“Arch puts a tremendous amount of importance on our relationships with our brokers”
Joseph Morrello, senior vice president, E&S property, Arch Insurance
In Partnership with
What does the future hold for the real estate and property insurance space?
Changing the footprint to help address insurance exposures
Read on
Joseph Morrello
Senior vice president, E&S property, Arch Insurance
Peter Flores
Senior vice president, retail property, Arch Insurance
David Palmer
President, special property, Jencap Insurance Services
Brian J. Dove
National real estate practice leader, USI Insurance Services
Industry experts
IF THERE was one sector that seemingly held strong during the global COVID-19 pandemic, it was property and real estate. While some businesses were hard hit and barely hanging on, property values just kept going up amid a flurry of buyer activity.
Other factors played into the “positive COVID effect,” including historically low rates, a workforce that shifted in mass numbers to remote work which required more functional space, and a substantial urban exodus as homeowners looked to relocate to areas outside the urban sprawl.
The net result for the property insurance industry was increased pressure to provide adequate risk coverage for properties that had often become overvalued in the red-hot real estate environment, as well as a struggle to provide coverage for the refurbishment of vacant office buildings as workers migrated to the home environment in high numbers.
With these issues in mind, the latest edition of Insurance Business TV’s Executive Insight Series brought together some of the top minds in the sector, offering their insights into the state of the real estate and property insurance market, as well as making future projections.
All four of the panel guests agreed that COVID had been a game-changer that had permanently altered the insurance landscape.
Brian Dove, national real estate practice leader with USI Insurance Services, drew attention to the challenge of increasing numbers of vacant buildings as people migrated in droves out of city centers across the country.
“Vacancy obviously causes special situations and exposures that the carriers need to address,” Dove said. “A lot of these real estate owners are looking to repurpose these buildings, which then throws in additional exposures as it relates to construction.
“This literally changes the footprint, as well as the overall protection and exposure for that asset [a vacant building].”
“Because of this repurposing of so many properties, their occupancy results in a change in exposure, and that exposure also results in a coverage change,” explained Joseph Morrello, senior vice president, E&S property with Arch Insurance.
“COVID-19 is something that’s not going to go – it has changed the game forever. People can work productively from home and that’s just not going to change,” said Pete Flores, senior vice president, retail property with Arch Insurance.
COVID-induced insurance exposures
“When you look at the net migration into different states, four of the top 15 cities are located in the state of Florida,” Flores said.
“So, [within] the relationship of the insured, the broker, and their carrier, there has to be that migration of not only people, but it has to be the migration of insurance coverage to be able to protect the insured’s assets,” he added.
For Dove, any discussion surrounding the challenges insurers have faced must include mention of the impact of supply-chain shortages.
“The supply chain issues that we’ve felt for a number of years now have had a dramatic impact on the cost of materials, and obviously [there is] their [the construction industry’s] labor-pool shortage, and then you throw in inflation on top of that,” Dove pointed out.
“It’s hard for the insurance market to continue to chase these costs from a valuation perspective,” he added. “We’re really pushing hard as an industry to make sure that we get it right.”
“It’s turned into a double rate increase,” said David Palmer, president of special property with Jencap Insurance Services. “[That is,] from both the inflationary standpoint and getting valuation up to par in conjunction with obtaining the market rate increases.
“Carriers are pushing the need to obtain higher limits, [they are cutting] back on the capacity that they want to share in the marketplace. So it has created an interesting situation.”
Insurance coverage impact
With the inflationary pressures that have unfolded over the last few years, the question remains what the impact on insurance coverage will be.
“It [inflationary pressure] has a tremendous impact on insurance coverage, and it is why the state of the insurance market is as it is today,” Morrello claimed.
“You are going to get rewarded for the good behavior – the proper valuation and getting your basics right,” he predicted.
Claim settlements may be caught in the inflationary crossfire as well.
“We are still wrestling with claims from Hurricane Ida, which have aged about a year and a half now. A lot of the issues stem from the inability to get supplies to begin repair work, and this has led to just dragging out some claim settlements,” Palmer said.
