2025 Tornado Season: Are Retail Insurance Agencies Prepared?

4 min read

March 20, 2025

Retail Insurance Agencies’ Rocky Yellow Brick Road

The 2025 commercial property insurance market is currently described as stable, marking a shift from recent years characterized by significant rate increases designed to correct market imbalances. Despite this newfound stability, secondary risks like severe storms and tornados, are increasingly capturing the market’s attention. While last year’s high-profile catastrophes like Hurricane Milton and major wildfires dominated insurance industry news headlines and discussions; 2024 was among the most destructive on record for severe storms. Recent data confirms at least 1,735 tornadoes occurred in the U.S. last year, with the number of strong tornadoes (EF2 or higher) reaching its highest level in over a decade. That’s over 500 more tornadoes than the 30-year average of 1,225 tornadoes from 1991 through 2020.

Across the heartland, severe storms in Kansas, Nebraska, Minnesota, Missouri, Michigan, Wisconsin, South Dakota, and North Dakota triggered widespread tornados along with damaging derechos, flooding, and hail. Between 1980 and 2024, Missouri experienced 120 extreme weather events that each caused more than $1 billion in damages.

Tornados Spin Up New Competition for Retail Agencies

As severe weather events become more frequent, some Midwestern states are working to attract new insurers by promoting their state’s strengths and opportunities. State officials and the insurance industry are implementing initiatives to improve disaster preparedness, engage with insurers, and attract new insurance providers.

InsurTechs are moving into the Midwest, too. The Midwest provides a compelling environment for businesses, characterized by a low cost of living and notably low corporation taxes—South Dakota and Ohio even offer no corporation tax. This financial advantage allows initial capital investments to extend further, presenting a significant edge compared to high-cost areas such as Silicon Valley.

The region hosts 150 Fortune 500 companies, including industry-leading insurance firms like Nationwide, Allstate, Progressive Insurance, and State Farm. These insurance giants don’t just provide market validation—they offer InsurTech startups transformational advantages: deep industry expertise, massive distribution channels, established customer trust, regulatory navigation capabilities, and access to capital resources that would take decades to build independently. Their strategic partnerships can compress a startup’s path to viability from years to months.

Retail insurance agencies should anticipate more competition, as these partnerships reshape the insurance industry and deliver on policyholder demands for faster service, more personalized coverage options, and seamless digital experiences.

Operation Transformation

The traditional policy checking process has long been a bottleneck for retail agencies. With staff spending an average of 70% of their time on manual document processing, today’s agencies face massive efficiency challenges. A typical mid-sized retail agency processes thousands of policies annually, with each policy requiring multiple reviews and comparisons.

As secondary events like tornados grow in frequency and severity, and competition increases, it’s critical for retail insurance agencies to reassess current policy checking workflows, identify pain points, and retool this core operational process.

Retail agencies are grappling with talent shortages, leaving lean teams of experienced staff members spending countless hours meticulously comparing policies against quotes and prior versions. Experienced personnel shoulder the burden of manual policy checking and other backlogged administrative tasks, increasing the likelihood of undetected policy errors, claims or increased E&O exposure premiums.

Policyholders are looking for consultative risk advisors to help them take proactive, preventative measures to protect their property from future storms. Inefficient policy checking operations are a significant contributor can delay policy delivery during peak renewal periods and limit capacity for proactive policyholder engagement.

Retail agencies risk falling behind competitors who adopt efficient AI solutions. Manual processing constraints reduce market responsiveness and agility, limit capacity to take on new business, and impact policyholder retention.

Weather the Tornado Season with Policy Checking AI

New AI-powered policy checking innovations, like Policy Checking AI, dramatically improve accuracy and reduce processing time and E&O risk. Policy Checking AI combines machine learning (ML), natural language processing (NLP), computer vision, and generative AI to automate the most laborious parts of this process while relying on insurance professionals to validate and act upon the automated results. This provides unsurpassed efficiency while maintaining the quality and accuracy needed for this critical back-office process.

“Our AI elevates human potential rather than replacing it. Our team uses these tools to manage diverse client needs on their behalf,” explained Patra’s Chief Technology Officer Tony Li in a recent interview with In$urance CIO Magazine.

Policy Checking AI handles all P&C insurance policies, from simple to complex commercial coverage.

No two agencies operate exactly alike, which is why flexibility in policy checking solutions is crucial. Policy Checking AI offers customizable implementation options that adapt to your agency’s unique workflows and preferences. This adaptability ensures that you can maintain control while leveraging powerful automation capabilities.

Full-service option with dedicated processing team
Self-service solution for in-house control
Standardized workflows ensuring consistent quality

Maintaining accuracy while increasing efficiency is the holy grail of operational excellence. Policy Checking AI alters this balance by combining advanced technology with comprehensive review processes. Patra’s full-service solution workflows are embedded alongside AMS review while our self-service solution is completely standalone. Both offerings provide unmatched accuracy and efficiency through:

Patent-pending AI technology performs comprehensive policy reviews using a 900+ point checklist
Color-coded discrepancy reports enable quick review and assessment
Comprehensive documentation of all checks performed

Every retail agency knows that E&O risk is an ever-present concern that can significantly impact both finances and reputation. Patra’s full-service Policy Checking AI offering addresses this challenge head-on by implementing systematic, thorough review processes that catch potential issues before they become problems. The result is a robust risk management approach that provides peace of mind for agency principals.

While results vary by agency, most users report 50-70% time savings with our self-service solution compared to traditional manual checking processes. Discover your agency’s time-saving potential by scheduling a short demo of Policy Checking AI.

Policy Checking AI is Imperative for Retail Agencies

Agencies that embrace AI-powered solutions like Policy Checking AI are positioning themselves for sustainable growth and success. Manual policy checking isn’t just time-consuming—it’s a significant source of E&O exposure that keeps agency principals up at night. Choosing to maintain traditional manual policy checking processes might seem like the safe choice, but the real costs and risks are substantial. Automating the policy checking process with Artificial Intelligence helps agencies reduce E&O exposure, improve accuracy, and free up valuable staff time to better service and retain policyholders impacted by severe weather events.

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