There have already been a record 23 billion-dollar weather and climate disasters across the U.S. this year — crises like the deadly wildfires in Maui and Hurricane Idalia in Florida in August. One fallout of these catastrophic events is the rising cost of property insurance, which some say is at a crisis level.
On this episode of of Bisnow Reports, we sit down with Danielle Lombardo, the chair of insurance broker Lockton's global real estate practice, who says insurance is killing real estate deals with not just high costs but also unpredictability.
Insurance premiums in the nation's largest multifamily markets have had a collateral annualized growth rate between 12.4% and 17.3% in the five-year stretch between 2017 and 2022, while rents have grown at a rate between 2.8% and 7.7% over the same period, according to Moody's Analytics.
Lombardo said the situation is starting to force different parts of the commercial real estate industry to work together to find a solution.
“This inflection point is giving the real estate, the lending and the insurance brokerage community the chance to really bridge what has traditionally been a disconnect in real estate transactions,” she said. “What we’re seeing in this environment is an opportunity for lenders, borrowers, insurance carriers and brokers to come together and be a bit more practical about the risk so that we are not overbuying insurance and further exacerbating the supply-demand issues.”
Bisnow’s audio series, Bisnow Reports, examines every facet of the international commercial real estate industry — from the murky future of retail and office to real estate’s reckoning with diversity to the effects of climate change on the built world, and so much more. You can subscribe on iTunes, Spotify and Amazon Music, or click below to listen in your browser.
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