Catastrophic events in general are driving up costs for insurers, including “the cost of labor, especially with inflation continuing to go up,” Flores mentioned.
“The challenge we have with values is, as we increase them and things like supply chain issues are resolved, it is hard to go backward on values,” Dove said.
Insurance lessons and tips
When asked whether the industry has learned from the unpredictable chain of events over the last few years, all four panelists answered with restrained optimism.
“I think we’re in agreement that the industry is trending in the right direction by properly programming risk from a coverage standpoint and with terms that in the past had just been ... too aggressive,” Palmer noted. “So we are getting there.”
“What the industry has seen in these past few years is enlightenment as to coverage needs in the eventualities of this worldwide event that we’ve all seen, and the need to really look at those exposures that we’ve always put to the side as potentially being there,” Morrello responded.
With the experience of the last few years behind them, all the panel guests felt comfortable offering tips for insurance professionals navigating the current market.
“A tip I could share is the importance of getting out in front with your agent and the insured regarding the issues that are affecting the industry,” Palmer offered.
“Whether it’s valuation of the risk, rate increases, or cutting of the line size, don’t wait until the end to deliver bad news, because it’s what the marketplace is basically driving at the moment,” he added.
For Dove, the answer lies in the data.
“My tip would be to understand the data and then use your analytics to run models to see what we’re looking at,” Dove insisted.
Flores agreed with Dove.
“Data quality is job one,” Flores stated. “You cannot put garbage in and get gospel out.”
For Morrello, the importance of insurance relationships is the secret to future industry success.
“Arch very much puts a tremendous amount of importance on our relationships with our brokers,” Morrello said.
“The one individual tip I would give to them [brokers] is make sure your clients are aware of the inflationary impact of their values and ensure those values are correctly stated so that you are not left with a gap at the end,” he concluded.
Arch Insurance North America is part of a global insurer offering superior coverage and service. We participate in specialty lines where the talent and knowledge of our employees are a competitive differentiator. We serve North America from offices in the United States and Canada, providing superb coverage and claims handling through careful and diligent underwriting of risks and business-friendly solutions. With 20 years of operating history and strong financial ratings, our track record remains solid.
Find out more
Joseph Morrello is the senior vice president of E&S property at Arch Insurance, a position he has held since February 2022. Prior to joining Arch, he served as head of E&S property and E&S homeowners at Beazley. Before that, Joe was an SVP – northeastern property at Axis Capital and Beazley US. Joe started his career at Factory Mutual as a loss prevention consultant and took on increasing responsibilities at Affiliated FM and FM in underwriting and area management. He graduated from the New Jersey Institute of Technology with a Bachelor of Science in mechanical engineering, and from the Professional School of Business in Milburn, New Jersey.
Senior vice president, E&S property, Arch Insurance
Joseph Morrello
Peter Flores is senior vice president, retail property for Arch Insurance, a position he has held since February 2020. Prior to joining Arch, he served as senior vice president, strategic broker relations & US field operations at Ironshore Insurance. Peter has a bachelor's degree from Hofstra University.
Senior vice president, retail property, Arch Insurance
Peter Flores
David is responsible for the Atlanta operations as the leader of the specialty property division and acting president. Prior to merging with Jencap, David and his partner Roger Ware owned and operated Genesee, a specialty multi-line wholesale and MGA operation that included operations in several US cities. In addition to running the overall operations of the Atlanta property division, David manages a large book of property business specializing in difficult-to-place and catastrophe-driven business. David supports the overall team in managing and expanding carrier relationships throughout the E&S industry. David is regularly recognized as a top specialist for E&S property.
President, special property, Jencap Insurance Services
David Palmer
Brian joined USI thirteen years ago from Benfield Corporate Risk, where he focused on the coordination of property marketing, placement, and service activities for customers with operations and construction projects worldwide. Prior to joining Benfield, Brian worked for over seven years with Marsh. During this time, he provided property solutions and alternative risk transfer solutions for major property clients in various industries, including real estate, healthcare, and energy. Brian’s experience includes five years at Aon, where he handled large property and construction risks marketing to both domestic and international clients.
