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Liability, Large Court Verdicts Drive Commercial Auto Insurance Price Surge
Commercial auto insurance companies continue to post steep losses for liabilities like third-party injuries and property damage, which is driving continued rate hikes for businesses, particularly fleet operators, according to a new report from A.M. Best.
The line posted its 14th consecutive year of underwriting losses in 2024, with liability coverage alone accounting for $4.5 billion in red ink. Those losses were slightly offset by physical damage coverage (part of a comprehensive package), which logged a $1.5 billion underwriting profit for the industry last year.
As losses mount, some commercial auto insurers have left the market and those that remain have tightened underwriting standards, making renewals and securing new policies more difficult.
Commercial auto renewal rates jumped 8% in the second quarter of 2025 from the same period the year prior, according to Ivans Insurance Services. During the last few years, rate increases have averaged 10% or more, but sometimes policyholders are hit with a much larger increase as their insurer must catch up to rising costs.
Even businesses with few claims are seeing significant rate hikes and tighter underwriting, meaning no organization can escape the growing exposure in case one of their drivers is in an accident.
What’s driving the trend
Social inflation and nuclear verdicts: Courts are awarding increasingly larger jury verdicts, and plaintiffs’ attorneys are more aggressively pursuing cases and pushing for trials over settlements, emboldened by favorable outcomes. This has led to more frequent and severe claims that outpace rate increases.
As well, third-party litigation funding is becoming more common, with external investors bankrolling lawsuits in exchange for a share of the settlement.
Vehicle repair costs: Modern vehicles are packed with sensors, cameras and advanced safety systems. Repairs require specialized parts and skilled technicians, many of whom are in short supply. The imbalance between demand and available workers has pushed labor costs higher.
Longer repair times: Parts shortages and limited repair shop capacity have stretched out repair timelines. The longer a claim stays open, the greater the legal exposure and ultimate settlement cost, according to A.M. Best, which estimates the commercial auto insurance industry to be under-reserved by $4 billion to $5 billion.
Driver shortage: As more experienced drivers retire, the labor crunch has meant fewer available drivers and more newbies, which can strain operations and increase risk, including:
- Higher accident rates
- Greater pressure to cut corners
- Inadequate training and mentorship
- Risk of driver fatigue
Shrinking insurer appetite and the rise of E&S coverage
As losses mount, many traditional “admitted” carriers are pulling back from commercial auto risks. This reduced capacity has forced some businesses to turn to the excess and surplus market for coverage.
E&S carriers historically focused on unusual or higher-risk accounts that standard insurers avoided. But today even businesses with relatively typical auto exposures are finding themselves placed with E&S carriers. While these insurers fill a critical gap, their premiums are usually higher, and terms can be stricter.
What you can do
Focus on safety: Instill a strong safety culture from the top down and invest in driver training. Require all drivers to check their vehicles before each shift and leverage telematics to track driver behavior.
Stay proactive with repairs: Build relationships with qualified repair shops to reduce downtime.
Work closely with us: We can explore options across both admitted and E&S carriers to ensure you have the right protection at a competitive rate.
Ballot Initiative Seeks Repeal of Proposition 103, Overhaul of Insurance Regulations
An insurance agent has filed papers with the state of California to qualify an initiative for the 2026 election that would repeal Proposition 103, a landmark insurance measure that has tightly regulated property and auto insurance rates since 1989.
Since 1989, Prop. 103 has required insurance companies to submit requests for rate changes to the California Department of Insurance (DOI). Under the law, the insurance commissioner is required to review those filings, decide whether they are justified, and can deny or limit increases. Consumers and advocacy groups are also allowed to intervene in the process, giving the public a voice in rate decisions.
The measure also made the post of insurance commissioner an elected position instead of one appointed by the governor.
Critics of Prop. 103 say the law slows down the rate approval process, which can drag out for months or even years due to bureaucratic obstacles. Proponents say it keeps insurance companies in check and that having an elected insurance commissioner allows them to act without political interference.
What the new initiative would do
The proposed ballot measure, dubbed the California Insurance Market Reform Act of 2026, would:
- Replace the elected insurance commissioner with an appointee chosen by the governor and confirmed by the state Senate.
- Establish stricter timelines for the DOI to act on rate filings, generally requiring decisions within 120 days.
- End the intervenor system that allows consumer advocates to challenge rate filings at insurers’ expense.
