By Kyle Herren
Producer
Lockton Companies of Colorado
kyle.herren@Lockton.com

Unfortunately, when owners and operators can least afford expense increases; the property insurance marketplace is seeing an upward trend in pricing.

Since 2006, property insurance has been a great burden and an expensive source of frustration to multifamily owners and operators nationwide. The insurance marketplace continues to be a fragmented and inefficient exchange where outcomes and pricings vary widely.

2008 brought natural catastrophe and fire losses totaling upwards of $30 billion domestically. Simultaneously, the collapse of global financial markets caused heavy losses on insurer’s investment portfolios. These two events combined have dealt a cataclysmic blow to insurance industry surpluses. This, in turn, is triggering increases in property insurance pricing in hurricane-prone and earthquake-prone areas including California, Florida and Texas.

If you have assets in Tier 1 wind locations such as Florida and Houston, have had a tough year or two of losses, or are looking to acquire troubled REO assets, insurance pricing is going to be an issue. Outlier results are still possible on your renewal, but you need to be more thoughtful and strategic about program design and placement. It’s critical that you ask your insurance broker the following questions well in advance of your renewal:

Outlier results are still possible on your renewal but you need to be more thoughtful and strategic about program design and placement. It’s also crucial to ask your insurance brokers the following questions, well in advance of your renewal:

    1. Are we starting early enough on our renewal?
    2. What target pricing do you have in mind?
    3. What cost saving alternatives and structures exist?
    4. Do you have access to the global marketplace and the appropriate leverage
        to help us negotiate better terms and pricing?

(Lockton Companies of Colorado is home to Lockton’s Multifamily Practice Group. Lockton represents more than 65 multifamily owners and managers and more than one million apartment units nationally.)