The real estate industry is expected to remain on a sustainable course of solid growth for 2015 through 2017. That’s according to a new three-year forecast from the Urban Land Institute (ULI) Center for Capital Markets and Real Estate. With banks and insurance companies also active, real estate lending will remain competitive and favorable for borrowers.
What does that mean for the insurance markets? We caught up with Tom Kersting, president of Insurance Services for Franklin Street to get his predictions for the insurance market in Florida for 2015?
“The existing players in the marketplace have an abundance of capital and it isn’t diminishing,” Kersting tells GlobeSt.com. “As a result, the property market will remain soft in 2015.”
Kersting sees new companies entering the space as well, which he says only adds to the abundance of capacity in the Florida CAT market. What began as a trend in the large account space is now the norm in smaller non-CAT commercial property.
“Carriers are jockeying for their place at the table to put more capital in the game causing pricing to become predictable,” he says. “Along with premium reductions, we’ll see improved terms such as broader coverages, lower deductibles and higher sublimits.”
When the market does turn, Kersting predicts it will not harden sharply, as it has in the past. This, he says, is due in part to the growth of alternative capital in the reinsurance space.
“For example, pension funds traditionally represented a very minimal amount of market share and they now represent slightly more than 10 percent of the $570 billion reinsurance market,” Kersting says. “They are moving the needle, and with their conservative return requirements, these investment vehicles will disrupt the market for years.”
If you missed part one of this interview, you can still read it: Franklin Street Exec Reveals Recruiting Strategy. Be sure to come back Monday to read: Is CRE Insurance More Expensive in Florida?