- Require wildfire risk maps to be updated every three years and allow insurers to factor in reinsurance costs and wildfire mitigation activities when setting rates.
The measure was submitted by Elizabeth Hammack, an independent insurance agent, who argued that Prop. 103 has caused dysfunction and delays that have worsened California’s insurance crisis.
Supporters and critics weigh in
Some in the insurance industry say the lengthy approval process under Prop. 103 has made it difficult to adjust rates in line with rising risks, especially from wildfires. Insurers also argue that delays and a provision requiring any rate hike request of 7% or more to trigger a DOI hearing have discouraged larger filings. As a result, most insurers have limited their requests to 6.9%, which they say has been inadequate in recent years due to rapidly rising claims costs for both property and auto insurance.
Combined with increasingly destructive wildfires, the difficult approval process and insurers’ inability to use certain forecasting models have prompted many companies to restrict writing homes and commercial properties in the state.
Consumer groups oppose the new proposal. They say Prop. 103 has saved Californians billions of dollars on auto insurance and kept home insurance rates more affordable than in many other states. Critics warn that repealing it would open the door to steep premium hikes with less accountability.
Long odds ahead
For now, the initiative remains a long shot. To make the November 2026 ballot, supporters must gather more than 546,000 valid signatures by next spring, a tall order without major funding. Consumer Watchdog, the advocacy group founded by Prop. 103’s author, has dismissed the campaign as unserious and underfunded.
If it does qualify, the proposal could set up a high-stakes battle between consumer advocates and insurers at a time when California residents are already frustrated with rising premiums and shrinking coverage options.
What it means for you
For California consumers and businesses, the debate is ultimately about the balance between cost and availability of insurance. Supporters of repeal say loosening regulations could bring insurers back to the state, giving homeowners and drivers more options. Opponents say it would leave consumers at the mercy of insurance companies with little protection against sudden price spikes.
With signature gathering still in its early stages, the proposal may never reach voters. We’ll keep you posted on developments.
New Rules May Coax More Insurers Back into California Market
In an effort to bring more insurers back into California’s homeowner’s and commercial property insurance market, the state Department of Insurance (DOI) has approved a system that will allow insurers to use forward-looking wildfire risk models to price policies in areas susceptible to wildfires.
The DOI hopes this and other measures it’s been taking, will provide some relief to businesses and homeowners in high-risk areas. Up until this point, insurers have been barred from using risk models that predict future wildfire claims costs and instead have been forced to use historical data.
Insurers have been pushing for this change for years, saying restrictive regulations have kept them from adequately factoring in wildfire risk.
What these models do
The DOI in August established the Pre-Applications Required Information Determination (PRID), a process that insurers can use to get their predictive models approved.
“The PRID process has introduced the potential for bringing relief to the many insurers who have struggled to provide coverage across California,” the DOI said in a press release. “With the ability to use more innovative risk forecasting model technologies, many carriers may return to provide coverage in the wildfire prone regions of California.”
Through PRID, the DOI has already approved prospective wildfire models, created by three companies, that insurers can use to price policies in the Golden State.
One such wildfire model was created by the risk-modeling company Verisk, which uses decades of wildfire science, engineering expertise and climate data to provide a forward-looking view of risk.
Another model approved through PRID is by Kimberly Clark & Co. That model, which has already been accepted in 24 other states, incorporates the impacts of climate change and accounts for mitigation efforts at property and community levels to encourage the reduction of wildfire risk.
What it means for the market
This could give homeowners and business owners more options in areas where it has been difficult or impossible to find coverage in the private market. The DOI is requiring insurers that use the new models to also commit to writing more policies in wildfire-prone regions.
With the new models in place, Mercury, Allstate and CSAA have announced plans to write more property insurance policies in California.
Rates are likely to shift as insurers adopt the models. Properties in areas shown to be at higher wildfire risk may see premium increases, while those in lower-risk areas or where fire-safety measures are in place may benefit from discounts.
Other changes in the works
The wildfire models are part of a larger effort to improve California’s strained property insurance market. Other steps include:
Expanded discounts for mitigation: Homeowners and businesses can qualify for premium reductions by taking specific wildfire safety steps.
Temporary FAIR Plan expansion: The FAIR Plan has raised its commercial property coverage limits from $10 million to $20 million for single facility and up to $100 million for a multi-unit property.
