The real estate industry, one of the largest market segments in our economy, faces a myriad of risks, from natural disasters and cyber threats to liability claims and operational hazards. To help real estate organizations make informed risk management decisions, Unison Risk Advisors has released its fifth annual benchmark report. This report provides valuable insights into the insurance purchasing decisions of thousands of real estate organizations across North America.
Overview: Aggregate (Habitational and Commercial Real Estate)
- Property Insurance: A significant shift towards larger deductibles is observed, reflecting the hardening property insurance market. Most firms opt for lower deductible options when available with 55 percent of firms carrying a deductible of $5,000 or less and 45 percent carrying deductibles of $10,000 to $25,000+.
- General Liability: The majority of firms (64 percent) carry $1 million per occurrence/$2 million annual aggregate limits. A slight increase in general liability limits is seen with increasing total insured value.
- Excess Liability: Smaller firms tend to purchase smaller excess liability limits, while larger firms opt for higher limits. The market is showing a growing demand for increased primary coverage limits. Over 90 percent of smaller firms purchase limits of $5 million or less and 42 percent of the largest firms in our report carry excess liability limits of $15 million or greater.
- Cyber Liability: Cyber insurance has become increasingly critical for real estate organizations. Most firms (68 percent) purchase cyber liability coverage limits exceeding $1 million. Increased demand has led to broader availability and more competitive pricing.
Overview: Habitational Real Estate
- Property Insurance: Deductibles increase as total insured value increases. 50 percent of small property owners carry deductibles of $1,000 or less. 96 percent of large clients carry at least a $10,000 deductible and 94 percent of medium-size clients carry at least a $5,000 deductible.
- General Liability: Most companies carry $1 million per occurrence/$2 million annual aggregate limits. Almost all companies are assumed to carry this level of coverage.
- Excess Liability: Smaller firms purchase smaller limits, while larger firms purchase larger limits. Some underwriters require higher primary limits for larger exposures. While 65 percent of the smallest firms purchase excess liability limits of $2 million or less, 62 percent of the largest firms opt for coverage exceeding $5 million.
- Cyber Liability: 5 percent of firms purchase less than $1 million of coverage, while 84 percent purchase limits greater than $1 million.
Overview: Commercial Real Estate
- Property Insurance: Deductibles increase as the size of the properties increases. National insurance companies dominate the market, especially for larger properties. 87 percent of the largest commercial firms carry at least a $25,000 deductible.
- General Liability: Most companies carry $1 million per occurrence/$2 million annual aggregate limits. Almost all companies are assumed to carry this level of coverage.
- Excess Liability: Smaller firms purchase smaller limits, while larger firms purchase larger limits. Some underwriters require higher primary limits for larger exposures. 68 percent of the smallest firms purchase excess liability limits of $2 million or less while 79 percent of the largest firms purchase limits exceeding $5 million.
- Cyber Liability: 60 percent of commercial firms purchase limits greater than $1 million compared to 84 percent of habitational firms. Only 5 percent purchase a limit less than $1 million.
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While our 2024 Real Estate Benchmark report provides valuable data on various lines of coverage, it’s important to remember that each organization has unique risk factors. A thorough review of individual exposures is crucial for making informed decisions. By understanding the evolving risk landscape and leveraging data-driven insights, real estate organizations can build resilient risk management programs and protect their bottom line.