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Ally Capital Group Acquires Tampa Office Complex

Excerpted from Commercial Property Executive story.

Ally Capital Group has acquired Austin Center, a 299,000-square-foot office complex in Tampa, Fla., from RS Westshore LLC, an affiliate of Redstone. The deal marks just the second time the complex has traded since its completion in 1975.

Located at 1111, 1211, 1311, 1401 and 1411 N. Westshore Blvd., the five-building office campus sits on 10.4 acres in the Westshore neighborhood. The complex is situated adjacent to International Plaza Mall and Tampa International Airport, and provides easy access to Interstate 275, Veterans Expressway and State Road 60.

Ben Miller and Casey Siggins of Franklin Street Capital Advisors arranged financing for the deal through Valley Bank’s Tampa location. ACG has tapped Tampa-based Franklin Street to lease, manage and provide insurance for Austin Center.

For full story, visit https://www.cpexecutive.com/post/ally-capital-group-acquires-tampa-office-complex/

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What to Expect for Commercial Insurance Rates in 2019

Excerpted from 2019 National Real Estate Investor Outlook story.

The most frequent question I’m asked today is “How will the 2018 hurricane season impact the insurance market in 2019?” As the current marketplace struggles to find its footing between hard and soft markets, rates are scattered, and carriers are targeting anywhere from a 5% decrease to a 20% increase. 

Although an overall pricing decrease is becoming less common, it is still achievable for the right type of portfolio. Generally, newer construction risks with few losses are getting the best terms and pricing at renewal. We’re now seeing most markets satisfied with a 5% average overall increase, though a few markets are pushing for higher rates on certain asset classes with significant exposure to natural catastrophe perils.  

Fortunately, the harrowing images of the damage caused by Hurricanes Michael and Florence are not indicative of the actual impact they will have on insurance rates. Total insured losses from these storms are expected to be at most $13 billion. However, the insurance marketplace is capitalized to withstand a $100 billion-plus event, and these storms should not dramatically impact the property insurance marketplace. Renewals in hurricane-prone regions are expected to be somewhere between flat and a moderate +7% increase, which is the result of a strong, well-capitalized reinsurance market flush with alternative capital.   

The flood events from Hurricanes Harvey, Irma, Florence and Michael in recent years have created an increased awareness of the importance of adequate flood coverage. The majority of flood insurance is purchased through the National Flood Insurance Program (NFIP), which has continued to take on record debt each year, reaching a total of $30 billion in 2017.  

The Federal Emergency Management Agency (FEMA) has made significant changes to the program recently, including rate increases across almost all policies. NFIP rate increases are averaging 8%, with the most significant increases coming in as high as 25% for pre-FIRM, non-primary residential and commercial locations.   

Alternatively, the private flood insurance market has proven to be a competitive option for mitigating the rate increases and uncertainty associated with the National Flood Insurance Program. Flood insurance is a difficult coverage to underwrite, and the increasing sophistication of the private market can deliver a more price-stable alternative for property owners. 

The insurance market in hail exposed regions has become very challenging. Hail-related claims in Texas, Oklahoma, Colorado, Kansas, Missouri and Nebraska have increased significantly both in frequency and severity over the past few years. Carriers that have not exited the market in these states have responded by increasing both rates and deductibles. Depending on loss history and location, rate increases for portfolios in these states can range from 5 to +15%.  

Multifamily has become the most challenging sector within the real estate industry when compared to retail, office and industrial. Over the past several years, carriers have aggressively underwritten multifamily risks to gain market share and grow premium volume. Unfortunately, these aggressive underwriting practices have caught up to carriers not charging enough premium to cover the inevitable underwriting losses. Rate increases for multifamily risks that have experienced significant losses can be as high as 20%. In these scenarios, aggressive risk management practices should be implemented to prevent and minimize future losses.  

