PEOPLE IN INSURANCE
Update: Incoming Arbella CEO Doubles Down on Independent Agents as Complexity Rises
QUINCY, Mass. //BestWire// - (This updates information throughout). Factors like a contentious legal climate and climate change are reinforcing Arbella Insurance Group's commitment to an independent agent distribution model, according to incoming Chief Executive Officer Paul Brady.
Paul BradyThat focus, along with investments in technology and data science and actuarial teams, is allowing the mutual to grow within its New England footprint, said Brady.
Brady will succeed John Donohue, who is retiring after 24 years at the helm but will continue as board chairman and Arbella Insurance Foundation CEO (BestWire, March 5, 2025).
During his 15 years at Arbella, Brady has held multiple leadership positions, including head of claims, chief information officer and senior vice president of operations. He started his career with Liberty Mutual, in information technology.
He learned to adapt and broaden leadership skills, saying each team has nuances.
However, Arbella’s executive team, data scientists and more offer a level of expertise on par with national competitors, he said. “Our use of data and complex data models, we’re right there with the larger carriers,” he said.
Brady said he thinks rates will continue to rise this year in order to maintain adequacy, albeit at a lesser amount than the preceding three years. In Massachusetts, he anticipated single-digit rate increases.
Several factors could change that. “There is still inflation,” said Brady, and legal system abuse costs that vary by state.
President Donald Trump has instituted higher tariffs with top trading partners, and threatened more, including on metals.
The price of auto sheet metal had already increased more than 50% over the past five years, Brady said, adding: “If the tariffs persist, they will have an impact on the cost” of auto and property claims.
“Twelve percent of autos are in an accident every year ... If that 12% that get into an accident cost 25% more to repair, it will absolutely” impact insurance rates, said Brady.
Property has much lower frequency, but severity that can already skew higher would escalate, he added.
U.S. homeowners rates have risen sharply in recent years and carriers have worked to reduce concentration of risk, particularly in areas at higher risk of traditional secondary perils such as severe convective storms.
Brady said the market in New England has remained steady. Arbella offers personal and commercial auto and property in Massachusetts and Connecticut and commercial products additionally in Rhode Island and News Hampshire.
Arbella is geographically focused within Massachusetts, where it is a larger personal auto writer, according to Best’s Credit Report.
It has a “sophisticated private passenger auto multivariate rating platform that factors in granular risk characteristics and enables the group to make expeditious rate and product changes, and facilitates an accurate and sophisticated pricing of risks,” AM Best said.
Each of Arbella’s states carries coastal and severe convective storm risk, although SCSs are less common than in central and southern states.
Arbella requires its agents to include a separate private flood policy quote alongside every property quote. He said the company asks policyholders who decline the coverage to sign off. It wants policyholders to understand that flood isn’t a covered peril.
Arbella has tightened underwriting and increased deductibles, but it hasn’t exited any areas. “We underwrite risks based upon many criteria,” said Brady.
And he counts on the carrier’s 500 independent agents to know their areas and customers, saying they have helped Arbella to grow premium regionally and maintain market share in its home state.
The company has increased underwriting limits, said Brady, because “more and more houses are worth in excess of $1 million.”
Even when they’re not, the potential severity of claims has jumped, he said, because inflation also sent contents and additional living expense costs higher. And communities have enacted building and energy codes, in part to improve resiliency.
A Coverage A total loss claim on a $600,000 dwelling typically exceeds $1 million claim, Brady said, and carriers need to price coverage accordingly.
Catastrophes in other regions have driven home the importance of stricter underwriting and better preparation for a potential catastrophe response from secondary perils, said Brady.
Underwriters are taking a closer look at resilience and risk — such as proximity to woods and brush. Commercial policyholders need to better detail how they’re reducing fire risk, said Brady, even though the region hasn’t yet contended with major wildfires.
He envisions modest, but steady growth in the near future at Arbella. “We will keep evolving, remaining relevant ... innovative. We’re growing materially in Connecticut, there are good opportunities, enough business” in New England, said Brady.
Underwriting entities of Arbella Mutual Insurance Co. currently have a Best's Financial Strength Rating of A (Excellent).
(By Renée Kiriluk-Hill, senior associate editor, BestWire: Renee.Kiriluk-Hill@ambest.com)