantly in Oklahoma, Kentucky, and Nebraska

• Labor Costs: Growth slowed to 1.06%

• Construction Risks: Future costs could be impacted by trade and immigration policies

Conclusion

While 2025 started with relatively low overall claim counts, the rising cost of individual claims — especially from high-severity CAT events like wildfires — continues to pose challenges for the insurance and construction sectors. As climate patterns shift and rebuilding expenses climb, insurers may need to adjust risk models and pricing strategies accordingly.

Verisk’s Q1 2025 data highlights a complex environment where fewer claims do not necessarily equate to reduced costs — particularly as regional catastrophes grow more destructive and expensive to recover from.

During a webinar on June 10, Verisk unveiled the final rankings of this year’s key concerns. Despite stiff competition from issues like climate change, infrastructure, and microplastics, artificial intelligence (AI) and generative AI (Gen AI) once again emerged as the top concern among industry professionals. As advancements in AI continue and new laws begin to take shape, the risks—such as hallucinations and unpredictable behaviors—are becoming more apparent.

Legislative Push Grows with AI Advancements

The rapid evolution of AI technologies has spurred legislative responses across the U.S., as lawmakers scramble to regulate tools and systems that are still largely misunderstood.

Laura Panesso, Associate VP of Government Relations at Verisk, noted during the webinar that the pace of proposed legislation has been “remarkably quick.” Although many states introduced AI-related bills in 2024, only a few have successfully passed them into law.

“This trend shows that regulators are trying to catch up with a technology advancing faster than we can keep pace with,” Panesso explained.

The National Association of Insurance Commissioners (NAIC) has issued guidance to help insurers govern AI use in business decisions, encouraging transparency, oversight, and testing to detect bias and discrimination. So far, 24 jurisdictions have adopted this guidance, while states like California, Colorado, and New York have gone further by enacting their own AI-specific rules.

With no overarching federal regulation for AI, states are forging ahead individually. As of now, 40 states have introduced or enacted AI-related laws, ranging from exploratory studies to detailed governance.

Key concerns include:

• Requirements for AI system deployers

• Rights over training data and outputs

• Algorithmic discrimination and pricing fairness

Generative AI, in particular, has drawn attention for issues such as deepfake content and non-consensual image creation. States are beginning to define how Gen AI tools can legally be used.

For instance, Utah’s Senate Bill 26, passed in the most recent session, regulates the use of generative AI in customer-facing settings. It mandates transparency when Gen AI is used, sets liability standards for deceptive practices, and offers safe harbors for companies that disclose AI use upfront.

Edge Cases & AI Hallucinations Raise Red Flags

AI is powerful and innovative—but it’s far from flawless. Greg Scoblete, a principal on Verisk’s emerging issues team, highlighted two notable vulnerabilities: edge cases and hallucinations in generative AI systems.

Edge cases refer to rare or unusual scenarios that AI models haven’t been trained on thoroughly. These outliers can expose serious weaknesses in AI behavior, especially in life-critical areas like autonomous vehicles.

Scoblete cited real-world examples:

• In the UK, a high-end car with adaptive cruise control accelerated to over 100 mph in a 30-mph zone after misreading a road marking.

• In the U.S., another vehicle with similar tech collided with the top of an overturned truck—a shape its AI wasn’t trained to recognize as an obstacle.

“These edge cases illustrate a major difference between human judgment and AI,” Scoblete said. “Humans instinctively recognize danger, even in unfamiliar situations. AI, on the other hand, can make critical errors because it lacks that intuition.”

Alongside edge cases, generative AI hallucinations—or incorrect outputs—are another concern. Unlike traditional AI models that rely heavily on data, Gen AI systems may generate content based on flawed reasoning or logic.

This has real consequences: Over 120 legal filings have included mistakes caused by generative AI tools. Stanford researchers have confirmed that AI-generated legal content often contains factual or logical inaccuracies.

Scoblete warned, “If lawyers—who must be accurate and precise—are facing these problems, we must assume other industries under pressure to improve efficiency with AI could face similar risks.”

He also noted that at least 11 product liability lawsuits tied to generative AI have been filed, per George Washington University data. A key question now is whether existing product liability frameworks—designed for physical goods—can or should apply to virtual AI products.

“The injury caused by AI is sometimes intangible,” he said. “But as AI becomes embedded in physical products like cars, its ability to cause real harm—both physical and financial—will only grow.”

Looking Ahead

Verisk’s emerging issues bracket made it clear: AI isn’t just a trend—it’s a transformative force that’s raising complex questions for regulators, insurers, and tech developers alike.

