Insights

Observations on a Turbulent Property Market


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Even before the impact of the COVID-19 pandemic was felt by the real estate insurance market, insureds were already beginning to experience the adverse effects of a dynamically changing purchasing environment. Recent experiences within the real estate property vertical suggest this trend is set to continue (and accelerate) the challenges most insureds are facing during the current market cycle and throughout the remainder of 2020. Further volatility could also be on the horizon due to predictions of an above-normal 2020 Atlantic hurricane season along with possible increases in wildfire activity in western and mid-western states such as California, Colorado, Oregon and Texas.

Thanks to, predominately, poor loss activity negatively impacting account performance and, thereby, insurer profitability, the habitation and hospitality industry segments have been hit particularly hard. As such, it’s evident insurers are implementing “corrective measures” to help improve these difficulties including:

  • Rate
  • Capacity
  • DeductiblesPolicy Forms
  • Coverage Sublimits
  • Other

In summary, while navigating through this challenging market the real estate property vertical is deeply committed to partnering with insureds to develop and implement bespoke program solutions that help mitigate the impact of such market conditions at renewal. Past successes include creating an All Other Peril plus-aggregate/stop-loss deductible structure or having insurers agree to a deductible indemnification agreement (at no cost) for the purposes of lender insurance compliance. We’ve also set up new and distinct bifurcated insurance programs segregated by occupancy type or specified peril (i.e. California Earth Movement) with specialized insurers.

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