So we have two large-ish hospitality properties that last year were hit with size-able increases to insurance premiums (YoY) in a coastal market. As we look towards renewals in the coming months, does anyone have any tips on ways we can look to save?
Has anyone had success in working with an insurance consultant (similar to taxes) vs. just broker to find ways to save?
What other avenues should we be exploring? Thanks in advance
Based on the most helpful WSO content, here are some tips and avenues you can explore to potentially save on insurance renewals for your hospitality properties:
Tips for Saving on Insurance Renewals:
Work with an Independent Broker:
Consult an Insurance Consultant:
Review and Tailor Coverage:
Leverage Relationships:
Consider Specialty Underwriting:
Additional Avenues to Explore:
Risk Management:
Reinsurance:
Market Comparison:
Long-Term Relationships:
By exploring these tips and avenues, you can potentially find ways to save on your insurance renewals while ensuring your properties are adequately protected.
Sources: https://www.wallstreetoasis.com/forum/corporate/the-forgotten-cousin-of-finance-commercial-insurance?customgpt=1, Life Insurance Underwriting - Exit Opportunities?., Apartment Renewal Negotiating Tips, Breaking Into Commercial Real Estate, Working in FIG (Financial Institutions Group) - An Overview.
No reason to not be working with an insurance specialist imo. It's super complicated in terms of strategies where you might be able to get some savings so best to just discuss with them and have them make a market for you.
The insurance market has been brutal. Generally if you package assets together you can achieve savings. Go through your loan docs with a fine tooth comb and see if your policy has coverage for things you don't need. Ex. a 25 million dollar limit when the loan only requires 20 million, terrorism coverage etc. but really we are at the mercy of carriers right now. I think a lot of the crazy increases are behind us, but the damage has been done to PLs.
This is correct. The property market has flatlined finally.
Adding on to the packaging of assets to achieve savings: your broker should be able to manipulate the allocation of premium across the properties to massage the P&L at the property level. Due to variances within the carrier (as noted below by the lurker bro), some properties may go up when packaged; others may go down. They can manage it so that there's no crazy hit if any particular asset is sold during the coverage period.
When is the renewal date? I can get this handled just message me. Your broker should have been communicating the hardened market 6 months out at a minimum to prepare you for a poor renewal. This way you can discuss with other brokers for a second opinion.
I work deals mostly in Florida and we've found that IF lender allows it you can remove windstorm coverage from your policy. The windstorm coverage in Florida makes up about 70% of your premium. You of course run the risk of keeping the property without this coverage but it can create 60-70% in annual savings on your insurance. I work debt side of RE and we try to line up sponsors with lenders who don't require this coverage and most sponsors prefer the substantial saving over keeping windstorm coverage.
Also avoid purchasing property insurance during hurricane season for FL, etc. Capacity is limited and underwriters are more reluctant.
I understand the argument during the hold period (still a risk). However, at sale wouldn't new buyer underwrite with full insurance baked in? Makes sense for the Class B/C product.
What asset class do you work in? I would be terrified of self-insuring wind risk (in the institutional multifamily realm)
Getting rid of windstorm insurance sounds super smart for Florida assets
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