Fast Break: Weathering the Risks: Why Proactivity Matters

Matt Cranney

Welcome to Fast Break. Today we’re tackling a topic that affects everyone, the fast-evolving world of personal insurance. From rising costs to new technologies and increased risks. The landscape of personal lines insurance is changing rapidly. It’s more important than it’s ever been for individuals and families to stay informed and proactive about their coverage. 

In fact, according to a recent report by Insurify, over the past two years, national average home insurance rates have risen by 20%. According to the report, this trend is expected to continue in 2025, with a further 8% increase, pushing the average annual cost of homeowners insurance to $3520. 

This continued rise comes amid rising concerns over severe weather and natural disasters across the country, leading insurers to adjust rates to better manage the risks they face.

To help us navigate this really important conversation today, I’m joined by two experts from M3 Elevate’s personal lines team Amy Schroeder, Personal Lines Client Executive, and Tim Hoel, Director of Personal Lines. Amy and Tim, welcome to Fast Break.

01:08 Matt Cranney

So to get us started, Amy and Tim, I’m hoping you can each share a little bit about your backgrounds, your roles at M3 Elevate and the areas of personal lines insurance that you focus on. So maybe Amy, I’ll come to you first. 

01:21 Amy Schroeder

My role here at M3 started about 3 1/2 years ago, came over to the agency side from the carrier side. My specialization is protecting assets, right? Your home. The things that you work really hard for. Your vehicles, the toys that you love and making sure that we are, we’re protecting you as best as we can. We care about the things that you care about.

01:41 Matt Cranney

Awesome, Tim, what about you? 

01:42  Tim Hoel

Yeah. Thanks, Matt. As you stated, director of personal lines here at M3 Elevate. Prior to M3, I spent the last decade plus actually working on the captive-agent-channel side, where I held a number of different roles during my time there. Spent seven years focused specifically on driving sales strategies within the personal line space. So most recently leading a group of 30 captive agency owners in Minneapolis throughout kind of the Twin Cities metro-area. 

02:08 Matt Cranney

So, welcome both of you, and you can see from the information that Amy and Tim shared. At M3 Elevate, we are as invested in the personal line space as we’ve ever been and with only plans to continue to go even further and deeper with great people like Amy and Tim and the rest of our crew that they’re representing today.

So almost everybody is facing rising premiums and stricter insurance underwriting guidelines with their home, their auto, and their other personal lines of insurance. So, when everybody’s getting that call from their agent, the renewal in the mail and they’re opening it up, I don’t know if there’s anybody that’s seeing a number that’s a decrease. 

This is such a timely question. This is such a great time for this conversation, so help us understand, if you’re listening to this today and you’re just wondering why is this going up so much? What are the primary factors driving these big changes that we’ve seen? 

03:05  Tim Hoel

The biggest thing that we’re seeing right now is frequency, and severity of catastrophic weather. You know that that continues to be the mainstay and some of the biggest exposure that carriers, and consumers alike, are all facing.

Really that continues to be a big driving force behind premium and cost to rebuild, continue to go up. 

03:28 Amy Schroeder

You know, from a consumer standpoint, it’s difficult to say, well, you know, I haven’t had a claim and I haven’t had weather that has come through my area. Which, if you think of across the country and if you think back three to five years, how many more hurricanes we’re getting, the fires out West, freezes, floods.

Flood is a really important conversation that we have. Now all of those are huge factors in the rates that carriers are taking because they potentially write across the country, whether they’re writing in these states that that have these really large catastrophic losses or if it’s just the Midwest.

And it’s roofs. So that’s a totally separate conversation. I’m sure we’ll get into, but it’s just, it’s really them trying to stay afloat. And lumber costs more take, you know it labor is more expensive. It costs more to rebuild, so they’ve got to, they’ve got to take some rate there and it can be aggressive rate. 

04:23 Matt Cranney

Yeah. You know, there’s a quote that I love that people don’t fear change, they fear sudden change. And I think for the consumer this is probably felt sudden.

 You know, some of us can maybe say, well, the industry’s kind of been struggling for a while and maybe insurance companies haven’t moved as fast as they could or should have to address the, you know, what we would sort of call like, rate inadequacy, right?