Reinsurance reforms: Insurers will be able to better manage their exposure to catastrophic losses, which regulators say should help keep the market stable.
Takeaway
For homeowners and businesses, these changes mean more choices may soon return to the market.
Prices will likely vary more widely depending on location and wildfire readiness, but insurers may start competing again to write policies in parts of the state where coverage has been scarce.
The Five Most Common Types of Employee Fraud, Theft
At some point, the odds are that a company will be affected by some form of employee theft or outright fraud.
Fraud can severely crimp a company’s finances and put the firm in a serious bind if the theft is large enough. With technology, fraud has in some ways become easier, but at the same time it typically leaves a trail of electronic breadcrumbs that may be hard to disguise.
According to the Association of Certified Fraud Examiners’ (ACFE) global “Report to the Nations on Occupational Fraud and Abuse” report for 2024, the median loss in the U.S. from a single case of:
- Employee fraud was $61,000,
- Manager fraud was $150,000, and
- Executive fraud was $300,000.
Here are the five main types of employee fraud and what you can do to thwart it.
Purchase order fraud
This is typically carried out in one of two ways:
- The employee initiates purchase orders for goods that are diverted for personal use, or
- The employee sets up a phantom vendor account, into which they pay fraudulent invoices, with funds eventually being diverted to the employee.
Company credit cards
Employees who have company credit cards may use them for illegitimate purposes to purchase items or on entertainment and travel. Some common types of fraudulent use of credit cards are fuel purchases, airfares, home supplies, meals that are not work-related and entertainment.
Payroll fraud
There are typically three ways that an employee can pull off payroll fraud:
- Setting up phantom employees on your payroll systems who are paid like regular employees but whose funds are diverted to the perpetrator’s account.
- Paying out excessive overtime.
- Continuing to pay employees after they die or after they leave your employ.
You should have systems in place to detect whether you have more than one employee with the same bank account number or the same address, unusually high overtime payments and whether dead or terminated employees are still on your payroll.
Sales and receivables
Some employees may collude with vendors to make payments for services never rendered or products never received.
Other times, you may have sales reps who inflate sales to receive higher commissions or bonuses.
Data theft
This involves an employee stealing important company data like trade secrets, personally identifiable information, client credit card numbers or client lists. In some cases, the employee would provide this data to third parties.
You may be able to detect this kind of theft by running tests to see if a database has been accessed by an employee without access privileges or if reports were generated by employees without authorization. You may also be able to run tests to find out if any employees have sent e-mail with attachments that include sensitive company data.
What you can do
According to the report, most theft occurs at one or more of the following stages:
- Procurement
- Payment
- Expense
If you are going to do any employee monitoring, these are the places you may want to focus on first.
The ACFE said that by analyzing transactions in these areas (such as with continuous monitoring systems driven by data analysis), it is often possible to test for a wide range of employee fraud as well as bribery and conflicts of interest.
Also, three out of four fraudsters displayed at least one of the following behavioral clues:
- Living beyond means (39%)
- Financial difficulties (27%)
- Unusually close association with vendor/customer (20%)
- Control issues/unwillingness to share duties (13%)
- Irritability, suspiciousness or defensiveness (12%)
- “Wheeler-dealer” attitude (12%)
- Bullying or intimidation (11%)
- Divorce/family problems (10%)
Construction Defect Litigation on the Rise
Construction defect lawsuits, a constant presence in the building industry, are on the rise, and legal observers expect the trend to continue over the next few years.
There are several factors driving the increase, including a continuing construction industry labor shortage, contractors working on tight schedules to rebuild properties in areas devastated by natural disasters and growing high-dollar court judgments.
Since insurance coverage for construction defect claims is not iron-clad, it’s important for construction firms, contractors, architects, engineers and even material suppliers to understand the drivers behind this trend.
Why defect claims are increasing
Skilled labor shortage — The construction industry has faced a sustained shortage of skilled workers for more than a decade, with recent estimates showing a gap of roughly 500,000 workers nationwide. According to Seyfarth Shaw’s 2025 Commercial Litigation Outlook, 30% to 40% of the construction workforce is made up of immigrants, and a significant portion is undocumented. Immigration policy shifts and the long-term difficulty in attracting new workers to the trades have kept the talent pipeline thin.
A smaller labor pool increases the likelihood of errors, substandard workmanship and oversights that later become the basis for defect claims.
