At Lument, we see firsthand how the insurance market is reshaping deal structures, valuations, and closing timelines. At this year’s CREW Network Convention in Austin, Texas, I had the privilege of moderating the session “Navigating Crisis and Change,” where we explored the shifting insurance landscape and its implications for owners, lenders, and investors. Below are the key themes that emerged from our dynamic discussion.
Understand What’s Changed
Insurance is no longer a back-end checklist item — it’s now a front-end determinant of deal viability. Panelists emphasized that climate volatility, catastrophic weather events, and reinsurance constraints have driven up costs and reduced availability. In 2024 alone, the U.S. experienced 26 climate-related disasters causing at least $1 billion in damage, compared to just seven in 2010 and two in 1980 (inflation-adjusted).
One panelist described the market as having “reset” rather than cycled — signaling a structural shift in risk, cost, and underwriting standards. While some property classes have seen premiums drop by 20% as capacity returns, deductibles and owner participation continue to rise.
Developers are also amplifying exposure by building high-value assets in vulnerable zones like coastlines and wildfire-prone areas. Meanwhile, new risks are emerging — such as “social inflation,” which refers to rising litigation costs and outsized jury awards. Nuclear verdicts (awards exceeding $10 million) are increasingly common, driving up liability premiums even for well-managed properties. Combined with aging infrastructure and demographic shifts, these factors make both property and casualty coverage harder to secure.
Set the Stage Early
Early coordination among borrowers, lenders, and brokers is now essential. Insurance requirements — particularly for Fannie Mae and Freddie Mac executions — have become more stringent. Lenders often require five market quotes or declinations and five years of loss history before approval.
Panelists urged stakeholders to engage insurance advisors at the time of application, not days before closing. Having the right documentation, understanding exclusions, and confirming compliance early can prevent costly delays.
Tell Your Story Through Data
Today, underwriters now evaluate a broader range of data — crime stats, maintenance records, violations, tenant mix, online reviews — and a single negative datapoint can trigger rejection. Transparency and narrative are critical. Owners should be ready to explain: What improvements have been made? What losses have been mitigated? What controls are in place to reduce risk? To better answer such questions, panelists recommended building a “data war chest” filled with accurate, accessible records — including loss runs, engineering reports, inspection results, and operating data.
Moreover, as deal flow picks up, insurance underwriting teams are increasingly stretched — making it more critical than ever to tell your story through data. One panelist noted that underwriters now spend up to 40% of their time on administrative tasks. Each submission may pass through as many as 15 different systems before a decision is reached. As a result, underwriters often lack the bandwidth to chase down missing information or resolve discrepancies, underscoring the importance of providing complete, well-organized documentation upfront.
Adapt to a More Disciplined Market
While reinsurance capacity is returning, carriers remain cautious. Many are adopting digital underwriting systems with strict checklists and automated data feeds. One panelist noted that most carriers are only 60–70% through their digital transformations, which improves data collection but reduces flexibility.
Underwriters now handle hundreds of submissions monthly — 20 times the volume from just a few years ago — leaving little room for exceptions. Relationships still matter, but they must be backed by solid data and preparation. Repeatedly submitting the same risk without updates can backfire. The key is cultivating long-term relationships supported by accurate information and consistent communication.
Focus on Fundamentals
Despite all the upheaval described above, the fundamentals of commercial real estate insurance persist: the quality of construction, age of the building, location, and contractual risk transfer still matter. Owners of older assets should expect more scrutiny and be prepared to invest in upgrades. For example, some carriers now limit roof coverage to actual cash value once it exceeds 10 years and apply tighter terms to buildings constructed before major code updates.
In today’s environment, insurance should be viewed not as routine maintenance, but as true catastrophe protection. The goal is coverage that performs on the worst day — not just the cheapest premium on an ordinary one.
Final Thought
The insurance landscape is unlikely to return to what it was a decade ago. Borrowers and lenders who understand how insurers evaluate risk — and who prepare accordingly — will be best positioned to keep their deals on track.
