In Partnership with
Real estate insurance’s post-pandemic realities
After the pandemic, the real estate insurance market is dealing with the aftereffects of that era’s high housing demands, interest rate changes, and even technological change
Zach Vollmer
Victor Insurance Managers
Industry experts
Abe Freeland
Alliant Insurance Services
Zach is the global transformation project leader for Victor and is responsible for leading growth strategies across operating companies and geographies. He works closely with the global executive committee and serves on Victor’s M&A deal team. In addition, he continues to lead Victor’s US real estate practice, responsible for management of the underwriting team and portfolio performance. Zach began his insurance career at Victor in 2007 as an underwriter in the real estate program before transitioning into management roles in 2013. He has held multiple positions within Victor, serving as distribution operations manager, chief analyst, and real estate program manager. In 2021 Zach transitioned into his current role for Victor globally. Zach has a BA from Manhattan College and holds an RPLU+ designation.
Victor Insurance Manager
Zach Vollmer
Throughout his 20+ year career in the insurance industry, Abe’s clients have consisted of leaders in the real estate, hospitality, construction, and development industries. Prior to joining Alliant, Abe co-led the real estate and hospitality practice for one of the world’s largest brokerage firms. Abe has arranged risk management and insurance strategies for some of the most iconic buildings and portfolios in the world. He is regarded as one of the industry’s leading contractual risk management experts, and has participated in numerous forums at the RIMS, IRMI and ICSC national conferences. Abe is a frequent speaker on insurance matters for leading national law firms and universities in addition to leading risk management educational forums for existing and prospective clients.
Alliant Insurance Services
Abe Freeland
“There is a direct link between the volume of transactions taking place in the market and lawsuits brought forth”
ZACH VOLLMER,
VICTOR INSURANCE MANAGERS
THE REAL estate market is in the midst of a perfect post-pandemic storm, with everything from rising interest rates to ESG, the rise of technology and automation, and even buyers’ remorse making for a unique set of challenges for the industry.
One of the biggest headaches that real estate insurance professionals are dealing with at the moment is buyers’ remorse.
“There is a contingent of individuals who bought at the height of the market,” said Zach Vollmer, senior vice president, real estate leader, Victor Insurance Managers. “When the market was at its peak, folks were waiving contingencies and home inspections and have now seen their home value decrease, have seen potential issues with the properties they purchased, and are realizing that they are now likely going to be in that property for a period of time due to the interest rates environment. As a result of that, we’ve seen an increase in lawsuits against real estate professionals.”
“The real estate insurance industry has always had some form of insurtech involvement, particularly when it comes to modelling for catastrophic exposures”
ABE FREELAND,
ALLIANT INSURANCE SERVICES
“When we think about the real estate liability space, we’re really seeing flat or reduced rates broadly across the entire segment,” said Vollmer. “And that’s a result of decreasing home transactions. Firms are seeing revenues go down, which in turn is driving clients to request their brokers to shop their accounts more frequently.”
When asked if this market was challenged, Freeland laughed and replied, “Challenged is a nice way to put it,” before adding that “it’s as difficult as I’ve ever seen it” in his 22 years in the property insurance marketplace.
Natural events, like water and wind damage, have always had an impact on the real estate insurance industry. But now, the range and intensity of these events have made for a more complex coverage picture. “Most carriers are not in the business of paying for attritional-type losses,” said Freeland.
There was a time when deductibles were so low that carriers felt like they were paying for a lot of attritional losses for events like water damage claims, he said. “They wanted to be there to pay for the catastrophic loss,” like earthquakes and windstorms, said Freeland.
However, recently, there have been other emerging types of catastrophic losses, with flooding, convective storms, tornadoes, wind, and hail becoming more frequent and severe.
Vollmer made his remarks during an appearance on Insurance Business TV.
“There’s not necessarily greater liability associated with those claims – it just means that there is an increase because you have a frustrated segment of homebuyers who are now remorseful about the purchase that they made,” Vollmer said.
“The real estate insurance industry has always had some form of insurtech involvement, particularly when it comes to modelling for catastrophic exposures,” said Freeland. “What we are seeing now is that the carriers have developed and are utilizing modeling for exposures such as convective windstorms, floods, wildfires.”
Getting good information from brokers and others to feed into their modeling is key to accuracy, Freeland said.
Apart from modeling for disasters like flooding, “it is almost impossible to separate technology from the real estate professional,” said Vollmer. He pointed to smart homes, and real estate agents using drones and augmented reality for showings, as just some examples.