Urgency in post-disaster rebuilding — Natural disasters such as hurricanes and wildfires are another factor driving defect risk. Rebuilding efforts after disasters have sometimes involved loosening or waiving certain permit and inspection requirements to speed up construction.
These measures can increase the risk of workmanship or design issues that later surface as legal disputes.
More complex and higher-value projects — In many markets, builders are taking on increasingly complex projects, from high-end custom homes valued at tens of millions to major medical facilities and infrastructure projects.
Larger budgets and intricate designs often mean more stakeholders, more specialized materials and more potential points of failure.
Litigation dynamics and ‘nuclear verdicts’ — Plaintiff attorneys are increasingly filing defect claims as close as possible to the statute of limitations, typically up to 10 years after project completion.
At the same time, the growing number of multi-million-dollar verdicts is pushing jury awards higher, particularly when property damage or perceived negligence is involved. This trend is making construction defect cases more attractive to plaintiffs’ firms.
Examples of recent construction defect verdicts
- A Chester County, PA jury rendered a verdict in favor of three homeowners, finding that the builder’s negligence resulted in construction defects and water damage to their homes. Jury award: $3.3 million.
- A condo association in Maryland was awarded $5.6 million due to faulty construction by Ryan Homes.
The insurance gap
There is no single insurance policy that specifically covers construction defects. While certain policies may respond to related losses, coverage is often limited and dependent on the circumstances:
- Commercial general liability — May provide coverage if the defect results in property damage or bodily injury, often through the products-completed operations portion of the policy.
- Builder’s risk — Protects a project during construction but generally does not respond after completion unless the defect arises and is addressed before handover.
- Professional liability — Covers architects, engineers and design professionals for claims stemming from design errors or professional negligence.
Many defects — especially those related solely to poor workmanship without resulting property damage — may fall outside these policies. That leaves builders and contractors exposed to significant out-of-pocket costs for remediation and legal defense.
What industry professionals can do
With litigation pressure building, contractors should consider:
- Tightening quality control — Implement formal inspection and sign-off processes at every stage of construction.
- Vetting subcontractors thoroughly — Require proof of adequate insurance and consider naming them as additional insureds.
- Documenting everything — Maintain detailed records of design changes, materials used, inspections and client approvals.
- Reviewing insurance programs — Work with us to identify gaps in coverage, confirm policy terms and explore endorsements or additional limits where possible.
- Planning for the long tail — Be aware of statutes of limitations and understand that claims may surface years after completion.
Ransomware Escalates: Physical Threats Against Company Leaders
A new survey has found that in 46% of ransomware incidents in the U.S., CEOs or other executives were physically threatened if their organizations did not pay the ransom demanded by hackers.
The findings in Semperis’ “2025 Ransomware Risk Report” highlight other pressure tactics, such as ransomware criminals threatening to file regulatory complaints to force payment. The study’s findings emphasize the need for businesses to remain vigilant against ransomware threats that can completely shut down their networks and websites until they pay ransom.
Many organizations cited a lack of experienced personnel or employee training as top challenges, opening the door to mistakes like clicking malicious links in e-mails that trigger ransomware.
Additionally, hackers are using new tactics to increase pressure on their victims.
Study findings
- 78% of organizations reported being targeted within the past 12 months.
- 55% of those that paid a ransom did so more than once, with 29% paying three or more times.
- 15% of organizations that paid never received usable decryption keys, or received corrupted ones, leaving equipment and data inaccessible.
- Less than one quarter (23%) recovered within a day, compared with 39% last year. Meanwhile, 18% needed between one week and one month, up from 11% in 2024.
- 42% paid ransoms of $500,000 or less, while 50% paid between $500,000 and $1 million.
New tactics
Physical threats — Ransomware actors are resorting to extreme measures to pressure victims into paying, including threats of physical harm to business executives. In the past 12 months, 40% of incidents involved physical threats against executives, according to the Semperis report.
Threats of reporting to regulators — in 47% of attacks, ransomware criminals threatened to file regulatory complaints against victim companies if they refused to pay.
This tactic was especially common against U.S. companies, likely due to cyber incident reporting requirements, including the Securities and Exchange Commission’s four-day disclosure rule for publicly traded firms. For example, ransomware group BlackCat reported one of its victims to the SEC in 2023 in a bid to pressure payment.