National real estate practice leader, USI Insurance Services
Brian J. Dove
In Partnership with
What does the future hold for the real estate and property insurance space?
Changing the footprint to help address insurance exposures
Read on
Brian J. Dove
National real estate practice leader, USI Insurance Services
David Palmer
President, special property, Jencap Insurance Services
Peter Flores
Senior vice president, retail property, Arch Insurance
Joseph Morrello
Senior vice president, E&S property, Arch Insurance
Industry experts
Arch Insurance North America is part of a global insurer offering superior coverage and service. We participate in specialty lines where the talent and knowledge of our employees are a competitive differentiator. We serve North America from offices in the United States and Canada, providing superb coverage and claims handling through careful and diligent underwriting of risks and business-friendly solutions. With 20 years of operating history and strong financial ratings, our track record remains solid.
Find out more
Joseph Morrello is the senior vice president of E&S property at Arch Insurance, a position he has held since February 2022. Prior to joining Arch, he served as head of E&S property and E&S homeowners at Beazley. Before that, Joe was an SVP – northeastern property at Axis Capital and Beazley US. Joe started his career at Factory Mutual as a loss prevention consultant and took on increasing responsibilities at Affiliated FM and FM in underwriting and area management. He graduated from the New Jersey Institute of Technology with a Bachelor of Science in mechanical engineering, and from the Professional School of Business in Milburn, New Jersey.
Senior vice president, E&S property, Arch Insurance
Joseph Morrello
Peter Flores is senior vice president, retail property for Arch Insurance, a position he has held since February 2020. Prior to joining Arch, he served as senior vice president, strategic broker relations & US field operations at Ironshore Insurance. Peter has a bachelor's degree from Hofstra University.
Senior vice president, retail property, Arch Insurance
Peter Flores
David is responsible for the Atlanta operations as the leader of the specialty property division and acting president. Prior to merging with Jencap, David and his partner Roger Ware owned and operated Genesee, a specialty multi-line wholesale and MGA operation that included operations in several US cities. In addition to running the overall operations of the Atlanta property division, David manages a large book of property business specializing in difficult-to-place and catastrophe-driven business. David supports the overall team in managing and expanding carrier relationships throughout the E&S industry. David is regularly recognized as a top specialist for E&S property.
President, special property, Jencap Insurance Services
David Palmer
Brian joined USI thirteen years ago from Benfield Corporate Risk, where he focused on the coordination of property marketing, placement, and service activities for customers with operations and construction projects worldwide. Prior to joining Benfield, Brian worked for over seven years with Marsh. During this time, he provided property solutions and alternative risk transfer solutions for major property clients in various industries, including real estate, healthcare, and energy. Brian’s experience includes five years at Aon, where he handled large property and construction risks marketing to both domestic and international clients.
National real estate practice leader, USI Insurance Services
Brian J. Dove
In Partnership with
What does the future hold for the real estate and property insurance space?
Changing the footprint to help address insurance exposures
Read on
Brian J. Dove
National real estate practice leader, USI Insurance Services
David Palmer
President, special property, Jencap Insurance Services
Peter Flores
Senior vice president, retail property, Arch Insurance
Joseph Morrello
Senior vice president, E&S property, Arch Insurance
Industry experts
Arch Insurance North America is part of a global insurer offering superior coverage and service. We participate in specialty lines where the talent and knowledge of our employees are a competitive differentiator. We serve North America from offices in the United States and Canada, providing superb coverage and claims handling through careful and diligent underwriting of risks and business-friendly solutions. With 20 years of operating history and strong financial ratings, our track record remains solid.
Find out more
Peter Flores is senior vice president, retail property for Arch Insurance, a position he has held since February 2020. Prior to joining Arch, he served as senior vice president, strategic broker relations & US field operations at Ironshore Insurance. Peter has a bachelor's degree from Hofstra University.