I’m wondering, can we talk a little bit about too, because Amy you brought up something really important, which is, hey, if I’m listening today and I live somewhere in Wisconsin, I haven’t had a claim. I haven’t fundamentally changed. I understand maybe some of the hey, my car costs more to repair. My house costs more to rebuild, got ya. 

But the idea of I’m sort of penalized for weather that’s happening, maybe not even in Wisconsin. Tim, can you maybe just touch on sort of the reinsurance aspect of that and why that shows up in Wisconsin? 

05:17 Tim Hoel

Yeah, absolutely. I mean, and I think it, you know, reinsurance brings in this whole different complexity around personal lines, insurance and when you bring in sort of the international reinsurance markets. So again for those listening at home reinsurance is the opportunity for insurance carriers to actually take out insurance with another provider and they typically try to spread this across the international market because weather happens differently across the globe.

So because of that, when there are these catastrophic events that happen literally across the globe, you can see reinsurance appetites change. And so when reinsurance gets more expensive, those buying the reinsurance, IE the carriers, are then paying more as well. So those costs are also driving up sort of the back-end prices that insurers then must place now down to the consumer.

It’s a great topic to sort of address, but it really does bring in sort of those different levels of complexity to our business because on the surface, our business is pretty straightforward. But really as anyone really starts to dive into it, and more and more people are doing that now. The importance of understanding your policy today versus five years ago versus five years ago, let alone 15 years ago, I mean is very, very significantly different.

06:32 Matt Cranney

I think that’s a great call out to Tim and maybe one of the themes that will come out of our conversation today, which is maybe making that mindset shift from seeing your personal lines is something that kind of an autopilot, maybe a little bit right in terms of, hey, I’m with a good agent. I’m with a great insurance company. It renews annually. Maybe it’s a little increase or a little decrease, but typically it’s relatively stable number.

Now, you can’t, you can’t take that sort of passive approach to it. You have to be engaged. You have to be proactive. You have to be to your point, Tim, engaging with your policy, engaging with your agent. 

Amy, I want to come to you. You know we we’ve all talked a little bit about impact of severe weather events and as we recorded this podcast, we’re actually dealt with a severe weather event today in our geographies that we serve. And so it’s it is becoming something more frequent.

How are you seeing insurance carriers adapting to these changing risks? But what are they doing to adapt and what can homeowners do to protect themselves? 

07:38 Amy Schroeder

Yeah, that’s. I mean that’s a great question. And we talk about it every day with our clients. You know, you mentioned engaged with your agent. We love to talk about this stuff to understand the why behind the what.

So, things that are happening that insurance carriers are adapting to these increased risks, things we talk about with our with our clients to mitigate risk so that the carrier can be more comfortable, we talk about an automatic water shut off device. How can you make sure that you’re not having these really large water losses when you’re gone. Maybe you have a secondary home that you go to South in the winter because Wisconsin winter is hard. How do you make sure that you’re protecting your home while you’re away?

All of those types of things, you know, security that way within your home, so that, you know, central fire burglar alarms. Anything to really lower the risk of a potential really large loss.

And so our carriers love to see those. Discounts come along with that which is really great. Everybody loves a good discount. We love having these conversations with our clients. We want to make sure that you’re protecting what you’ve worked really hard for, you know, with severe weather events like the one that went through this morning that we dealt with that.

Paying attention to that, sometimes if you can put your car inside, no one really knew that a huge hailstorm was going to come through this morning as we’re recording this, bring your car inside, bring your patio furniture inside. When there’s huge wind. Stuff like that. It’s a little extra step if you can do it safely before the storm comes, you can really help yourself in those ways. 

09:16  Tim Hoel

I think Amy brings up just a really good point about some of these things seem common sense and very little and it’s insignificant, but to I mean to your point, if you’ve ever seen the aftermath of a patio table getting picked up and thrown through you know, front windows of a home that that stuff is just again frequency and severity is increasing.

And so the little things that we can do, I mean to your point Matt, law of large numbers and we are all in this together right when we can try to cut losses across the board it’s better for all. 