Other tactics — In early 2025, Cisco Talos reported that the Chaos ransomware group threatened additional damage by launching DDoS attacks and spreading news of the breach to competitors and clients if payment was withheld.
What businesses can do
- Address vulnerabilities and strengthen defenses to improve the ability to recover if an attack occurs.
- Regularly back up your data to an offline or secure location.
- Train staff to spot e-mails that may contain ransomware and avoid opening attachments or clicking on links from unknown or suspicious senders. Run cross-functional tabletop exercises every six months so executives, managers and technical teams know their roles.
- Ensure your organization has well-documented, clearly communicated crisis response and recovery processes, and practice them in test scenarios that mirror real-world conditions.
- Hold vendors and partners with system access accountable to the same security and recovery standards you require internally.
- Install updates to your operating system, web browsers and other software as soon as they become available and use a firewall.
If you are hit
- Contain the attack quickly. Isolate affected networks, revoke and rotate credentials, and preserve forensics. Then restore from clean, verified backups.
- Call your incident-response partner and legal counsel immediately. Parallel communication, legal and technical workstreams speed recovery and help limit secondary harm.
- Notify your cyber insurer right away. Expect tighter underwriting and potential premium impacts; nearly half of respondents reported coverage disruption after attacks.
- Treat ransom payment as a last resort. Require proof that a decryptor works on samples before transferring funds, and plan for the possibility that keys may never arrive.
The takeaway
Consider purchasing cyber insurance, which can help your organization recover from a ransomware hit or other cyberattack. In some cases, the insurer can help you avoid paying the ransom without compromising your ability to continue operating.
If you have questions about cyber insurance, give us a call.
Cumulative Trauma Claims Driving Workers’ Comp Costs
One of the largest writers of workers’ compensation insurance in California recently sounded the alarm about the growth of costly cumulative trauma claims in the state.
In a recent earnings call with analysts, the insurer, Employers Holdings, highlighted the drag these claims have on its results. This came a month after the Workers’ Compensation Insurance Rating Bureau noted in its recent rate filing the oversized impact of CT claims on overall workers’ comp claims. While some claims are legitimate, many are filed by workers after they are terminated, thanks to lawyers who approach them after they are laid off.
The typical claims allege gradual injuries sustained over years of repetitive motions, exposure or strain, rather than from a single accident or incident. They’re common in industries involving repetitive motion, heavy lifting or prolonged exposure to harmful conditions.
California is the only state that allows cumulative stress claims in workers’ compensation and one of only a few to permit claims after termination.
In 2023, CT claims accounted for 21.8% of all workers’ comp claims in the state, compared to 18.5% the year prior and 15.6% in 2021, according to the Rating Bureau.
CT claims often have similar characteristics:
- They are more likely to involve multiple injured body parts,
- Long delays between the time of injury and when the claim is filed, and
- Involvement of an applicant’s attorney hired by the claimant.
The Rating Bureau report found that:
- 40% of CT claims in California are filed after a worker is terminated.
- 98% of CT claims are litigated.
- Fully denied CT claims still end up costing over $10,000 on average, and many remain open even after five years.
The main injuries that workers claim when alleging CT:
- Soft tissue disorders 25%
- Dislocation and sprain 20%
- Carpal Tunnel Syndrome 13%
- Multiple injuries, including CTS 13%
- Mental & behavioral disorders 9%
The Rating Bureau found in a recent report that post-termination CT claims were initially less costly, but the longer they stay open, the more quickly costs accelerate.
That’s compared to regular CT claims filed by workers who are still working for their employer, which start off more expensive but tend to develop more slowly over time.
Example
The owner of a produce company said he had to lay off 46 workers, and a few of them started filing CT claims using the same attorney. Eventually, word got around among the other laid-off workers, and 16 of them had filed claims alleging CT injuries.
The firm’s workers’ comp carrier eventually set aside more than $500,000 in reserve for these claims. The employer’s X-Mod shot up to 350, and his premiums increased significantly as a result.
The takeaway
While these claims have long been a persistent problem in Southern California, they are spreading to other parts of the state, including the Bay Area and Sacramento, Katherine Antonello, CEO of Employers Holdings, said during the company’s earnings call in August 2025.
They’ve become such a burden on the system that California Insurance Commissioner Ricardo Lara acknowledged the rising frequency of these claims when approving a recent workers’ comp benchmark rate increase.
Employers should strive to reduce the risk of repetitive motion and cumulative injuries as part of good safety practice. At the same time, it’s important to document all injuries and near misses.
