As the election approached, some insurers started backing away.
Recently, several of the nation’s largest commercial property insurers have put moratoriums on new insurance policies and renewals due to concerns about potential election-related “civil unrest,” according to Garet Marr, director of Insurance Services for Franklin Street, which has an insurance portfolio of 400,000 multifamily units and 30 million square feet of commercial space.
“The insurance marketplace for commercial real estate has been going through a substantial correction, obviously,” Marr says.
While multifamily has been the hardest hit, all sectors are suffering. Marr says insurance has been incredibly difficult to secure in urban areas, like Chicago, New York and Los Angeles. “Then places that have seen a high amount of civil unrest, like Portland, have also had difficulty,” Marr says. “This is something that has been ongoing with renewals in general.”
Renewals have been a particular sticking point for some property owners. “If they have assets located in these larger urban areas, they are not able to cover that location, or they have some type of moratorium for these areas due to the civil unrest,” Marr says.
While some carriers haven’t backed away from the market, even a few lenders pulling out is bad news for larger projects.
“In a market like today, if you have a ground-up single commercial building, that’s a $60 million-plus project, you need multiple carriers to cover that just because people are pulling back financial capacity,” Marr says. “Before, you might have had a Travelers or a Zurich do the builder’s risk coverage for the entire building, but nowadays, you need three or four carriers to cover that structure. Now, when you do that, the pricing goes up.”