The State of the Hard Real Estate Insurance Market and the Importance of Underwriter Comfort

With the hard insurance market continuing what may soon be a historical run, finishing and coating operators across the country are clamoring to gain clarity and control of their terms and premiums.

Steve CareySteve CareyThis hard market has many contributing factors, including rising replacement costs, capacity going down as losses pile up, and supply chain disruption driving business income claims higher.

The shortage of skilled workers is impacting both the insurance market and property values. In addition, property values are feeling the pinch of inflation. For years, carriers would replace a building at current costs, even when the client was paying premiums on an outdated property value. Not anymore.

Data is No Longer Relevant

Mother Nature is changing the rules as well. And hurricanes are moving further up the East Coast, and tornadoes are hitting new locations, making historical underwriting data no longer totally relevant.

In addition to all of this, many carriers renewed their insurance on the properties they insured and saw large increases in premiums and lower capacity for writing new business. Insurers will take on fewer accounts and at higher premiums.

Even as these challenges compound and insurers crack down, some accounts are receiving the best possible terms the market has to offer. Now is a good time to reevaluate your insurance portfolio, especially on your property.

Hope Isn’t a Winning Strategy; a Well Thought-Out Plan is.

There are several steps you can take to get the necessary coverage for your property at the best rates.

  1. Start early. The earlier you begin the process, the more options you will have. Ideally, risk management is a year-round process.
  2. Tell your story. Work with your broker to tell the story you want the markets to hear. Have your properties been appraised? Can you discuss the cost per square foot and the methodology of the calculation? What makes your shop best in class? How are you responding to ever-changing rules and regulations? What safety measures do you have? Underwriters want to know if the cost trend is being applied to the correct starting figure. Pay attention to the details!
  3. Embrace the priority recommendations. Work hand-in-hand with your broker’s loss control team to address any unresolved, aged life safety and human element recommendations that would affect pricing pressures or non-renewal notices. The days are over when people could ignore recommendations to reduce risk and still get coverage, but there are often creative and low-cost solutions to carrier recommendations.
  4. Explain your losses. Each large loss should come with a narrative of what happened, lessons learned, and what you’ve done to ensure it won’t happen again. Making sure your story is being told in its full authenticity has never been more important.

A good broker will be honest about the difficulties you face and the expected increases in your renewal. They will also explain challenges within the market that might impact your renewal.

For more information, please contact Steve Carey, CAWC, Risk Strategist, Property & Casualty, at 248-530-2483 or

Note: This communication is for informational purposes only. Although every reasonable effort is made to present current and accurate information, Oswald makes no guarantees of any kind and cannot be held liable for any outdated or incorrect information.