Skip to main content

3 Reasons Your Insurance Premiums Have Skyrocketed… and How a Commercial Real Estate Insurance Consultant Can Help

A Business Property Insurance Consultant Helps You Clear These Hurdles

From catastrophic weather events to the pandemic, global circumstances have reshaped commercial real estate insurance. Navigating these increasingly complex, costly policies puts companies in a dangerous position. There’s the potential for gaps in coverage, unfavorable terms, and last-minute financial surprises. Ready to reduce that stress and financial risk? Partner with a commercial real estate insurance consultant, and overcome these three prevalent industry challenges.

Common Challenges a Real Estate Insurance Consultant Navigates for You

When you work with a commercial insurance consulting firm, you get expert advice, insight, and guidance on these common challenges in the commercial real estate industry.

  1. Rapidly Increasing Building Valuations
  • Even a commercial insurance consultant with decades of general experience could be a poor fit for your business. Look for specific experience in the commercial real estate insurance industry.
  • Many global factors, including the pandemic, rising inflation, and skyrocketing construction costs, have directly affected building valuations. According to the International Code Council, here’s building valuation data over time for a business-designated building:
  • August 2020: $202.30 per square foot
  • February 2021: $212.26 per square foot
  • August 2021: $240.93 per square foot
  • February 2022: $240.90 per square foot
  • August 2022: $265.63 per square foot
  • In the span of just two years, that’s an increase of 31.305 percent.
  • What does that mean for businesses with significant real estate portfolios?
  • Insurance companies are requiring commercial real estate insurance purchasers to increase the stated value of those holdings. That results in both premium increases and rate increases.
  • By working with a commercial real estate insurance consultant, you have an experienced, expert partner who can help you anticipate this issue within your business and then successfully manage the entire process.
  • Commercial real estate insurance consultants offer invaluable knowledge and expertise that allow you to plan for this problem before it arrives. That means no unexpected, last-minute, unpleasant financial surprises.
  1. Diminished Capacity
  • In a world where billion-dollar catastrophes are drastically impacting the commercial real estate insurance landscape, working with a consultant becomes even more critical.
  • One of the biggest challenges of these dramatic weather events is diminished capacity. Essentially, as the disasters become more costly, insurance payouts must increase. That makes commercial real estate insurance not as lucrative for investors as it once was.
  • Because those investors are free to put their money wherever they see fit, fewer and fewer are opting for commercial real estate insurance. That has led to a shortage in property insurance coverage.
  • Clients with high-value commercial real estate portfolios used to be able to get full insurance coverage from a small, manageable network of insurance policies.
  • Today, with the individual capacity of so many insurance companies greatly reduced, owners of commercial real estate must routinely navigate complex, costly syndications (or multiple insurance companies) to ensure full coverage.
  • A commercial real estate insurance consultant is in the best position to navigate this complexity. With their broad, deep understanding of the landscape, they bring several benefits:
  • Policies that fully cover your asset portfolio—without fear of gaps.
  • Policies that bring comprehensive coverage at the most cost-effective price point.
  • Communication with insurance companies about your buildings’ unique features, which could positively impact policy terms, premiums, and rates.
  • Anticipation of insurance-related problems so they can be dealt with as proactively as possible.
  1. Commercial Imperative of Real Estate Insurance Brokers
  • A broker sells insurance. They often work on a commission structure, and this gives them a commercial imperative to sell particular insurance plans or policies or to push specific insurance companies.
  • This fact can lead to bias in their judgment and their recommendations for how to manage your asset portfolio. It can also lead to policies that don’t offer the most favorable terms, including premiums.
  • A consultant, however, does not work in this capacity. Consultants are not affiliated with or incentivized by any particular insurance program, policy, or company.
  • Their job is to recommend what makes the most sense for you and your specific asset portfolio.
  • Working with a real estate insurance consultant gives you that objectivity. However, you also want to ensure your consultant or team of consultants has solid relationships with brokers in the industry. Once the policies have been selected, those close professional ties help ensure they can execute the deals efficiently and effectively.

Ready to Talk to a Commercial Insurance Consulting Team?

With a consultant, you can stop worrying about:

  • Sudden, unwanted financial surprises with your insurance premiums and rates.
  • Gaps in your insurance coverage.
  • Whether you’ve secured the most cost-effective protection.

If you’re looking for a trusted, expert partner to navigate you through the commercial real estate insurance landscape, reach out to MB Davis Group. Schedule a consultation with us today.

Leave a Reply