If a CT claim is filed, employers should conduct thorough investigations, meticulously document workplace hazards and training, and assess possible links between the injury and work.
Also check with your insurer to ensure the claim was filed within the state’s statute of limitations, which is one year. For post-termination claims, the clock starts on the worker’s last day of employment. For claims by active employees, the statute of limitations has not yet begun.
Multi-Unit Facilities Get Better Deal from FAIR Plan
The California FAIR Plan on July 25, 2025, started offering a new “high-value” commercial property coverage option for larger housing developments, farms and businesses with multiple buildings at one location.
The new limits are up to $20 million per building, with a total maximum of $100 million per location — up from the previous limit of $20 million per location. These coverage limits are available to all eligible applicants for both new and renewal policies.
The FAIR Plan covers the following commercial structures:
- Habitational buildings — Buildings with five or more habitational units, such as apartment buildings, hotels or motels.
- Retail establishments — Shops such as boutiques, salons, bakeries and convenience stores.
- Manufacturing — Companies that manufacture most types of products.
- Office buildings — Offices for professionals such as design firms, doctors, lawyers, architects, consultants or other office-based functions.
- Buildings under construction — Residential and commercial buildings under construction from the ground up.
- Farms and wineries — Basic property insurance for commercial farms, wineries and ranches, not including coverage for crops and livestock.
Why the increase
The decision comes as commercial property rates continue rising due to inflationary pressures, particularly for companies in areas considered urban-wildland interfaces.
Rebuilding costs have also risen substantially over the past five years, making the old FAIR Plan limits inadequate.
FAIR Plan limitations
The FAIR Plan is taking on more policyholders as more insurers pull back from the California market. Under state law, if a business can’t find an insurer that is licensed in California, the first option is to go to the “non-admitted” market, which consists of insurers not licensed in the state but often backed by established insurers like Lloyd’s of London.
If there are no takers in this market, the last resort is the FAIR Plan. However, costly FAIR Plan policies are not a complete replacement for a commercial property insurance policy. Policies only provide coverage for damage caused by the specific causes of loss listed in the policy:
- Fire
- Lightning
- Internal explosion
Optional coverages are available at an additional cost, such as for vandalism and malicious mischief.
If you have to go to the FAIR Plan, we can arrange for a “differences in conditions” policy that will cover the areas where the plan is deficient compared to a commercial property policy.
How to Implement an Effective Safety Incentive Program
Although not required by OSHA, some employers have shown that one of the best ways to positively motivate employees is through a safety incentive program that rewards safe behavior and participation in workplace safety efforts.
These programs need not be complicated, and some of the simplest have proven most effective. The best ones encourage safe behavior, teamwork and hazard recognition, while discouraging non-reporting of legitimate accidents or frivolous claims.
How safety incentive programs work
At their core, safety incentive programs offer rewards or recognition to employees or teams for meeting specific safety goals. These might include:
- Zero injuries over a period of time
- Reporting near misses
- Completing safety training
- Using personal protective equipment consistently
- Identifying and correcting safety hazards
Avoid “everything or nothing” goals, and ensure the prize is not the main motivator, as both are potential pitfalls that can discourage employees and promote cheating and under-reporting.
Getting started
Analyze past accident reports to understand the types of incidents that have occurred. Inspect your facility and correct all known hazards. Focus your incentive program on high-risk areas of operation.
Brainstorm with your safety team and employee representatives to develop goals that will promote increased workplace safety and measurable improvements. You’ll also need to decide what kind of incentives to offer staff who meet these goals.
When planning your program, your team should ask themselves:
Is it rewarding? The rewards must have a direct and immediate appeal to the targeted employees. If unsure, ask the employees.
Is it entertaining? The program should be something employees enjoy and want to participate in regularly.
Does it provide daily reminders? Communication is key to the success of a safety incentive program, so keep your staff updated on their progress. One popular method is to have a sign displaying the number of days since a safety incident.
Does the program allow rewards to grow? There should be milestones, such as every 100 days without an incident, that increase the reward over time.
Is it easy to understand? It must be clear, concise and easy for employees to follow.
Is it visual? Visual elements like safety signs or progress displays should be bright, colorful and attention-getting — and placed in conspicuous locations.
Is it flexible? An incentive plan that allows modifications gives management the latitude to keep it fresh.