“The use of technology is outpacing the policy language,” said Vollmer. He pointed to how technology now allows for smart-lock systems, like an app-based entry system, as a way technology has changed how realtors enter a house on the market.
concierge services – things that may be outside of their typical acumen,” said Vollmer. However, this can lead to more “severe” claims, he says, as professionals go outside of their respective “swim lanes,” as he put it.
On the developer side of the real estate industry, with the recent rise in interest rates over the past year, and the impact of inflation, developers have been pumping the brakes on new builds.
Developers who may have tens of thousands of units in the construction pipeline at any one time have now “pulled back. There is more of a wait-and-see approach with interest rates and the macroeconomy,” said Abe Freeland, executive vice president, Alliant Real Estate and Hospitality, Alliant Insurance Services.
Volume and type of losses occurred are outpacing premiums that carriers have been collecting, he said, and reinsurance has gotten “[very much] more expensive as well,” Freeland said.
Read on
Vollmer suggested that automated valuation models would be a good way to perform appraisals without bias.
A recent real estate industry poll last fall found that “fair-housing-related issues were one of the top issues that [those polled] highlighted for concern for 2023,” Vollmer said.
Victor Insurance Managers LLC is a leading global managing general underwriter. At Victor, underwriting management has been a distinct discipline for over 65 years. Our expertise lies in evaluating and underwriting risks, developing and executing risk management activities, and servicing accounts on behalf of our insurance carrier partners. We carefully select leading insurance carriers to partner with in our chosen markets, and, in most cases, we act as the exclusive managing general underwriter. We then distribute our solutions through a large distribution network of licensed insurance agents and brokers. Victor’s mission is to consistently create superior products and to provide outstanding service and exceptional value to each and every customer. Our vision is to be recognized as an elite specialty insurance provider/distributor and grow through valued service, innovation, and expertise. Victor is the insurance enterprise of the future. Large but nimble, rooted in rich history but fueled by the latest technology, we are driven by the view that disruption is simply an opportunity for progress. Victor offers a unique combination of global reach and specialized expertise with core capabilities in underwriting, technology, distribution, and capital. Together, we are all victors. Learn more about Victor’s story.
Find out more
Alliant Insurance Services is one of the nation’s leading distributors of diversified insurance products and services. We operate through a network of specialized national platforms and local offices to offer our clients a comprehensive portfolio of solutions built on innovative thinking and personal service. The business of managing risk is getting more complex, and Alliant is meeting this complexity head-on – not with more layers of management, but with more creativity and agility. Alliant is changing the way our clients approach risk management and benefits, so they can capitalize on new opportunities to grow and protect their organizations. Visit us at alliant.com. #TheMoreRewardingWay
Find out more
In Partnership with
Real estate insurance’s post-pandemic realities
After the pandemic, the real estate insurance market is dealing with the aftereffects of that era’s high housing demands, interest rate changes, and even technological change
Read on
Abe Freeland
Alliant Insurance Services
Zach Vollmer
Victor Insurance Managers
Industry experts
Zach is the global transformation project leader for Victor and is responsible for leading growth strategies across operating companies and geographies. He works closely with the global executive committee and serves on Victor’s M&A deal team. In addition, he continues to lead Victor’s US real estate practice, responsible for management of the underwriting team and portfolio performance. Zach began his insurance career at Victor in 2007 as an underwriter in the real estate program before transitioning into management roles in 2013. He has held multiple positions within Victor, serving as distribution operations manager, chief analyst, and real estate program manager. In 2021 Zach transitioned into his current role for Victor globally. Zach has a BA from Manhattan College and holds an RPLU+ designation.
Victor Insurance Managers
Zach Vollmer
Throughout his 20+ year career in the insurance industry, Abe’s clients have consisted of leaders in the real estate, hospitality, construction, and development industries. Prior to joining Alliant, Abe co-led the real estate and hospitality practice for one of the world’s largest brokerage firms. Abe has arranged risk management and insurance strategies for some of the most iconic buildings and portfolios in the world. He is regarded as one of the industry’s leading contractual risk management experts, and has participated in numerous forums at the RIMS, IRMI and ICSC national conferences. Abe is a frequent speaker on insurance matters for leading national law firms and universities in addition to leading risk management educational forums for existing and prospective clients.