With rapid technological advancement outpacing legal and ethical standards, the industry is now grappling with how to responsibly integrate AI while safeguarding against its most unpredictable risks. As the landscape continues to evolve, AI’s place at the top of Verisk’s list seems well-deserved—and far from temporary.

The Dublin-based lessor, which is ranked as the third-largest globally in the aircraft leasing sector, disclosed the latest figures in its full-year financial results for the fiscal year ending March 2025. The new settlements bring the total recovered from insurers to approximately $1.41 billion, stemming from claims related to aircraft stuck in Russia.

The situation dates back to 2022 when SMBC, along with other global lessors, was forced to cancel leasing agreements with Russian airlines after sanctions made it illegal to do business with the country’s aviation sector. As a result, SMBC lost access to 34 aircraft still on lease to Russian operators. To account for the potential financial loss, the company recorded a $1.6 billion impairment that year, reflecting the full expected hit to its balance sheet.

In May 2025, SMBC was among six leasing companies that decided to drop legal action in Ireland against their insurance providers. This came after a series of successful negotiations led to large settlement agreements, resolving a legal impasse that had been ongoing for more than a year.

Despite the challenges posed by the Russian aircraft issue, SMBC reported a strong year financially. Its pre-tax profit surged by 22% year-over-year, reaching a record $563 million—a figure that excludes the benefit from the insurance-related payouts.

The company also highlighted growth in its core leasing business, with lease rental income rising 3% to $2 billion. In addition, SMBC generated $1.9 billion from asset sales, fueled by the sale of 48 aging aircraft as part of its fleet optimization strategy.

SMBC Aviation Capital is majority-owned by a Japanese investor consortium that includes Sumitomo Corporation and Sumitomo Mitsui Financial Group, both major players in global finance and infrastructure.

These latest financial results and settlements not only reflect SMBC’s resilience in navigating geopolitical and operational risks but also reinforce its status as a major player in the aviation leasing market, with a diversified portfolio and a strong recovery strategy.

According to a notice posted on the company’s website, the outage has affected online customer portals, phone-based support services, and even its First Notice of Loss (FNOL) line—a critical system that allows policyholders to report new insurance claims. Customers trying to log in to their accounts, file claims, or contact support by phone have been unable to do so since the issue began.

“All available resources are working to assess the impact and resolve the issue as soon as possible,” the company stated. No additional specifics about the cause of the outage or an estimated time for resolution were provided at the time of the announcement.

Customer Impact and Response

The outage has created widespread inconvenience for Erie’s policyholders. With the digital portal offline and call centers inaccessible, customers currently have very limited options to manage their policies or file urgent claims. This interruption is especially problematic in emergency situations where quick access to insurance services is essential.

In the interim, Erie has advised customers to contact their local insurance agents directly for assistance. While this workaround may provide some relief, many customers could still face delays due to the high demand and the inability of agents to access backend systems.

Though frustrating, the company has asked for customers’ patience as IT teams continue working to identify and resolve the root of the problem. It remains unclear whether the issue was caused by a cyberattack, internal system error, or other technological malfunction.

About Erie Insurance

Erie Insurance has a long-standing reputation as a regional insurance provider with a strong customer base. Headquartered in Erie, Pennsylvania, the company employs over 7,000 people and works with approximately 14,000 independent insurance agents to serve clients across 12 states and the District of Columbia.

In 2024, Erie Insurance reported impressive financial performance, bringing in a total annual revenue of $3.8 billion. This strong showing earned it the #323 spot on the 2025 Fortune 500 list. Its parent company, Erie Indemnity Co., posted a net income of $600.3 million for 2024, a notable increase from $446.1 million the previous year.

This recent outage marks a rare operational disruption for a company that prides itself on customer service and stability. While no business is entirely immune to technical issues, such an extensive outage has raised concerns among policyholders and stakeholders alike.

What Customers Should Know

For now, Erie customers are advised to take the following steps if they need assistance:

• Contact Your Local Agent: Agents may be able to provide guidance or log your issue for follow-up once systems are restored.

• Call the FNOL Line: Customers can try reaching the First Notice of Loss team at 800-367-3743, although call availability may be limited.

• Stay Updated: Erie has promised to keep customers informed through its website and other communication channels as progress is made.

In the age of digital dependency, system outages like this one can have a ripple effect on both individuals and businesses. For an insurer, timely service and communication are vital to maintaining customer trust, particularly in times of crisis or emergency.

Looking Ahead

While Erie Insurance has not given a timeline for when services will be back online, it has reassured customers that resolving the issue is a top priority. The company’s IT and operational teams are reportedly working around the clock to identify the cause of the outage and bring systems back online safely and efficiently.

