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Disasters Drive Increased Lender Scrutiny

National  + Healthcare  | 

Lending requirements for property insurance have come under increased scrutiny following recent natural and manmade disasters. In the past 12 to 18 months, insurance company experts that work in the CRE sector say they’ve seen stricter requirements, particularly from CMBS and securitized lenders, especially as the market goes deeper into this cycle.

Lenders have always required property insurance to cover replacement cost for damage caused by disasters. But, Arthur J. Gallagher & Co.’s Alex Glickman says recent hurricanes and floods have also “made lenders more concerned and conservative.”

While all asset classes may be affected by the increased attention, industrial flex is particularly impacted, especially in earthquake zones because these properties tend to be concrete tilt-up and most vulnerable to seismic activity.

Aon Risk Services’ Jason S. Peery says, “It is important to insure a portfolio as a portfolio, rather than just doing a probable maximum loss (PML) for one asset.” By looking at the larger portfolio picture rather than insuring per asset, it allows owners to see how it might impact the whole portfolio and helps prevent insuring for too much.

Peery says, “… aggregated modeling can set appropriate limits and reduce the chance of overspending by getting a real life view for the whole portfolio. For some portfolio owners, it can save them millions.”

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Inside The Story

Read more at AIR CREConnect With Arthur J. Gallagher & Co.’s GlickmanConnect With Aon Risk Services’ Peery

About Dennis Kaiser

Dennis Kaiser is Vice President of Content and Public Relations for Connect Commercial Real Estate. Dennis is a communications leader with more than 30 years of experience including as a journalist and in corporate and agency marketing communications roles. He is responsible for Connect’s client content operations and is involved in a range of initiatives ranging from content strategy, message development, copywriting, media relations, social media and content marketing services. In his most recent corporate communications roles, he led a regional public relations effort across Southern California for CBRE, played a key marketing role on JLL’s national retail team, and was responsible for directing the global public relations effort at ValleyCrest, the nation’s largest commercial landscape services company. In addition to his vast commercial real estate experience, Dennis has worked on communications and launch strategies for a number of residential projects such as Disney’s Celebration in Florida, Ritter Ranch in Palmdale California (7,200 homes, 22,000 acres), WaterColor in Florida and PremierGarage in Phoenix. Dennis’s agency background included firms such as Idea Hall and Macy + Associates. He has earned an outstanding reputation with organization leaders as a trusted advisor, strategic program implementer, consensus builder and exceptional collaborator. Dennis has developed and managed national communications programs for Fortune 500 companies to start-ups, both public and private. He’s successfully worked with journalists across the globe representing clients involved in major-breaking news stories, product launches, media tours, and company news announcements. Dennis has been involved in a host of charitable and community organizations including the American Cancer Society, Easter Seals, BoyScouts, Chrysalis Foundation, Freedom For Life, HOLA, L.A.’s BEST, Reach Out and Read, Super Bowl Host Committee, and Thunderbirds Charities.