09:49 Matt Cranney

One specific thing, I think related to weather it is really changes that we’ve seen insurance companies make in the last let’s say couple of years, specifically about how they adjust roof claims. And so, I think we’ve seen so many questions come in from our insureds about this and we have not yet, thank goodness, seen a significant hail event, maybe prior to today, since these changes have gone into effect.

And so Tim, I want to spend, the next couple of minutes really diving deep and unpacking some of the changes that have been implemented and what people can do about it moving forward to put themselves in the best possible position. 

10:31 Tim Hoel

Certainly. You know, I think starting with sort of the why and we sort of covered that, it really is this frequency and severity of catastrophic weather and you know, I don’t know what the full stat is, but it’s a significant. Majority of exposure are happening to roofs from wind-hail cases.

So there are three, what I would say are major differences or things that have occurred from a carrier side in the last, two to three years. And those three things are what we call RCV to ACV, or Replacement Cost Value to Actual Cash Value. The second one are roof schedules and some of the eligibility guidelines that they’re putting in around roof age. And then the third one would be wind, hail deductibles.

So jumping back to that first one, the conversation around RCV versus ACV and just to kind of put this in simple terms. A Replacement Cost Value is the total cost to put on a new roof and ACV is that Actual Cash Value, so it pays sort of the depreciated value of the roof over the age.

I always like to sort of align this with an auto policy. Most auto policies are Actual Cash Value. Think about if you crash a 2005 Ford F-150, your expectation is that you’re going to be recoup the value of a 2005 F-150, not 2025 F-150.

The second one then is the roof schedules and sort of those eligibility guidelines or basically they’re called the depreciation schedules of a roof. And we see these depreciation schedules now starting anywhere from the very first year to year 15. And then we’re seeing the eligibility guidelines sort of changing where for new business we’re seeing carriers not interested in taking on risks of roofs that are 10/15/20 years old. They’re just not interested in providing coverage.

And then that third one is the wind hail deductibles. Again, going back to the why about the major exposure that carriers and consumers alike are facing. It comes down to those wind and hail events, so we’re starting to see percent deductibles. You might see a half percent or a 1% even up to 2 or 5%. And those are percentages of your coverage A. So basically, the value of your home. So if you had a $400,000 home and you had a 1% wind-hail deductible, it would be a $4000 deductible for a wind hail occurrence. And then some carriers have a flat rate deductible for wind-hail as well.

So those really are, I think the three major factors right now that we’re seeing that are changes. And they’re big changes and to your point, the importance of really understanding what those differences are but what your policy is really spelling out and what that means for you and your age of your roof. 

13:24 Matt Cranney

Really well laid out. Thank you. I want to just go deep for our audience on that specific on the first one because my point about change is OK, but sudden change feels hard, right?

Let’s use a practical example. So, my roof is 10 years old, let’s say. Pretend I’m back in replacement cost days. Can you walk through like how that would have been handled. What would I have paid? What would the insurance company pay me? And then we can compare and contrast that to it like ohh Matt, here’s what you’re going to get now on a ten year roof.

13:53 Tim Hoel

Again, it goes down to what that policy sort of spells out, too. So for an average policy back in, what we may say the ‘good old days’ of replacement cost value. A 10 year old roof, you would have a hail claim coming through the carrier usually sends out to you your depreciated value, that’s sort of leftover of that roof and then they’ll ask you to go out and get an estimate for the replacement. And once work is completed, they pay off sort of the difference minus whatever deductible it was you had and most of those, were $1000 deductible.

So today, if you had a roof schedule that started depreciating or maybe say at 10 years switched from replacement cost to actual cash value. So there’s no additional replacement coverage coming in, they’re just going to say, Matt, your house was or your roof is 10 years old, that’s a, the life of it is 20 years. So it’s half of its life and it’s going to cost $30,000 to replace. And we’re going to pay 15. And then you’re going to have your wind hail deductible, minus that as well. So the big difference really and there, I think it’s more and more difficult to find a replacement cost value, an RCV policy. And that is that shift from you know going back to thinking about making you whole with a 2005 Ford F-150 versus a 2025. 