Customers should continue to monitor Erie’s website and official communications for the latest updates. In the meantime, patience and caution are advised when attempting to access or submit sensitive information.

This situation serves as a reminder of how reliant even the most established companies have become on digital systems—and how vulnerable those systems can be to unexpected failures. For Erie Insurance, how it manages and recovers from this outage will be a key test of its resilience and customer service commitment.

While working on a book documenting Crum & Forster’s (C&F’s) 200-year legacy, I found myself reflecting not only on how far our industry has come, but also on the tremendous potential that still lies ahead. Our history reinforces the importance of attracting and nurturing the next generation of talent—individuals who are inquisitive, determined, and ready to shape what’s next.

I look forward to discussing more of these insights at the 2025 Insurance Industry Charitable Foundation (IICF) Global Conference in New York. Until then, here are a few thoughts on how the future of insurance work is beginning to unfold.

Insurance Offers a Meaningful Career Path

One of our greatest responsibilities is to cultivate the leaders of tomorrow. That journey begins with bringing exceptional individuals into our profession. While insurance has sometimes been labeled as “boring,” C&F’s long history clearly shows that it’s a challenging and dynamic industry—anything but dull.

Because most young people don’t consider insurance as a first career choice after high school, the industry has created robust self-education programs. Initially born out of necessity, these programs have become a strength, making our field accessible to individuals from all backgrounds and enabling them to shape their own development paths.

Of course, learning doesn’t stop at textbooks. We also need to offer clear, experience-based routes to advancement. The most fulfilling careers evolve through a mix of increasing responsibility, hands-on learning, and growth opportunities over time. While our industry is rich with challenges, it can be difficult for newer professionals to envision a clear trajectory from entry-level roles to executive leadership. Meanwhile, those already in leadership may not always recognize who’s ready to step up.

At C&F, I urge individuals at every level to “stand out” by embracing an “And Plan”—seeking involvement beyond their primary job functions. Our Brand Ambassador program is a great example. Employees from across departments are chosen to learn about our diverse product offerings and refine their networking capabilities. They then represent C&F at industry events and local community boards, including with organizations like the IICF. These experiences boost employee confidence and leadership skills while amplifying our brand’s reach and influence.

Decentralization as a Growth Engine

How do we create a workplace that truly energizes and inspires? At C&F, we strive to offer every team member the chance to shape a meaningful, fulfilling career.

A foundational part of our strategy is our decentralized business unit model. Instead of a traditional top-down structure, we emphasize a “demand pull” approach—one where local teams take initiative, solve problems, and drive outcomes.

This structure empowers those closest to our clients to make decisions. Our field professionals understand their customers better than anyone, and they’re best positioned to recognize how innovations—like AI—can simplify tasks and elevate the customer experience.

Giving teams true ownership leads to greater engagement and stronger retention. When people can see the direct impact of their decisions, they’re more confident and motivated to advance in their careers.

Strengthening Culture in a Hybrid Environment

There’s an ongoing discussion about the long-term role of hybrid work. While I personally enjoy the office environment, I believe hybrid models are here to stay. So the question becomes: how do we preserve and extend our culture in this new world of work?

It starts with being intentional. We’ve made it a priority to create moments that foster connection. Our hybrid approach centers on high-impact events. We invest part of the savings from our smaller office footprint into meaningful employee experiences—like team gatherings, networking mixers, and celebrations with our business partners. These events bring together people who might never have met in a pre-hybrid setting, and they’re designed to build lasting relationships in a short time.

We also schedule “high-density” office days to create momentum—people are more likely to come in when they know their colleagues will be there too. One of our most successful initiatives is our quarterly new hire onboarding event, which brings team members from across the country together to connect with coworkers and leadership, fostering a sense of community from day one.

Fostering a Culture of Giving

Insurance at its core delivers a social benefit—but our commitment to doing good doesn’t stop there. We believe deeply in giving back to the communities where we live and work. In addition to corporate philanthropy, we empower employees to lead grassroots efforts and support causes they’re passionate about.

An employee-led committee oversees our charitable donations and volunteer efforts. This group selects the organizations we partner with and rallies the broader team to participate. Events like the IICF’s Month of Giving unite thousands of professionals across the industry in a shared mission of service—and serve as a powerful reminder of the positive impact we can achieve together.

Connect and Thrive

What’s your vision for the future of insurance? I invite you to join the discussion. One key lesson from exploring C&F’s 200-year history is this: our strength lies in collaboration. By sharing knowledge, supporting one another, and working together, we can build a stronger, more resilient future for our industry.