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How Insurance Impacts Real Estate Markets

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It doesn’t matter if it is residential, commercial or indsutrial. If you are a real estate agent here’s what you need to know about how insurance will impact your target market and how you can help your clients.

1. Stricter Underwriting Guidelines

We all hear it on the news and see it alll over social media. Inflation is impacting all corners of the economy. Natural disasters are devastating communities across the nation.

This impact has not been avoided by the insurance industry. Record-high losses followed by an increase premium rates has made it hard on even the largest insurance companies. State Farm recently announced a $13 billion, yes, with a ‘B’, loss in 2022. Many other companies are reporting record claim losses and the impact trickles down to everybody.

In response, insurance companies are tightening their underwriting guidelines. Clients are being given non-renewing notices or cancellation notices after being with companies for many years. Accounts that were appetizing to companies just 6 months ago are no longer desirable.

If your client has claims on their recent insurance reports, or the property is in a ‘high-risk’ area, you’re likely to see denials from companies. To protect their financials insurance companies are saying “no” to clients and properties with recent insurance activity more frequently, making it difficult for some people to find insurance.

2. Available Carrier Markets

In addition to tightened underwriting guidelines, some carriers are getting out of certain market segments completely. Notably – Oregon Mutual Insurance Company has decided to no longer offer personal insurance. This means that families with Oregon Mutual are being forced to find insurance elsewhere which often means increased premiums.

Companies are putting a halt to writing risks such as Commercial Properties or Self-Storage facilities, citing increased cost of repairs and replacement. Others are pausing any new business on certain business-types such as manufacturing or other industrial-type businesses.

For Commercial and Industrial Property owners this could mean hard-to-find insurance or an increase in their own premium rates.

3. Increased Premium Rates

Less markets available to place insurance with means increased premiums (you know, simple supply and demand economics). Pair this with tighter underwriting and it is a recipe for frustration.

Being able to protect their investments and assets while balancing the impact of rent increases on their tenants is becoming more difficult. Increased premium rates can mean increased mortgage payments. There are many ways that an increase in premium can impact your clients.

While some may cut corners on coverage in order to keep premiums lower your clients will be in a risky spot. As tempting as it can be – stepping over dollars to pick up pennies is a foolish way to lose money.


How You Can Help Your Clients

Business must go on, and the best real estate agents are successful no matter what the market is doing. Here’s how you can help your clients seal the deal despite a hardening insurance market:

Parter with a knowledgeable insurance agent.

Working with an insurance agent that is an expert in your type of real estate is important to helping your client find proper insurance, as well as keeping it affordable.

An independent insurance agent will have the options necessary to help and the expertise to point you in the direction of companies with an appetite for your client’s risk-type. Knowing the carrier appetites, how to handle non-renew notices and navigate the hardening insurance market is our job.

You focus on helping your clients find their ideal property and we will help them protect it.

Contact us today to schedule a meeting and discuss how we can help.


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