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Welcome to the Pride,

Every Friday we distill 200+ insurance, legal, and corporate-risk articles into three signals your board should know about on Monday morning.

Three developments caught our attention this week:

• Private equity enters public university athletics. Boise State is negotiating the first direct PE investment in a public university athletic department, creating untested D&O exposures for boards overseeing these deals.
• Congress proposes 10-year freeze on state AI regulations. The budget reconciliation bill would suspend enforcement of existing AI rules, leaving insurers to defend algorithmic decisions without regulatory guidance.
• Geographic patterns drive bad faith verdicts. Our analysis of 20 years of litigation data reveals which jurisdictions and policy language combinations trigger nuclear verdicts. We’ll tell you how you might be able to avoid them.

The boundaries between public and private, regulated and unregulated, predictable and random are dissolving. The winners will be those who see patterns where others see chaos.

Private Equity Crosses Into Public Universities as Boise State Targets Year-End Deal

Summary

Boise State's athletic department is "actively considering" private equity investment, with AD Jeramiah Dickey expecting a transaction by December 2025. (source)

The university created "Bronco Athletic Growth Solutions" to explore options from revolving credit to minority stakes, positioning itself among five Mountain West schools jumping to the Pac-12 in 2026. While the Big 12 suspended similar PE discussions after initial exploration, Boise State pressed forward. It’s seeking to bridge an estimated $15–20 million annual revenue gap with Power Five programs.

A completed deal would mark the first direct PE investment in a public university athletic department. (source)

So What?

PE is buying into a market with no rulebook.

Unlike professional sports with established ownership models, college athletics operates in regulatory chaos: 32 states have different NIL rules, 18 have none, and many prohibit tying compensation to athletic performance—making traditional PE metrics obsolete. When UNLV's quarterback walked after a promised $100K NIL payment never materialized, nobody knew who could be sued.

Traditional D&O policies never contemplated state-appointed regents negotiating alongside PE partners demanding 20% IRRs, or nonprofit collectives functioning like talent agencies facing IRS scrutiny.

Every institution touching these deals, from municipal underwriters to foundation directors, inherits liability without precedent.

A Decade Without AI Oversight Sounds Good, Until You Run Into State Insurance Law

There's a 900-page budget reconciliation package quietly moving through Congress that could change how insurers operate, and how they're held accountable.

Nicknamed the One Big Beautiful Bill, it contains a proposal to suspend all new state-level AI regulations for a decade. This would freeze enforcement of many already on the books.

Supporters say it's a win for efficiency. We agreed with them at first blush. But for insurers relying on AI as infrastructure, it's not a gift. It's a vacuum that litigation will rush to fill. (source)

AI Is Already Insurance Infrastructure

Insurers aren't experimenting with AI anymore, they're operationalizing it.

Models now drive underwriting. Bots handle claim intake. Machine learning informs portfolio decisions, detects fraud, flags anomalies, and routes customer service. What used to be human judgment is now algorithmic infrastructure.

And in many states, regulators have stepped in with thoughtful, risk-based guidance. That guidance would be frozen under the moratorium—leaving carriers to navigate without a compass.

When Rules Stall, Risk Accelerates

The bill promises simplicity. One national approach to AI instead of 50 different state rules. But the language is so broad it could freeze oversight of everyday insurance tech—not just advanced AI, but pricing engines, claims automation, and triage algorithms.

The pushback has been swift: the NAIC, state insurance commissioners, and attorneys general from 40 states have formally opposed the measure. Not because they're anti-AI, but because they know what happens when regulation retreats. It doesn't leave freedom, it leaves a vacuum that courts fill with precedent. (source)

And insurers are the ones who'll have to explain how the machine made its decision.

Less Regulation Doesn't Mean Less Accountability

In the absence of clear standards, courts become the arbiters of what's fair.

Plaintiffs will challenge denial letters, pricing practices, and automated decisions using existing statutes. The UDAP, unfair claims practices, and anti-discrimination laws to name a few. They don't need new regulations. They need a sympathetic jury and a model that can't explain itself.

The liability isn't theoretical. It's contractual, reputational, and rapidly materializing.

Without state standards to cite, carriers will be left defending "reasonableness" without a rulebook.

The LION Lens: Lead in the Vacuum

At LION Specialty, we see this as a defining moment.

