Commercial Insurance Real Estate Developer Case Study

Here’s how the commercial insurance consultant:

• Saved their bank loan and sizable construction project.
• Drastically reduced their annual insurance premiums.
• Didn’t compromise on insurance coverage, terms, or quality to do it.

Get to Know the Client

One of MB Davis Group’s recent clients is a real estate developer. When the commercial insurance consulting firm took them on, the client was looking to build a large industrial facility in Texas.

In order to fund that project, the client had already engaged with a bank and negotiated a construction loan.

Battling Unreasonable (and Unnecessary) Commercial Insurance Premiums

The issue with the construction loan was not on the financing side. It was a great solution for getting the capital necessary to move the industrial facility project forward.

The problem was on the commercial insurance side. The loan created some unique and onerous insurance challenges.

As it neared the time limit on the loan, the client was getting closer to the point where they needed to finalize those insurance provisions to satisfy the lender’s requirements.

As MB Davis Group worked through this problem on behalf of the client, it became clear the insurance provisions baked into the agreement were both very expensive and difficult to solve.

Eventually MB Davis Group did come up with an insurance solution that enabled the client to satisfy the lender. That solution, however, required insurance with excessively high premium costs.

“We presented the insurance package to the client, but we actually recommended against buying it,” said Mitch Davis, MB Davis Group founder and lead risk management consultant. “Given the nature of the project, we felt much of what the bank was recommending was not necessary.”

Bringing the Bank to the Negotiation Table… and Winning

Using their experience and insight into the banking and real estate development landscapes, MB Davis Group suspected they could do two important things for their client:

• Salvage the commercial loan deal, ensuring the capital for the industrial facility build.
• Get them adequate, favorable insurance at a more reasonable price point.

To achieve those two things, MB Davis Group engaged in active negotiations with the bank’s insurance experts over almost a month.

Those negotiations were long, involved, and technical. It required the participation of:

• Bank insurance experts with MB Davis Group
• The real estate development client
• Loan officers and underwriters from the bank in question

Because the loan was neither a Fanny Mae nor Freddie Mac loan, the consultants at MB Davis Group knew there was the potential for flexibility in the loan negotiations. (Had the loan been from either of these government agencies, the requirements would have been entirely inflexible. Any negotiation attempts would have been a nonstarter.)

“Given the class of our client’s loan, we knew we could at least open the conversation with the bank,” said Davis. “We could get to square one. Of course, that didn’t necessarily mean we’d get to square two.”

Luckily, after the lengthy negotiations, MB Davis Group did a lot more than just progress the conversation to the next step. They were able to persuade the bank to modify their insurance requirements.

The Win–Win: Appeasing the Bank and Drastically Lowering the Client’s Commercial Insurance Premiums

Convincing a bank to negotiate their insurance requirement terms doesn’t happen often. But the expertise, experience, and persistence MB Davis Group brought to the negotiation table secured a huge win for their client.

As a result of the bank loosening their commercial insurance requirements, the client was able to save hundreds of thousands of dollars on their annual insurance premiums—all without jeopardizing the loan that gave them the necessary funds to build their new industrial facility.

Even though the bank modified their insurance requirements, MB Davis Group still ensured the secured insurance was adequate and appropriate to protect both the borrower and the bank.

Get Personalized Guidance from a Commercial Insurance Consultant Today

When navigating your commercial insurance, you need an expert who understands:

• Your business
• The commercial insurance landscape
• ll the high-level factors that could affect your insurance program

You need a partner. A creative, forward-thinking, strategic partner.

If you’re frustrated searching online for answers to your insurance questions or getting stuck prompting an AI chatbot, this is your opportunity to speak to a live commercial insurance consultant.

For thirty minutes, MB Davis Group will be your commercial insurance partner. We’ll answer your questions, discuss your risk exposure, and explore how your specific business could improve its commercial insurance program. At no cost.

All benefits. No risk. Schedule your no-cost call today.