State of the Market – Real Estate Insurance
A comprehensive update on the state of the hard market conditions from the Real Estate Practice at Baldwin Risk Partners.
The BRP Real Estate Practice anticipates the challenging market conditions of 2022 and the first quarter of 2023 to continue for the remainder of the year due to several reasons, including:
The steady occurrence of severe weather and natural disaster events nationwide such as flooding, wildfires, and windstorms.
An increased emphasis by carriers on property owners and operators to utilize accurate replacement cost valuations.
A decreased appetite among carriers for certain asset types and geographies.
The cost of nearly everything continuing to rise; it is hard to dismiss the inevitable impact of inflation on the insurance industry. From construction materials to labor and services, the impact is difficult to quantify but is irrefutable.
The State of the Market Real Estate Insurance explores these factors and others, as well as highlights actions owners and operators can take to position their portfolio’s renewal submission and overall risk management strategy for the best outcome — this year and moving forward.
Perhaps an appropriate opening is the consideration that no real estate owner or portfolio is immune to the challenges of the current insurance marketplace. Taking all that has occurred globally in recent years into consideration — the pandemic, numerous catastrophic weather events, national and international political unrest and war, an uncertain economy with rising interest rates and supply chain issues, and more — the impact to the insurance market is unprecedented.
Insureds must acknowledge the larger backdrop and recognize that every portfolio is unique. The current rates or renewal results of one portfolio should not be hastily compared to another. While two portfolios may seem comparable, rates and renewals are affected by numerous
contributing factors such as asset type, geography, portfolio size, asset valuation, loss/claim history, deductible structure, and risk mitigation and risk management implementation.
Those that will face the greatest challenges are wood-frame habitational assets and properties located in areas of increased risk for catastrophic (CAT) weather and natural disaster events. However, all property owners should enter their renewals aware of present market conditions.
Why is property insurance skyrocketing?
The influences are abundant and certainly interrelated; inflation, geopolitical risk and uncertainty (including but not limited to the Russo-Ukrainian War), rising costs of construction, labor shortages, ongoing
supply chain delays, the lingering global effect of COVID-19, and overall unpredictability of what lies ahead are all noteworthy contributors.
No one has a crystal ball.
It is impossible to know where the insurance market will be a year or two from now, but your broker partner should be poised to navigate the uncertain climate with you.
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Partner | Vice President
Matt Carnuccio is a Partner and Vice President at RogersGray, A Baldwin Risk Partner, focusing on Real Estate, which includes multifamily, commercial, development, and the insurance needs associated with owning and managing large property portfolios.
He believes in building long-lasting relationships built on trust, accountability, and honesty. With over twelve years in the industry, Matt takes a proactive approach to help educate and guide businesses through soft and hard insurance markets.
Matt resides in Duxbury, Massachusetts, with his wife and three children. As an avid fisherman, he is always eager to share his passion for being on the water with others.
Matt can be reached at email@example.com