Bisnow Reports
Lockton's Danielle Lombardo
Oct 16, 2023
Danielle Lombardo, Chair of Lockton's global real estate practice, discusses the escalating insurance costs in the real estate industry and the need for a solution. They explore the changing mindset towards insurance, the impact of volatility on real estate deals, challenges of property insurance in Florida, growing demand for risk management consulting, and the outlook for reinsurance in 2024.
34:48
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Quick takeaways
- The rising cost of insurance in the real estate industry is hindering construction projects and draining cash flow, necessitating collaboration between lenders, governments, and the industry to find a solution.
- The increasing frequency and volatility of weather events, driven by climate change, require a paradigm shift in real estate risk management, with a need for more practical insurance requirements and exploration of alternative risk finance strategies.
Deep dives
Record-breaking weather and climate disasters in the US
The US has experienced at least $23 billion weather and climate disasters this year, setting a new record. The deadly wildfires in Maui and Hurricane Adalia in Florida are examples of such catastrophic events. The aftermath of these disasters is leading to a crisis in the insurance industry, with premiums rising significantly. These insurance cost increases are negatively impacting real estate deals, hindering construction projects and draining cash flow. The volatility in insurance pricing, with unexpected and substantial last-minute changes, further exacerbates the situation.
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