Alliant Insurance Services
Abe Freeland
In Partnership with
Real estate insurance’s post-pandemic realities
After the pandemic, the real estate insurance market is dealing with the aftereffects of that era’s high housing demands, interest rate changes, and even technological change
Read on
Abe Freeland
Alliant Insurance Services
Zach Vollmer
Victor Insurance Managers
Industry experts
Throughout his 20+ year career in the insurance industry, Abe’s clients have consisted of leaders in the real estate, hospitality, construction, and development industries. Prior to joining Alliant, Abe co-led the real estate and hospitality practice for one of the world’s largest brokerage firms. Abe has arranged risk management and insurance strategies for some of the most iconic buildings and portfolios in the world. He is regarded as one of the industry’s leading contractual risk management experts, and has participated in numerous forums at the RIMS, IRMI and ICSC national conferences. Abe is a frequent speaker on insurance matters for leading national law firms and universities in addition to leading risk management educational forums for existing and prospective clients.
Alliant Insurance Services
Abe Freeland
Zach is the global transformation project leader for Victor and is responsible for leading growth strategies across operating companies and geographies. He works closely with the global executive committee and serves on Victor’s M&A deal team. In addition, he continues to lead Victor’s US real estate practice, responsible for management of the underwriting team and portfolio performance. Zach began his insurance career at Victor in 2007 as an underwriter in the real estate program before transitioning into management roles in 2013. He has held multiple positions within Victor, serving as distribution operations manager, chief analyst, and real estate program manager. In 2021 Zach transitioned into his current role for Victor globally. Zach has a BA from Manhattan College and holds an RPLU+ designation.
Victor Insurance Managers
Zach Vollmer
Share
Share
Share
Challenges facing the real estate liability space
Published 22 May 2023
Contact Us
Specialty
Best in Insurance
Resources
Risk Management
TV
News
Copyright © 2023 KM Business Information US, Inc
RSS
Sitemap
Contact us
About us
Conditions of Use
Privacy policy
Terms & conditions
People
Contact Us
Specialty
Best in Insurance
Resources
Risk Management
TV
News
Copyright © 2023 KM Business Information US, Inc
RSS
Sitemap
Contact us
About us
Conditions of Use
Privacy policy
Terms & conditions
People
Contact Us
Specialty
Best in Insurance
Resources
Risk Management
TV
News
Copyright © 2023 KM Business Information US, Inc
RSS
Sitemap
Contact us
About us
Conditions of Use
Privacy policy
Terms & conditions
People
On the issue of liability, Vollmer noted that with less inventory on the market, there would be fewer sales. And fewer sales mean, in all likelihood, fewer lawsuits. “There is a direct link between the volume of transactions taking place in the market and lawsuits brought forth,” said Vollmer.
Real estate professionals looking to diversify their offerings in a difficult market can also prove to be somewhat of a liability.
“When the housing market takes a dip, real estate professionals look to provide more bespoke or
On the lookout for liability
More weather events, more impact on real estate
How technology is shaping the sector
Environmental, Social, and Governance (ESG) issues continue to be a concern for the real estate market.
“ESG is really top of mind in the real estate space,” said Vollmer.
He pointed to a recent study by the University of Washington that looked at the 50 largest metropolitan areas in the US. The poll found that homes owned by people of colour were disproportionately undervalued when compared to homes owned by whites.
Where does ESG fit within the real estate field
For many years, designing, building, or retrofitting buildings with LEED (Leadership in Energy and Environmental Design) certification “became a big goal,” said Freeland. But that certification comes with its own unique features and costs.
“It’s been critically important to make sure that insurance policy wording keeps up with these new and different exposures to ensure that, in the event of a loss, real estate owners are made whole,” said Freeland, though he stressed that those LEED buildings are also operating more efficiently.
“There should be some benefit there, and some decrease in costs, compared to non-LEED buildings,” Freeland said.
The insurance implications of LEED
Source: SafeHome.org
American Real Estate Market Statistics
percentage of American homeowners who have homeowners’ insurance
94%
Southern homeowners’ average premium, the nation’s highest
$1,834
percentage of homeowners who said their annual premiums increased in the last year
43%
proportion of homeowners who have filed claims on their homeowners’ insurance
1 in 4
amount of homeowners’ average claim
$20,700
approximate proportion of homeowners who are planning to switch to a different insurance company in the near future (as of 2022)
1 in 10
percentage of homeowners wanting to
switch insurers to get a better price
76%
Source: ValuePenguin by LendingTree
Most common homeowner insurance claims
Wind: 4%
Non-weather water: 20%
Hail: 16%
Weather-related water: 11%
Theft: 6%
Note: Percent of claims from 2009 to 2016
“The real estate insurance industry has always had some form of insurtech involvement, particularly when it comes to modelling for catastrophic exposures”
ABE FREELAND,
ALLIANT INSURANCE SERVICES
“There is a direct link between the volume of transactions taking place in the market and lawsuits brought forth”
ZACH VOLLMER,
VICTOR INSURANCE MANAGERS