When regulators pull back, the opportunity isn't to cut corners…It’s to set the standard others will eventually follow. The carriers that build transparency, auditability, and control into their systems now will be ahead of both the lawsuits and the laws.

AI isn't just a tool. It's an accountability system. And the strongest carriers are designing it accordingly.

Regulation May Slow. Risk Won't.

The moratorium may delay new rulemaking, but it won't pause claims, subpoenas, or scrutiny.

The winners in this cycle will be the ones who treat AI governance as a competitive edge. Not just as compliance or a cost, but as brand defense.

Because in this next era of insurance, those who lead through ambiguity won't just avoid the fallout—they'll define the future.

Start by mapping where AI touches your operations today. The vacuum is forming. Your advantage begins now.

P.S. If the moratorium passes, expect a formal challenge from the NAIC and its member commissioners. Legal action under the McCarran-Ferguson Act—which protects state primacy in insurance regulation—is already being discussed. But even if that challenge succeeds, the uncertainty in the interim will fall squarely on carriers. Prepare accordingly.

The $100 Million Pattern Hidden in 20 Years of Bad Faith Claims

Two identical claims. Same damages. Same policy language. Same facts.

One settles for $50,000. The other explodes into a $10 million bad faith judgment. The only difference? The zip code.

For decades, the insurance industry has struggled to understand why certain jurisdictions turn routine denials into nuclear verdicts. The research fueling our bad faith model—conducted over the last year with a major reinsurance broker partner and some of the most advanced analytics professionals in our industry—discovered the answer isn't random jury behavior. It's specific combinations of policy language, local precedent, and claims handling procedures that create predictable patterns of exposure.

These patterns have always existed, buried in thousands of cases across hundreds of courts. Too scattered for traditional analysis. Too complex for standard risk models. But advances in natural language processing have made it possible to extract structured data from two decades of bad faith litigation at scale.

The process works in two stages. First, the LION AI systems read and categorize every case—extracting policy language, verdict amounts, jurisdictional data, and procedural elements. This isn't analysis; it's data extraction and structuring. The AI identifies what happened, where it happened, and under what circumstances.

The second stage applies traditional statistical analysis to this newly structured dataset. This reveals correlations that only emerge at scale: which policy phrases correlate with adverse verdicts in specific jurisdictions, which claims procedures trigger punitive damages, and which settlement strategies succeed or fail by geography.

The findings challenge conventional wisdom about bad faith exposure. Geography doesn't just influence verdict size…It fundamentally changes which claims practices constitute bad faith. A standard denial letter that's routine in one state can be evidence of institutional bad faith 100 miles away. Settlement timing that's strategic in one jurisdiction is seen as manipulative in another.

Understanding these patterns transforms how carriers approach claims. Instead of universal policies applied blindly across jurisdictions, insurers can calibrate their approach based on proven risk factors. Policy language can be adjusted to avoid phrases that trigger adverse precedent in specific venues. Claims protocols can be modified by jurisdiction before problems arise.

The implications extend beyond individual claims. Carriers can now price bad faith exposure with precision, understanding not just their historical losses but their forward-looking risk based on where they write business and how their policies interact with local law.

This isn't about replacing human judgment with algorithms. The AI doesn't make decisions or predict outcomes—it simply makes visible what was always there but impossible to see. Claims professionals armed with these insights can make better decisions, avoid predictable pitfalls, and focus their expertise where it matters most.

The $10 million verdict that "came out of nowhere" rarely does. The patterns were always there, waiting to be discovered.

For more information about bad faith pattern analysis, contact us at LION Specialty. And stay tuned for our forthcoming bad faith model!

The Bottom Line

The insurance market is being tested along new fault lines. Public institutions are taking private capital, compliance is morphing into litigation strategy, and geographic patterns are turning claims handling from art to science.

Winners won't be those with the biggest balance sheets or best lawyers, but those who transform uncertainty into intelligence before their competition realizes the rules have changed.

If you’re a director or officer at an FI, your personal assets face threats from multiple directions…

That's why we created the D&O Contract Vigilance Blueprint, a 5-day email course designed to help you:

• Secure superior D&O insurance coverage and identify overlooked gaps.
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• Protect your personal and institutional assets by proactively addressing emerging risks.

​>>> Get the D&O Contract Vigilance Blueprint​

Don't wait until a catastrophic claim hits to find out your institution is under-protected.

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Stay Covered,

Natasha & Mark
​Co-Founders and Managing Partners
LION Specialty

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