Arbella Mutual Insurance Co. is staying the course with its independent agent distribution model, according to incoming CEO Paul Brady. Facing challenges like a complex legal environment and the effects of climate change, Brady said the company is focused on growing its presence, especially in New England. To support this growth, Arbella is investing in technology, data science, and actuarial expertise.
Brady, who has been with Arbella for 15 years, will take over from John Donohue. Donohue, who led the company for 24 years, will continue as board chairman and serve as CEO of the Arbella Insurance Foundation. Before becoming CEO, Brady held several leadership roles at Arbella, including head of claims, chief information officer, and senior vice president of operations. He began his career at Liberty Mutual in information technology.
In a report from AM Best, Brady noted that Arbella’s use of data and advanced modeling gives it a competitive edge compared to larger national carriers. He anticipates that insurance rates will continue to climb in 2025, but at a slower rate compared to recent years. Specifically, he expects single-digit rate increases in Massachusetts. However, Brady acknowledged inflation and legal system costs could influence these pricing trends. Other factors, such as trade policies and increasing material costs, could also affect the insurance market. For example, the price of auto sheet metal has risen by more than 50% over the past five years. Tariffs could further impact auto and property claim costs. Considering that 12% of vehicles are involved in accidents each year, even a 25% rise in repair costs could contribute to higher premiums.
Independent agents are a crucial part of the US insurance industry. They can provide clients with various products from multiple carriers. Unlike captive agents who only represent a single insurer, these independent agents work with numerous companies to offer tailored coverage options. While the total number of independent property and casualty (P&C) agencies in the US saw a slight decrease to 39,000 in 2024 (down from 40,000 in 2022), the majority of agencies reported revenue gains. In 2024, 75% of agencies saw revenue increases, up from 62% in 2022. However, 12% experienced revenue declines, with an average decrease of 24%.
Independent agents are also dealing with the challenges of a harder market. The industry faced one of its toughest markets in recent years, with rising rates and stricter underwriting standards. Independent agents faced difficulties with renewals and placing new business, with 83% saying these conditions were the most challenging they’ve faced.
