How Can Transparency Transform the Property Insurance Landscape?

3 min read
January 24, 2023

In the commercial real estate industry, risk management is critical to the success and resiliency of organizations with extensive property portfolios. Risk management teams are responsible for assessing the potential risks across their organization’s property portfolio and developing strategies to minimize them.

However, key findings from the Advisen Ltd. and Archipelago survey conducted in 2022 show that risk managers need more transparency from insurance companies when it comes to pricing risk. 

Feedback and Understanding are Lacking

The 2022 Property Risk Management Report shows that 73% of risk managers in the commercial real estate industry do not receive comprehensive and actionable feedback from their insurance partners, making it difficult for them to understand their coverage and assess their risk. 

Furthermore, 66% of risk managers want more transparency into property insurance underwriting and pricing, and only 19% understand how insurers use their statement of values (SOV) data to determine insurance pricing.

These issues can be troubling for risk managers, but they also present an opportunity for more effective collaboration between risk managers, brokers, and insurance carriers in the industry. Working together, these three groups can create a more efficient and effective system for managing risk amidst increasing natural disasters, uncontrollable economic conditions, and renewed regulatory practices.

Transparency is a Two Way Street

As companies who own sizable real estate portfolios prepare for a potential economic downturn, they are scrutinizing their business expenses across the board. Unfortunately, when a finance team seeks justification for increasing insurance premiums, risk professionals are often left on the back foot, unable to provide any detail of why premiums have gone up or what they can do to lower their premiums in the future. 

Insurers and brokers have the power to set positive changes in motion within the industry, especially if they were to provide a closer level of detail on why premiums are set where they are. As a direct result, risk professionals would be able to educate their leadership and create opportunities for strategic investments and divestment to improve premiums and prevent losses before they take place.

Insurance carriers looking to build strong partnerships with clients should work with them to provide more insights into how they use SOV data to determine premiums – helping risk management teams better understand the factors that go into determining their premiums and make more accurate assessments of their risk. 

Insurance brokers can also play an essential role in increasing transparency. These professionals have the knowledge and experience to navigate the complex insurance market and can provide valuable insights to risk managers on the options available. They also serve as a liaison between risk managers and insurance carriers, making a conscious effort to bridge the communication gap and improve transparency.

It’s important to note that transparency is a two-way street. 

In the 2022 Property Risk Management Report, Sean Ringstead, Chief Digital Business Officer and Chief Risk Officer for Chubb, stated, “The traditional client-insurer relationship paradigm has shifted, now aimed at early identification of risk that can prevent potential damage before it occurs. Crucial to this is getting high-quality, detailed, and accurate data from our customers about their exposures. The better the data we receive, the better our ability to reciprocate with actionable insights.” 

Without clean, detailed, and accurate property data provided by property owners and brokers, via their SOV, insurers are unable to get a clear picture of a client’s risk and are forced to make broad assumptions to protect themselves. This leads to increased opacity across the market and distrust and frustration for all stakeholders.   

Increasing Transparency Builds Trust

Ultimately, risk managers, brokers, and insurance carriers can choose to work together to establish best practices for risk management through open communication and high-quality data. 

The commercial real estate industry is constantly evolving, and risk management strategies must also evolve. With each other’s help, risk managers, brokers, and insurance carriers can create a more efficient and effective system for managing risk. By establishing more transparent communication, more accurate underwriting, and better use of standard metrics, the industry can reduce uncertainty and increase trust across the market.

If you’re interested in learning more about how Archipelago can help you standardize, organize, and improve your property data to gain transparency into your insurance placements, click here to set up a demo.

Get Email Notifications