In conclusion, although we are not in a hard market, rate increases are expected in 2019. An awareness of what to expect for your portfolio will be an important part of planning for your insurance renewal.   

As Managing Director, Matt Harrell brings a wealth of industry experience to Franklin Street Insurance Services. He can be reached at Matthew.Harrell@FranklinSt.com. 

 

For full 2019 National Real Estate Investor Market Outlook, visit https://www.nreionline.com/

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Prepare Your Commercial Property for Hurricane Season

Franklin Street, a full-service commercial real estate firm, has produced a “2018 Hurricane Preparedness Guide” for commercial property landlords and tenants. Business continuity and hurricane preparedness planning is just one of many services Franklin Street provides to assist in protecting clients’ valuable assets. Developed by Franklin Street’s property management and insurance experts exclusively for their clients, the guide offers proactive steps to ensure the safety of tenants and the value of each property. 

The 2018 Hurricane Season officially begins on June 1st and ends on November 30, 2018. Franklin Street’s guide includes resources for employers and employees such as an emergency preparation and supply checklist, instructions for what to do if a Hurricane Watch or Hurricane Warning has been issued, and contact information to local and federal emergency management offices.

“We urge property owners and tenants not to be complacent about hurricane preparation,” said Patrick McGucken, Vice President of Retail Management Services at Franklin Street’s Tampa office. “Our guide provides important tips and information on preparing your property, action steps to take before and after a disaster, and a list of key emergency contacts.”

“If my business is forced to shut down because of a natural disaster, will my insurance policy cover us for loss-of-income? Does my commercial property insurance include flood coverage?” said Lonnie Kitchen, Senior Director for Franklin Street Insurance Services.  “These are the types of questions that property owners should be asking when reviewing their policies before a storm strikes.”
 
Here are four steps you can take to protect your commercial property from disaster.

1. Review property insurance with the company’s insurance agent concerning the hazards of a hurricane.

Even as rebuilding is in progress, building and business owners have learned that insurance policies are works in progress and should be reviewed and clarified regularly, well in advance of any disaster.

2. Activate your emergency plan as soon as a Hurricane Watch is posted.

When a Hurricane Watch is issued, preparations should be made for a possible facility shutdown and evacuation. Do not wait until a Hurricane Warning is issued, as there may not be enough time to complete all the necessary actions. Any action that can be performed without interrupting ongoing business operations, such as storage of site furniture, should be done immediately.

3. Stockpile the emergency supplies needed in preparation for the hurricane season.

Supplies are essential to sustain you and your employees in the event you are temporarily stranded in the workplace during a storm. Please review the following list of items to include in your emergency kit: 

• Food – stock your office with non-perishable foods such as food bars and dehydrated foods.
• Water – ensure you have a three-day supply of purified water available. It is highly recommended that at least two quarts of water is stocked per day, per employee.
• Emergency Lighting – light sticks, flashlights, flares.
• Batteries – ensure you have a supply of batteries on-hand.
• Medical – ensure you have a First Aid kit on hand that is well-stocked with fresh supplies. It is recommended that the kits are designated to treat earthquake-related injuries such as heavy bleeding and broken bones.
• Blankets – lightweight fire and shock retardant emergency blankets.
• Radios – two-way radios as well as portable transistor radios with an extra supply of batteries.
• Medications – persons on medication should keep a 72-hour supply of such medications in their desk.

4. Keep a list of important phone numbers handy to help you through the emergency. 

Make certain your tenants update their emergency contact information with your property management office. Also, make sure your emergency contact list includes these numbers:

Emergency: 911
Federal Disaster Assistance: 1-800-621-FEMA (3362); www.fema.gov
American Red Cross (Evacuation Resources): 1-800-975-7585
Hurricane Helpline: 1-800-227-8676
Finding Loved Ones: 1-877-LOVED-1S

For more information on how to prepare your commercial property for severe weather, visit Franklin Street Management Services. For information on how to protect your business with commercial property insurance, visit Franklin Street Insurance Services.