Does it provide recognition? This applies to both group and individual achievements.
Is it easy to administer? Maintaining administrative records avoids potential confusion and ensures fairness.
Successful incentives
While cash rewards are frowned upon by safety professionals, you can still have appealing rewards, such as:
Gift cards: For various retailers, restaurants or online shopping sites like Amazon.
Bonus time off: An outstanding employee may get a Friday or half day off.
Recognition awards: Certificates, plaques or public acknowledgment of safety achievements in company newsletters or meetings.
Wellness rewards: Gym memberships, spa vouchers or other health-related perks.
Team celebrations: Lunches, outings or other social events that boost morale and foster camaraderie.
Experience-based rewards: Tickets to sporting events, concerts or other entertainment options.
Personalized safety gear/tools: High-quality safety equipment or tools customized with the employee’s name or initials.
Company swag: Items like shirts, hats or mugs with the company logo are often seen as a symbol of belonging and recognition.
How New U.S. Trade Policies Affect Insurance Costs
President Trump’s sweeping return to tariff-heavy trade policies in 2025 is sending ripples across the economy, including the cost of property insurance claims.
The latest round of tariffs, which include steep duties on imported construction materials and auto parts, many of which are sourced from China, threatens to drive up claims costs in both personal and commercial lines, particularly property and vehicle insurance. The result is likely to be higher insurance rates to account for higher claims costs.
Here’s a look at the effects on vehicle and commercial property insurance under the turbulent and constantly changing tariff regime.
Vehicle insurance effect
Depending on where they come from, vehicle parts face tariffs as high as 50% (in the case of China), which is hitting both original equipment manufacturer and aftermarket parts. Since more than half of all U.S. vehicle parts are imported, the cost of repairs has increased sharply, even for minor collisions.
According to the American Property Casualty Insurance Association, this could raise auto insurance claims costs by $7 billion to $24 billion annually.
The website Insurify predicts that full-coverage auto insurance premiums could rise 19% by year’s end on the back of higher repair costs and delays in parts availability, which also increase settlement times and costs.
For commercial fleets, this dynamic is particularly problematic. Businesses may face longer vehicle downtimes and delayed operations after an accident, and higher deductibles or premiums to account for elevated risk.
Commercial property insurance effects
Many of the main construction materials are also subject to tariffs:
- 25% across-the-board on steel
- 20% on Canadian lumber
- In early July, the president promised a 50% tariff on copper (used in wiring).
- Trump increased tariffs on steel and aluminum imports to 50% on June 4 and expanded them to include household appliances like refrigerators and dishwashers on June 12.
With these tariffs in place, the cost to rebuild or repair damaged property has increased significantly. The National Association of Home Builders estimates that tariffs have added $7,500 to $11,000 to the average cost of constructing a new home.
Business interruption risk
If tariffs inflate raw material costs, this could create uncertainty across supply chains. Therefore, businesses may be more vulnerable to supply chain breakdowns and related operational delays, increasing the risk of business interruption.
If tariffs cause delays in material inputs, they could slow down or stop manufacturer operations.
Industries like electronics, automotive parts, construction materials and apparel are especially exposed. Many of these businesses rely on components or raw materials from Asia, where even slight delays or cost increases can disrupt production and reduce profitability.
What business owners can do
What makes the current situation especially difficult for insurers is the unpredictability of Trump’s tariff policies. With frequent changes and shifting targets, insurers struggle to accurately model future claims costs, which complicates underwriting and risk pricing.
The lack of clarity around how long tariffs will remain in effect or whether additional duties will be imposed introduces pricing volatility that’s not easily absorbed by carriers. In some cases, insurers may respond by tightening underwriting standards or increasing premiums in advance to safeguard against future cost surges.
With tariffs driving up claims costs and likely hitting insurance costs, business owners are faced with several considerations:
- Review replacement costs and policy limits: Ensure the policy reflects current rebuilding costs, accounting for inflation from materials and labor. We can help you review your replacement cost.
- Consider higher deductibles: A higher deductible can reduce a policy’s premium, but it means the business will have to pay more out of pocket if it incurs a claim.
- Plan for longer claims cycles: Understand your carrier’s average claim timelines and adjust your business continuity plans accordingly.
- Find new vendors: If a business relies on parts or products from a high-tariff country and is concerned about resulting supply chain interruptions, it may want to explore new sources in other countries.