15:24 Matt Cranney

The average person who doesn’t spend their days thinking about insurance the same way that we all do. They imagine, like, hey, storm goes through. I see my neighbor getting a new roof. Somebody comes and asks me, like, hey, I think you probably have some damage. They do the inspection. It’s like, yeah, you need a new roof. And I’m paying $500 deductible, $1000. And I got a new roof. Now again, that probably wasn’t the actual case in every situation, but I think that’s probably the perception that a lot of people have.

It’s also worth calling out to something you said about. Every policy is unique. And every policy is different. This is again another call to, as Amy laid out before know your policy, read your policy check with your agent. These are the conversations that you should be having. If all we inspire today is people going oh gosh, I haven’t talked to my agent in a while. I should do that or I haven’t read my policy in depth and thought about how it handles. Hopefully people can do that.

16:18  Tim Hoel

Or I’m not used to opening letters from my carrier. Read your mail. Read your mail. Changes are happening regularly to policies as well.

16:30 Amy Schroeder

Well, yeah, I really like what you said about how carriers are, they’re getting strict on whether or not they’re going to take on a new risk, right. So you may have a 10-year-old roof that is, is in perfect condition to you because it’s got a 30-year lifespan, but some of these carriers just aren’t ready to take on those risks because it’s to them a tougher risk than a brand new roof. And so that’s also part of the conversation that we have.

Our carriers can get a little limited. Our options and the availability to you to write a new policy for you gets a little trickier the older your roof gets and understanding why that’s happening, right?

The five, five years ago, 15 years ago, it’s just not the same that we in technology is not the same, right? We’re evolving with all of this stuff and I think for the first time, insurance is now changing. And we have to evolve that way. And you again, you don’t know what you don’t know. So if you’re not having the conversation, we want to be able to talk about that. We want to be able to talk through that with our clients and just and just let them know where they stand, the why behind all of it, what’s going on. All of this is new. Let’s have the conversation about it.

17:43 Matt Cranney

I think it’s also worth pointing out here too, we love our insurance company partners here at M3 Elevate and M3 in general. The industry needed to catch up, to change. And again we can have debate and discussion about when that should have started and the pace of change and all those things. But what we all agree on, I think whether it’s clients, agents, carriers, we want our marketplace to be stable and predictable as much as we can.

I think all of these changes, our hope is we’re living in a little bit in that suddenness now, but we all hope in that we believe that we’re moving towards a place where there is what insurance company called rate adequacy, where they’re getting enough insurance premium to be able to pay claims, adjust them well, be consistent, be present because we’ve all seen stories, even in the geographies we serve of insurance companies that haven’t been able to manage their balance sheet and their reserves well enough and haven’t been able to remain in, in the personal lines business which we know the more carries, the more good carriers that we have in the personal lines space, the better it is for everybody. 

As part of these changes, both in the insurance company side, the agent side, obviously technology is playing a role today. Tim, I want to come to you on this one. What are you seeing from a technology and or innovation space, maybe in general in the personal lines space that’s maybe improving efficiency or that customer experience? 

19:07 Tim Hoel

Yeah, I mean just like in, in every industry across the board right now, AI is sort of everywhere, right? And I think when we look across that from an insurance perspective, I mean it is, it’s everywhere from risk rating to claim processing automation. AI is really starting to make a dramatic impact just around the efficiencies as a whole for consumers and carriers alike

From a personal lines space, I think UBI or Usage Based Insurance and telematics specifically around auto. There’s going to be this opportunity to have some greater insights into how our customers are operating, how they’re working.

In the long term, I do think it’s going to have, profound impacts on both agency operations as well as again as those customer efficiencies, and ultimately that’s just going to provide all of us so much more accurate and in real time data, and I think it gives us then, from a carrier side really key insights into individual customers. And then for us on the agency side it allows for us to have much more timely and really highly personalized solutions that are fit right. And it’s specific for customer needs, and that from a tech and efficiency standpoint, I think you know only gets us all into a better place.

