State of the Insurance Market Report
2025 Initial Outlook and 2024 Wrap-Up
Real Estate
The real estate space (including office, industrial, retail, habitational, hospitality, etc.) continues to be affected by a wide range of variables that can impact availability of capacity, breadth of coverage, competitiveness of rate, and more. These variables include asset class, geography, construction type, protection measures, and historical losses.
Each of the asset classes within real estate has its own nuances and challenges, with habitational being the most volatile given expected loss activity, climate change, geography, and building construction exposures.
In 2023, there were 28 separate natural catastrophic (CAT) events in the U.S. costing the industry at least $1B, which puts 2023 in first place for the highest number of billion-dollar disasters in a calendar year. According to the National Oceanic and Atmospheric Administration (NOAA), there have been 19 confirmed events for the first half of 2024, with losses exceeding $1B each affecting the U.S. This continues to affect insurer profitability, leading to stricter underwriting guidelines and higher reinsurance attachment points – all of which will continue to affect the availability of capacity, terms, and rates for the foreseeable future.
Insurers continue to focus on building valuations for policies with blanket limits and/or replacement cost coverage, given the continued rise in construction costs. Although rates have been stabilizing, with no significant CAT events over the past year, underwriters are carefully tracking exposure accumulations, given higher net retentions. While there are signs the market is beginning to moderate, rates are still at an all-time high and costs are impacting owners’ and operators’ ability to close on new deals.
One of the more recent challenges is the state of the domestic casualty market. Rates for general liability are up year-over-year, which are even higher in the lead umbrella and excess liability portions of the overall placement. Lacking tort reform combined with continued nuclear verdicts has led to increased pressure for underwriters to seek rate increases. It is therefore imperative that brokers work closely with clients to develop a tailored marketing strategy for the renewal in order to yield the most optimal outcome.
Coverage Considerations
There are several coverage considerations that should be considered. For property, it is important to look for items that would offset indemnification for true replacement cost, such as coinsurance provisions and margin clauses.
It is also common to see coverage limitations or exclusions for exposures that have more applicability in certain regions, such as cosmetic roof damage exclusions in areas that are high hazard for convective storm (hail and tornado), sinkhole exclusions in Florida, or habitability exclusions in California.
Real Estate Rate Forecast |
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| Property - Soft Occupancies (office, retail, & other well-protected risk): | -15% to +5% | |
| Property - Tough Occupancies/Non-CAT: | Flat to +10% | |
| Property - Tough Occupancies/CAT-Exposed: |  |
+5% or greater |
| Liability - General Liability: | Flat to +10% | |
| Liability - Auto: | |
+5% to +10% |
| Liability - Umbrella: | |
+5% to +15% |
| Liability - Excess Liability: | |
+5% to +15% |
| Liability - Workers’ Compensation: | Stable | |
Start the renewal process early, leading with analytics, and leverage technology that enriches exposure information to develop an appropriate narrative that will help execute a comprehensive go-to market strategy.
Partner with a specialty broker who has deep experience, resources, and knows the real estate space well.
These factors can make all the difference in ensuring that clients have the right coverage and secure the most competitive rates the marketplace will support.
Replacement cost valuations and business interruption (rental income) continue to receive a high level of underwriter focus.
It is critical that valuation tools be used as a reference point, which are used to enhance the level of collaboration with clients to justify the amounts on the schedule of values.
For clients with unfavorable loss history, it is important that loss control be engaged as a resource to help build a plan to mitigate future losses and that the plan is appropriately shared in the marketplace as part of the overall narrative.
For programs with high-hazard exposures such as wind, earthquake, flood and wildfire, partner with a trusted advisor, model the risk, and provide feedback to the client regarding guidance of sufficiency of limits, applicability of deductibles, and insight into what technical pricing underwriters will need.
Consider pre-underwriting a risk, before the submission is released into the market and engaging the client as part of the process, for a meaningful impact on the overall outcome.
Most importantly, ensure the risk is differentiated, a concise marketing strategy is followed, and the renewal process is started as early as possible.
At Risk Strategies, our breadth of knowledge and specialty focus allows us to take a deep dive into the ever-evolving exposures your real estate business faces.
Download the Report
Our industry and product line specialists have collaborated to provide an update on current trends and market conditions. We invite you to explore their insights by downloading our latest State of the Insurance Market Report.