To learn about specific risks in your area, contact your local emergency management agency.

About Franklin Street: Celebrating more than 10 years in the business, Franklin Street is a family of full-service commercial real estate companies focused on delivering value-add solutions to meet the evolving needs of clients. Through a collaborative philosophy of leveraging the resources, expertise and experience of each of its divisions – Real Estate, Capital, Insurance, Property Management and Project Management – Franklin Street offers unmatched value and optimal solutions for clients nationwide. Learn more about Franklin Street at FranklinSt.com.

 
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After Hurricane, Some Investors Moving Assets Out Of Florida

In the wake of Hurricane Irma, many of South Florida’s real estate pros were eager to get back to work, downplaying the storm damage and predicting that the region will remain attractive to buyers.

Turnberry Associates CEO Jeff Soffer went on CNBC to say real estate prices would not be affected long term, and other developers told The Real Deal that they were mostly dealing with temporary landscaping issues and power outages.

But Franklin Street Director of Multifamily Investment Sales Hernando Perez said that he has fielded calls from multiple clients who no longer want to deal with the hurricane risk.

“I’ve had a handful of calls where clients want to get rid of assets and reposition their equity,” Perez said. “We have tangible examples of clients who want to take action to avoid the consequence of another storm.”

He declined to name specific clients, but said they included the owner of a sizable project in Broward County and the owner of a large portfolio in North Miami. One client had been mulling the idea of cashing out for months.

“One made the decision right after the storm, ‘I want to get rid of my property immediately,’” Perez said.

Perez specified that the investors with this attitude had bought property between 2010 and 2016 and were relatively new to the South Florida market. Franklin Street is a relatively young firm; it was founded in 2006 and focuses on properties in the Southeast. It has six offices in Florida and one in Atlanta.

“Most of the investors we are dealing with today have never been exposed to a major hurricane like a Wilma, an Irma or a Harvey,” Perez said. “When they see firsthand Houston or the Florida Keys, that client’s mindset becomes ‘This is real. This is no longer through the grapevine. This is a real situation.’”

Hurricane Irma left 6.5 million people without electricity, some for more than a week. Insurance claims are expected to reach $18B. Perez said that news coverage of wind and water damage affected some clients.

“They’re thinking, ‘I don’t want to be that person putting plywood on the windows, working 12 to 15 hours a day to prepare my home, putting clients and tenants at ease, making sure I have enough insurance. Maybe I want to move my equity elsewhere,’” Perez said. “They start to see dollar signs.”

Perez said these clients want to shift into assets that require little to no management responsibility, or to an area that is less vulnerable to storms or market downturns. He said some are considering selling and holding onto cash until they see more opportunity to buy at affordable prices.

Then again, he said, the storm also brought out opportunistic types looking to make deals with exactly those types of sellers.

“I’ve had several people say, ‘Hey, find me whatever you can find me in Miami,’” Perez said.

Ultimately, he said, any event that could be a catalyst and significantly affect the market – like a storm, a hike in interest rates or an election – creates reactions in both directions, with some investors moving to more conservative positions and others making aggressive moves.

Perez said that Franklin Street can help investors mitigate risks, as it is a full-service firm with property management and insurance arms. Perez said Florida will always be attractive to investors. The weather and the beaches will always lure people, he said.

“[But] most beneficial for investors is that Florida is a tax-free state,” Perez said. “South Florida still provides significant amount of gain, of yield … It will remain a very attractive market, especially compared to markets [like New York and San Francisco] that are hyper-compressed, where yields are nonexistent.”

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The Most Common Question CRE Owners Are Asking As Irma Approaches

With Hurricane Irma bearing down on Florida, many commercial real estate owners are taking a closer look at their property insurance coverage just in case they experience any damage and need to file a claim. GlobeSt.com spoke exclusively with Evan Seacat, senior director of Franklin Street’s Insurance Services division, about what owners need to know at this moment.