20:29 Matt Cranney

Yeah, well said. What we’re really seeing, I think from an underwriting perspective is kind of like on an old TV set that you have to dial the channel in, right or a radio station. That’s what I feel like is happening now as it relates to risk both in terms of the personal line side, the commercial line side, because good risks should want that.

Because you know if we say hey, these are the rates for all 35-year-old male drivers. These are the rates for all 50-year-old female drivers. Well, you can have excellent drivers and you can have not excellent drivers. To have those premiums really become mor, oh this is about my risk.

That’s initially what I fell in love within insurance. The idea that you know we could all call to get a quote on auto insurance we could drive the same car, but our premiums could be different based on.  You know how we take care of that car, our driving history, all of those kind of things. And so I think we’re starting to see technology play a role there. Amy, anything you’d reflect on with that?

21:30  Amy Schroeder

Really understanding the differences. Matt to your point, if we have a lot of people that come here that are like ohh well, you know my buddy next door, his premium is $2000 but mine is 5300. Why? Let’s talk about it right. 

21:41 Matt Cranney

Yeah, yeah, well said. There’s nothing more comparative than a personal lines quote, you know? And again, I get it. And we all understand it. It’s again, I think it’s a fact of what we talked about before, where because there has been so much predictability and consistency. And we’ve been so lucky in Wisconsin to have that. If you talk to people in Florida or California, they certainly would not being saying the same thing. 

And Amy that leads maybe to the last question in this segment that we want to finish with and because you know on Fast Break we want to be as practical as we can and I think this has been certainly one of our most practical episodes. If you’re listening today and you’re like, OK, I get it. You know Matt, Amy and Tim like I got to start paying attention to these things. What are some of the most proactive things that you would say individuals and families can do to ensure they have the right coverage in this ever-changing environment?

22:31 Amy Schroeder

Yeah. And I think, I want to go back to, you know what, what Tim has said before of understanding your policy, right, what is it reading? What is it saying? What does this roof schedule mean? What is that? That’s never happened before. What is the percentage of, where is the percentage coming from that that 2% now iIs 2% of what, right?

So like so understanding those things and so proactive steps with your current policy again sit down and talk about it. You know this is the time to do it, to understand, but also if you think about buying secondary homes moving, if you need to move, what are some of the questions that you should be thinking about from an insurance perspective that’s different than the housing market, right?

So like you want to know some of those things and you want to be in the right school district, but how old is your roof? Has your plumbing ever been updated? If you got a really old home, let’s talk about some of those things. These are things that are going to matter when you need insurance. And so we always ask our clients. 

You know when you’re purchasing a new home or secondary home, wherever that may be, please loop us in. We know the market. We know the industry. We know the questions that, we want you to find out so that you can be insured properly. So it doesn’t come as a huge surprise to you when we give you your new insurance policy, and it’s going to be more expensive than maybe what you thought.

You know, Matt, to your point that everybody is as an individual, every home is rated differently, every auto is rated differently and just know that and just know the why behind all of that. And I think just making sure that you are, you’re covered knowing the coverages that insurance carriers offer. I’ve talked about flood more often in the last year or year and a half than I think I ever have. 

It’s important. Again, just have the conversation whether you purchase the policy or not. Let’s talk about the potential risks that may happen and how we can support you with coverages and know what some of those things are.

24:42 Matt Cranney

Really well because I always think it flood is a great example, right? It’s like, well, I live in Wisconsin and I’m not near a river. So you know versus well, what is defined as flood in your insurance policy? Right? And, if it’s an escape of water, if it there’s a million ways that a flood policy, I shouldn’t be hyperbolic. There’s a lot of ways. It’s probably not a million. There’s a lot of ways that flood insurance can be relevant and important and impactful for people even in Wisconsin. So again have the conversation

25:13 Tim Hoel

And ask questions. You know, Amy said this ask questions that you might not understand. It’s OK. Our business is very complex, but it’s as complex as it is important.

25:22 Matt Cranney

Well said, it’s a complicated but really important conversation. And I think that’s a really nice way to sum up kind of this segment of our conversation. We’ve all talked probably more about things like roofs and rates and reinsurance and all things more in the last two years with our clients and we maybe ever have before, because again to the shift from reactive to proactive, from the set it and forget it to be able to actively manage, these are really important things. And so our encouragement to you as you listen today is we are here for you and M3 Elevate is ready to serve. 