Senior vice president, retail property, Arch Insurance
Peter Flores
David is responsible for the Atlanta operations as the leader of the specialty property division and acting president. Prior to merging with Jencap, David and his partner Roger Ware owned and operated Genesee, a specialty multi-line wholesale and MGA operation that included operations in several US cities. In addition to running the overall operations of the Atlanta property division, David manages a large book of property business specializing in difficult-to-place and catastrophe-driven business. David supports the overall team in managing and expanding carrier relationships throughout the E&S industry. David is regularly recognized as a top specialist for E&S property.
President, special property, Jencap Insurance Services
David Palmer
Brian joined USI thirteen years ago from Benfield Corporate Risk, where he focused on the coordination of property marketing, placement, and service activities for customers with operations and construction projects worldwide. Prior to joining Benfield, Brian worked for over seven years with Marsh. During this time, he provided property solutions and alternative risk transfer solutions for major property clients in various industries, including real estate, healthcare, and energy. Brian’s experience includes five years at Aon, where he handled large property and construction risks marketing to both domestic and international clients.
National real estate practice leader, USI Insurance Services
Brian J. Dove
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Joseph Morrello is the senior vice president of E&S property at Arch Insurance, a position he has held since February 2022. Prior to joining Arch, he served as head of E&S property and E&S homeowners at Beazley. Before that, Joe was an SVP – northeastern property at Axis Capital and Beazley US. Joe started his career at Factory Mutual as a loss prevention consultant and took on increasing responsibilities at Affiliated FM and FM in underwriting and area management. He graduated from the New Jersey Institute of Technology with a Bachelor of Science in mechanical engineering, and from the Professional School of Business in Milburn, New Jersey.
Senior vice president, E&S property, Arch Insurance
Joseph Morrello
“You cannot put garbage in and get gospel out”
Peter Flores,
Senior vice president, retail property, Arch Insurance
“The supply-chain issues that we’ve felt for a number of years now have had a dramatic impact on the cost of materials, and obviously [there is] their [the construction industry’s] labor pool shortage, and then you throw in inflation on top of that”
Brian Dove, national real estate practice leader, USI Insurance Services
“I think we’re in agreement that the industry is trending in the right direction by properly programming risk from a coverage standpoint and with terms that in the past had just been ... too aggressive”
David Palmer, president, special property, Jencap Insurance Services
Source** United States Census Bureau
Building Permits: 1,819,000
Housing Starts: 1,724,000
Housing Completions: 1,295,000
New residential construction stats for April 2022
Source** United States Bureau of Labor Statistics
Consumer Price Index: increased by 0.3%
US Import Price Index: unchanged
US Export Price Index: increased by 0.6%
Labor and productivity stats
for April 2022
Source** United States Bureau of Labor Statistics
Consumer Price Index: increased by 0.3%
US Import Price Index: unchanged
US Export Price Index: increased by 0.6%
Labor and productivity stats
for April 2022
Source** United States Bureau of Labor Statistics
Consumer Price Index: increased by 0.3%
US Import Price Index: unchanged
US Export Price Index: increased by 0.6%
Labor and productivity stats
for April 2022
Morrello went on to explain that “insurance is predicated on proper values to rate against.”
The values, he outlined, had been understated in part because of the soaring consumer price index, in addition to the ongoing challenge of supply and demand for materials required to rebuild damaged portions of buildings. This is resulting in more pronounced loss costs, which in turn are reflected in rate increases across the board.
All panel members agreed that the rate squeeze may lessen somewhat in the coming months, depending on what plays out over the summer.
“I think that those insurers that had always revisited their values and kept pace with the market are going to make out better than the insurers that didn’t,” Flores said.
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Copyright © 2022 Key Media
People
Terms & conditions
Privacy policy
Conditions of use
About us
Contact us
RSS
Asia
NZ
AU
CA
US
UK
contact us
specialty
Best Insurance
Resources
RISK MANAGEMENT
News
Copyright © 2022 Key Media
People
Terms & conditions
Privacy policy
Conditions of use
About us
Contact us
RSS
Asia
NZ
AU
CA
US
UK