For full story, visit 
http://www.globest.com/sites/jenniferleclaire/2017/09/08/the-most-common-question-cre-owners-are-asking-as-irma-approaches/

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Four Ways to Save Your Commercial Property from Disaster

Franklin Street, a full-service commercial real estate firm, has produced a “2017 Hurricane Preparedness Guide” for commercial property landlords and tenants. Developed by Franklin Street’s property management and insurance experts exclusively for our clients, the guide offers proactive steps to ensure the safety of your tenants and the value of each property.

The 2017 Hurricane Season officially began on June 1st and ends on November 30, 2017. Franklin Street’s guide includes resources for employers and employees such as an emergency preparation and supply checklist, instructions for what to do if a Hurricane Watch or Hurricane Warning has been issued, and contact information to local and federal emergency management offices.

“Now is the ideal time for all employers and employees to prepare and recognize the risks and potential dangers of hurricanes and what to do before, during and after a storm,” said Patrick McGucken, Vice President of Retail Management Services at Franklin Street.

“Property owners need to take the time to review their insurance policies now,” said Lonnie Kitchen, Senior Director for Franklin Street Insurance Services. “Checking to see if you are properly protected after a storm hits is too late.”

Here are four steps you can take to protect your commercial property from disaster.

1. Review property insurance with the company’s insurance agent concerning the hazards of a hurricane.

Even as rebuilding is in progress, building and business owners have learned that insurance policies are works in progress and should be reviewed and clarified regularly, well in advance of any disaster.

2. Preparation for a hurricane should begin as soon as a Hurricane Watch is posted.

When a Hurricane Watch is issued, preparations should be made for a possible facility shutdown and evacuation. Do not wait until a Hurricane Warning is issued, as there may not be enough time to complete all the necessary actions. Any action that can be performed without interrupting ongoing business operations, such as storage of site furniture, should be done immediately.

3. Stockpile the emergency supplies needed in preparation for the hurricane season.

Supplies are essential to sustain you and your employees in the event you are temporarily stranded in the workplace during a storm. Please review the following list of items that will be useful in case this happens:

• Food – stock your office with non-perishable foods such as food bars and dehydrated foods.
• Water – ensure you have a three-day supply of purified water available. It is highly recommended that at least two quarts of water is stocked per day, per employee.
• Emergency Lighting – light sticks, flashlights, flares.
• Batteries – ensure you have a supply of batteries on-hand.
• Medical – ensure you have a First Aid kit on hand that is well-stocked with fresh supplies. It is recommended that the kits are designated to treat earthquake-related injuries such as heavy bleeding and broken bones.
• Blankets – lightweight fire and shock retardant emergency blankets.
• Radios – two-way radios as well as portable transistor radios with an extra supply of batteries.
• Medications – persons on medication should keep a 72-hour supply of such medications in their desk.

4. Keep a list of important phone numbers handy to help you through the emergency.

Make certain your tenants update their emergency contact information with your property management office. Also, make sure your emergency contact list includes these numbers:

Emergency: 911
Federal Disaster Assistance: 1-800-621-FEMA (3362); www.fema.gov
American Red Cross (Evacuation Resources): 1-800-975-7585
Hurricane Helpline: 1-800-227-8676
Finding Loved Ones: 1-877-LOVED-1S

For more information on how to prepare your commercial property for severe weather, visit Franklin Street Management Services. For information on how to protect your business with commercial property insurance, visit Franklin Street Insurance Services.

To learn about specific risks in your area, contact your local emergency management agency.

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Property Insurance Forecast for 2017: Reinsurance Front Keeps Clouds Away

As commercial property owners renew their insurance programs in 2017, they’ll be pleasantly surprised to see their property premiums continue to decrease. Those owners can thank favorable meteorological and financial conditions for their good fortune.

