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Spring 2021 McGriff Market Update:
Real Estate & Hospitality


The challenges of the 2020 property market have carried into 2021. We expect the market to remain stable with rate increases still being the norm, but moderating slightly compared to the rate increases of 2020. The frequency of attritional losses and natural catastrophes like storms, wildfires and tornadoes in 2020 and early 2021, combined with a higher cost to rebuild due to increased demand for materials, has taken a toll on the market. We are awaiting a potential Q2 market impact from the February 2021 polar vortex.

Property underwriters are taking the position that unprofitability is requiring rate increases, sub-limit reductions and narrower policy wording. We are also seeing higher deductibles, specifically for water damage, sometimes as high as $250K. Some carriers are also trying to impose individual water damage deductibles by location versus per occurrence. The standard $10K All Other Perils deductible has now increased to $25K or $50K. We are also seeing carriers broaden the geography for wind and hail zones. Some carriers that traditionally focused on CO, OK and TX are expanding to cover more of the central U.S. and with deductibles ranging from $100K to percentage deductibles such as 2–3% of total insured values. Examples of narrower policy wording include loss of ingress/egress and civil and military authority limitations, renewal form changes and communicable disease/pandemic exclusions.

In response to COVID-19 and reductions in travel, hospitality clients are facing increased underwriter scrutiny of low occupancy levels, vacancy-related maintenance issues (e.g., pipe bursts and unknown water damage) and repurposing of space. As we see some businesses return to a new normal, underwriters are also focusing on restaurant exposure within hotels. And with so much uncertainty, projecting 12 months of business income has proven difficult. As we work with clients to consider creative solutions in the face of these challenges, it remains key to consider lender requirements and engage lenders early in the renewal process to determine any flexibility in requirements for deductibles, limits and financial ratings.

Habitational real estate is also seeing difficulty with placement, and in some instances, double-digit premium increases. Despite an influx of capital into the marketplace in early 2021 and an increase in appetite for medium to large real estate and multi-family accounts, we expect continued scrutiny of terms and conditions and attachment points, especially in light of recent losses, including winter storms. To obtain the best possible market results, multi-family clients should share detailed risk management initiatives and procedures (e.g., non-smoking policies for tenants, requirements for water sensors, sprinkler systems and smart technology). Also, detailed descriptions of large losses and steps taken to reduce the likelihood of recurrence are key. Finally, submissions that provide detailed, quality information regarding property components will go a long way to help underwriters in their decision-making process.

Finally, the hard property market is affecting industrial clients as well. Underwriters are no longer willing to brush aside whether companies have complied with loss control and engineering recommendations. Those who have complied are seeing better results in their renewals.

Overall, clients should not be surprised if multiple insurance carriers are needed for larger valued locations. Creative solutions to achieve the best possible results might include increased deductibles, quota share arrangements or reduced excess coverage limits. Property valuations are key to help determine the limits to purchase and to ensure blanket limits can be obtained (vs. scheduled limits) and replacement cost appraisals are helpful to validate the reported values.


The real estate industry as a whole saw dramatic insurance rate increases in 2020. We expect the Casualty market will remain firm and that capacity will continue to tighten, especially for umbrella/excess liability throughout 2021. An increase in catastrophic losses as well as an increase in overall loss severity and frequency has led to considerable disruption in the umbrella/excess marketplace. The upsurge in claims litigated, nuclear verdicts and large settlements is also placing stress on the market. Underwriters are taking the position that these deteriorating loss trends are negatively impacting their profitability and are requiring rate increases, limited underwriting appetites, reduced capacity and higher attachment points. Many insureds are surprised to learn that insurers are reducing renewal capacity on lead umbrella and excess layers but not providing premium relief. Insureds that experience an incumbent carrier non-renewal or who require excess coverage totaling $100 million or more in limits are seeing the greatest increases.

Meanwhile, some carriers are re-evaluating coverage grants altogether. It is becoming more commonplace for any one carrier to offer only $5 million or less in the first $10 million of excess coverage. Quota sharing within the first $25 million, along with lead excess buffers of $1 million or $2 million, is also becoming the norm. To combat these rate increases, insureds are considering higher deductibles, corridor deductibles or a reduction of their total excess limits. This has strained and lengthened the renewal process, as more carriers are needed to replace expiring umbrella/excess liability limits.

In response to COVID-19, communicable disease coverage is more difficult to obtain, especially for the hospitality and industrial industries.

The hospitality industry is also seeing insurers pay close attention to repurposing or businesses trying to modify job duties to meet the changing demand. Hospitality and multi-family insureds are having difficulty finding assault/battery and molestation coverage. And some underwriters are looking at sexual abuse limitations or declining coverage for hotels in certain areas that may be exposed to sex trafficking.

Despite being the casualty line of business with the most COVID-19 claim activity, Workers’ Compensation insurance rates are generally flattening, though we are seeing slight increases in response to losses of high severity. Most carriers continue to use Workers’ Compensation as a competitive tool when paired with the General Liability and Commercial Automobile coverage. As for Commercial Automobile Coverage, AM Best reports that 2019 was the automobile insurance segment’s worst accident year in 10 years, with losses that approached $4 billion. Large commercial fleets are seeing the largest increases, especially in lead umbrella pricing. While the pandemic may have resulted in a reduction in total traffic, auto accident severity remained high and the number of businesses turning to delivery to meet client demand has also had an effect on some automobile rates.

Given this volatile market, insureds should strive to provide detailed submissions and utilize analytics tools, to the extent possible, to help differentiate risk profiles and exposures. Businesses in this sector must evaluate their risk management and insurance programs in a timely manner for the most favorable renewal results.

The information, analyses, opinions and/or recommendations contained herein relating to the impact or the potential impact of coronavirus/COVID-19 on insurance coverage or any insurance policy is not a legal opinion, warranty or guarantee, and should not be relied upon as such. This communication is intended for informational use only. As insurance agents or brokers, we do not have the authority to render legal advice or to make coverage decisions, and you should submit all claims to your insurance carrier for evaluation. Given the on-going and constantly changing situation with respect to the coronavirus/COVID-19 pandemic, this communication does not necessarily reflect the latest information regarding recently-enacted, pending or proposed legislation or guidance that could override, alter or otherwise affect existing insurance coverage. At your discretion, please consult with an attorney at your own expense for specific advice in this regard.

Insurance products and services offered through McGriff Insurance Services, LLC, a subsidiary of TIH Insurance Holdings, LLC, are not a deposit, not FDIC insured, not guaranteed by a bank, not insured by any federal government agency and may go down in value.

McGriff Insurance Services, LLC. CA License #0C64544