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.
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.
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.
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.