Florida hasn’t been hit by a major hurricane in more than a decade. Hurricane Matthew skirted much of Florida’s coast, ultimately reeking damage and disruption in Jacksonville, but overall, had a relatively small impact on the state and the insurance industry as a whole. Insurers have enjoyed the good weather, which has attracted more competitors to the state at the primary and reinsurance levels, while better technology and predictive modeling have driven property catastrophe (CAT) coverage closer to a commodity, making it difficult for existing carriers to firm up rates, let alone drive increases.

Weathering the Storm

Even if we were to experience major storms in 2017, the effects of any jolt would be contained. As carriers begin the new year with significant surplus in their coffers and the January treaty renewals wrapping up, initial reports point to another year of declining reinsurance costs. For carriers, the cost of capital has declined materially for years and their ability to strike a better deal has cascaded down to property insurance buyers.

Alternative capital, which for some time has disrupted the reinsurance industry, has in recent years become available directly to property insurance buyers through regulated carriers and products. These new capital sources offer cost advantages over their more senior competitors, as they aren’t building robust internal distribution salesforces, regional offices or policy execution infrastructure, as was the traditional model for the existing carriers with legacy infrastructure.

Real estate owners and managers seeking to decrease their insurance operating expenses will best leverage these conditions by finding an insurance broker that specializes in commercial real estate properties. These niche brokers communicate daily with the wholesalers and hot managing general agent (MGA) programs to gain access to products and capacity provided by emerging capital sources.

With the right help, owners can find new, private companies that: 1.) aren’t burdened by legacy claims, 2.) are aggressive about growing market share, 3.) have a higher risk tolerance than publicly traded companies and 4.) have investors waiting in line to park their cash in the industry.

The market was very different a decade ago when we had very few dominant players competing on a primary basis for catastrophic exposed risks, commonly referred to as “wind coverage” in Florida. The number of companies with an appetite for wind coverage has doubled today. And for larger CAT-exposed property portfolios, as many as 40 carriers will compete for an excess layer of risk in a shared tower program.

Coverage from Reinsurers

Reinsurance carriers, which backstop the primary market, have a similar predicament. Insurance carriers turn to reinsurance markets to transfer some of their exposure in the same way property owners do. Solid performance and years of historically low interest rates have steered capital into reinsurance firms, where returns are stable. During the past several years, capital has poured into the reinsurance space, where investors are seeking higher yields than that available on treasuries and similar investments. Other factors, such as trends toward greater retentions, more accurate modeling, new regulations, industry consolidation and technology, have all compounded to challenge the market’s desire for rate stabilization.

In a market long on cash and short on claims, the capacity of reinsurers has grown, while the amount of reinsurance purchased by primary carriers — due to their own surpluses — has reduced. Further compounding the already competitive environment, mechanisms now exist which allow the capital markets to more easily enter the markets quickly. Consistent with some opinions that the current conditions are the “new norm,” it’s possible that when a hint of rate increase is felt, it will be quickly undercut by new entrants, looking to capture market share and willing to put their capital to work, for less. This trend will continue, likely until a market surprise of sorts, making people think twice about investing in the industry.

On the Horizon

What could cloud these conditions? One possibility would be a storm or series of storms that prove worse than predicted, resulting in industry total losses that exceed projections from forecasted catastrophe models. For instance, reinsurers would remain calm if claims reached into the hundreds of millions of dollars, so long as the total loss fell within an acceptable range from what was modeled. Again, the capacity exists to absorb great losses, and in this case, the fundamental underwriting and exposure modeling would be shown to be sound. However, the market could be buffeted by a storm that caused $100 million in damage when just $30 million was expected.

This scenario could cause some doubt or lack of confidence in the way catastrophes are modeled and lead carriers to question whether exposures are adequately priced. Higher interest rates, which have been expected from the Federal Reserve for some time, could slow the rate at which capital flows to the reinsurance markets, which long-term could have an effect on industry surplus. However, in the short-term, incremental interest rate increases would have little impact on the property insurance rates proposed in owners’ upcoming renewals.