OK. Tim and Amy, we get to move now to our fastest break set of questions. Amy, I’ll come to you first favorite book you’ve read in the last 12 months. 

26:05 Amy Schroeder

“It Ends With Us”.

26:07 Matt Cranney

Tim Hoel

26:08 Tim Hoel

I’m currently book I’m reading. It’s called “When: The Scientific Secrets Of Perfect Timing” by Daniel Pink.

26:14 Matt Cranney

That’s a good one. I read that one. I would recommend that, too. OK, Amy, complete the sentence. Leadership is. 

26:20 Amy Schroeder

Presence. Showing up fully, intellectually and emotionally. 

26:24 Matt Cranney

Love it. Tim, what about for you? Leadership is:

26:25 Tim Hoel

A privilege.

26:27 Matt Cranney

Love it, Amy. the most impactful piece of professional advice that you’ve ever received. 

26:31 Amy Schroeder

Get comfortable with having uncomfortable conversations. 

26:34 Matt Cranney

Oh, I love that one, Tim. What about you?

26:37 Tim Hoel

When in doubt, wait it out. It’s got to make sense.

26:40 Matt Cranney

OK, Amy, your favorite podcast that you would recommend to our audience.

26:42  Amy Schroeder

Anything, crime junkie related.

26:45 Matt Cranney

OK, is a lot out there. There’s a lot out there. Tim what about you?

26:47 Tim Hoel

I’m the worst with this cause I’m music over podcast all day long for me. But Main Street business with Mark Kohler and Matt Sorensen is one that I really appreciate just from a real estate perspective.

27:02 Matt Cranney

Amy, your can’t live without it app on your phone.

27:03  Amy Schroeder

Chat GPT

27:05 Matt Cranney

Love it, Tim?

27:06 Tim Hoel

Ah, my onX hunting maps.

27:08 Matt Cranney

Hey, love it. OK, Amy, the last thing you did that truly scared you.

00:27:11 Amy Schroeder

I fed a giraffe last summer. It was terrifying.

27:17 Matt Cranney

But with a good outcome? Tim. What about you?

27:19 Tim Hoel

Making the decision to leave an organization that I’ve grown my career with for a decade plus, but it’s funny how fear can seem to be a mile wide, but only an inch deep when you kind of step into it. And I think I made a good choice so far. 

00:27:34 Matt Cranney

We’re lucky and excited to have you. Amy last question, if you were to give a Ted talk, what would be its title? 

27:40 Amy Schroeder

If you’re on time, you’re late. 

27:43 Matt Cranney

Love it, Tim. What about you? 

27:45  Tim Hoel

I think mine would be “Three Stories” because I usually have to tell three stories to tell you one. 

27:54 Matt Cranney

I love that before we close, today, Amy and Tim, if we have people in our audience who have listened and they want to think about making that switch from reactive to proactive and looking for maybe a trusted advisor, can you share with our audience where they can find out more about each of you and the best way to get connected, Amy I’ll come to you.

28:12 Amy Schroeder

Yeah, yeah, the best way is through our M3 website. M3 Insurance has a people directory. Tim and I are both on there. Our e-mail is there. Our phone number is there. We’re always here to help. We want to talk. It’s meaningful to us and we really love what we do. So we would love to hear from you, all of our info is out there.

28:30 Matt Cranney

Awesome. And we will put your contact information, Amy and Tim in the show notes as well. So Amy, Tim, thank you so much for joining us today for sharing your insights into this crazy personalized world that we’re living in today. We really appreciate it. 

28:45  Tim Hoel

Thanks for having us. 

28:46 Amy Schroeder

Thank you. Thank you for allowing us to to give some insight into into the crazy world. We appreciate it.

This has been Fast Break brought to you by M3 Elevate. I’m Matt Cranney, thank you for joining me. Do you want more tips to grow protect your business? Subscribe now and catch all of our episodes and we’ll see you next time.