The question today is what to do with the savings. Should a property owner or manager send the savings to the bottom line? Or should they maintain the premium figure and tweak sublimits and deductibles?

The answer depends in large part on the insured’s risk profile and capital position. How much does an owner or manager want to pay out of pocket? Higher sublimits and lower deductibles will lessen cash demands should a property sustain even minor damage. And if a major hurricane hits, owners and managers can rest easier knowing that the cash demands will be tempered by better coverage.

— By Tom Kersting, president of Insurance Services for Franklin Street. Tom can be reached at tom.kersting@franklinst.com.

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Why Some CRE Owners Are Skipping Hurricane Insurance

MIAMI—The National Hurricane Center on Tuesday issued a warning. There’s a weather system in the Atlanta ocean and 50-50 chance it will turn into a tropical cyclone. That could eventually turn into a full-blown hurricane and threaten Florida.

Against that backdrop, GlobeSt.com caught up with Evan Seacat, a senior director at Franklin Street, to get his take on what commercial real estate owners need to know in part one of this exclusive interview. Stay tuned tomorrow for part two, in which he will discuss when insurers usually stop writing policies and other issues you need to understand.

GlobeSt.com: Property owners may be getting complacent because we haven’t had a major storm since 2005. What aren’t they most likely to be overlooking or forgetting?

Seacat: With no hurricane to hit South Florida in the past 10-plus years, we are starting to see more and more clients self-insure for windstorm-hurricane insurance. If no lender is involved, companies are more willing to take the risk that they’ll lose 100% of the property. They are also not insuring coverages that we feel are extremely valuable and important: loss of rental income with windstorm insurance and law-and-ordinance coverage.

GlobeSt.com: What in their corporate finances needs attention, given that windstorm policies never cover 100 percent of the damage and exclude items such as landscaping?

Seacat: Most windstorm policies in South Florida have either a 3% or 5% deductible. An owner with a $10 million building will pay out of pocket either $300,000 or $500,000 before the insurance policy kicks in.

We always recommend to our clients, “Be prepared for this. Have a reserve fund set aside in this instance.” This region has been extremely fortunate to see storms pass by our region, but that luck is going to run out and we need to start getting prepared.

GlobeSt.com: When shopping windstorm insurance, what should property owners be looking for in terms of deductibles and loss of rental income coverage?

Seacat: Insurance companies charge a higher premium for the lower of the two deductibles, but, in the event of a claim, the out-of-pocket expense is lower. Property owners should shop both deductibles to determine which best fits their budgets now and when a storm hits.

Many companies self-insure the loss of rental income. This is a huge risk.

If a hurricane displaces half of the tenants of an office, retail, or industrial center, the owner loses rental income for the two or three months before they can return. Property owners with coverage for lost rent should review the policy with their current insurance agents to ensure it is there. A lot of times an owner will have loss of rental income coverage but it will be special form excluding windstorm insurance. Now is the time to check, while storms are far at sea and weak.

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Hurricane Lawyers and CPAs: Be Ready for the Storm

Just because there are only four named hurricanes predicted for the 2016 hurricane season doesn’t mean commercial real estate owners can breathe easy.

The Weather Research Center estimates there’s a 70 percent chance a named storm will make landfall along Florida’s Gulf Coast this year—and that’s just taking into account the named storms. Tropical weather systems without a name can arise without much warning.

“Our Cyclone Strike Index provides forecasts of the most probable landfall of where a tropical cyclone will occur during the 2016 Atlantic Hurricane Season,” said Jill Hasling, president of the Weather Research Center. “The west coast of Florida and Texas coastal areas have the highest risk of being impacted this year. And of key importance is that the Gulf of Mexico oil leases have a 90 percent chance of experiencing a named tropical cyclone.”

With these dire warnings in mind, GlobeSt.com, an ALM affiliate of the Daily Business Review, reached out to “hurricane lawyers” and accountants to get strategic advice for commercial real estate owners facing the possibility of massive storm damage. The key questions: What should you do before and after the storm?

David White, an attorney at Thompson & Knight in Dallas, said lawyers should review a client’s policies long before a storm hits to make sure the most likely risks are covered.

“Those risks include physical damage to the property and equipment; business interruption to cover lost profits while the company is getting back to normal operations; contingent business interruption or ‘service interruption’ if the company is shut down because utilities are cut off or crucial suppliers are interrupted,” White said. “Also ‘law and ordinance’ coverage if civil authorities order evacuation or restrict access to the property.”

Ryan Cassidy, a senior director at Franklin Street Insurance Services, said a property owner could be left paying a huge out-of-pocket expense without law and ordinance coverage.

“If a building was built in the ’70s and there have been multiple building code changes since then, there is potential for a total loss to leave the owner coming up short,”Cassidy said. “In this scenario, the insurance company would only pay for the cost to replace the old building to 1970 standards. However, it now needs to be built to 2016 standards, which leaves a large gap in coverage and oftentimes means hundreds of thousands of dollars of out-of-pocket expenses.”

All policies impose certain responsibilities on an insured in the event of a loss such as providing prompt notice, showing the damaged property and mitigating the damage, said attorney Gina Clausen Lozier, a Boca Raton associate with Berger Singerman and member of the firm’s dispute resolution team.

“Failing to comply with any one of these responsibilities can prejudice an insureds right to recovery,” she stressed. “It is crucial for a business owner to be familiar with the specific obligations of the insurance policy to avoid jeopardizing a claim from the outset and consulting with an insurance attorney can provide business owners with a roadmap for handling the initial claim stages.”

What about after a hurricane strikes? That’s when attorneys step in and help expedite a claim decision and avoid delay. Michael J. Higer, a Miami partner with Berger Singerman and a member of the firm’s dispute resolution team, said attorneys can also assist in compiling documents responsive to an insurance company’s request to make sure claim forms are submitted properly, as well as working with the insurance company to obtain advanced payment to resume operations as soon as possible following a hurricane.

“Additionally,” he said, “if the insurance company denies or underpays the claim, an insurance attorney can advise of the available remedies to seek proper coverage and compensation for an insured’s losses.”

Money-Saving Advice

CPAs play a role in helping commercial real estate owners weather storms. Amy Landry, a loss control engineer at Risk Strategies Co., said accountants can help clients make sure the values insured for each building are sufficient to replace the property in today’s construction cost environment.

“Accountants can review rental income and time element exposures and values to ensure their property policy reflects current and projected budgets,” Landry said. “Accountants may look to include extended period of indemnity coverage in the property policy that covers a reduction in income for an extended period of time even after damaged property has been repaired or replaced.”

Landry also points to client relations as part of the equation. Accountants can assess any customer and supplier contingencies that may impact the revenue stream even if an owner’s or developer’s property is not damaged or destroyed.

“One thing accountants could advise is to have a reserve fund,” said Mary Ann Jordan, a senior analyst of risk management at Transwestern. “Even with insurance, expenses relating to a hurricane can be staggering. Deductibles are high and exclusions are plentiful. The claims adjustment process could take a long time, so having cash on hand is a prudent idea.”

Landry recommends having a pre-loss contract with a forensic accountant who will be able to immediately help owners and developers measure their property damage and time element losses and provide the insurance company with records and documents to support their claim to accelerate the claims payment process.

“Include in the property policy a designated adjuster to handle all property damage claims for a developer or owner,” Landry said. “Adjusters are going to be in high demand in the event of a catastrophic event so it is prudent to make pre-loss arrangements to have one ready to hit the ground when disaster strikes. Advise owners and developers to carry enough contingent cash on their books to protect against uninsured loss.”

 

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