2022 Property Management Insurance Forecast

Emerald Management & Realty Ltd. is proud of our insurance program that has been customized for the properties we manage. With close to 50 years of property management service, Emerald has successfully leveraged its buying power and track record to obtain best in class preferred rates and robust coverage for its valued clients and property owners.   As highlighted in 2021, the insurance market has been incredibly challenging for the real estate sector.

2022 Property Management Outlook

As early as 2018, the insurance market started to experience a dramatic shift with reduced capacity creating a “hard market” that our team at Emerald Management & Realty Ltd. continues to navigate for our valued stakeholders. The “hard market’ experienced since has been characterized with substantial rate and deductible increases, declined renewals along with reduced capacity and/or restrictions on renewals.

The 2022 Q1 predictions made in Q4 of 2021 indicate that the market is to transition and stability to some degree, and the market is now showing signs of this transition with increased capacity and some broader appetite from insurers. Moving into 2022, the general consensus is that markets are still looking to hold their rates with concerns the 2021 claims results are to some degree artificial due to the impact on activity globally with COVID-19. This in addition to impact on claims costs due to global inflation and labor challenges still has many cautious. While the market is transitioning, the outlook on some residential property remains tight especially where the prior rate was before hard market as insurers are not providing any flexibility for rates below their required system rate. The main concern is the impact of inflation on claim costs, as this has major effect as could appreciate looking at 15 to 45% increase on claims.

Despite these challenges, the forecast remains positive for real estate investors and condominium corporations. This is good news as insurance companies continue to advise that market conditions are starting to improve and that there is a return to profitability necessary for the market to soften.¹

What to Expect

In this current environment, even though insurers are cautiously optimistic and forecast a softer market in comparison to the past couple of years, they are still forecasting that where there is an increase in rates, mainly due to the impact of inflation on claims costs and capacity restraints, it should be between 5% and 15%. In addition, it is anticipated that insurance companies will be seeking higher water damage deductibles and even where there is new capacity — it will be limited and expensive.

What are Key Factors Driving Insurance Costs

Key factors that continue to impact insurance rates for rental investment properties and condominium corporations are:

Increase in property values
Impact and the cost of record-high water and fire claims
Cost to insurers have increased from severe weather losses, market disruption and impact of COVID-19
Increase of building materials and construction due to disruption of supply chains, labour and inflation
New regulations from the national solvency regulation is being monitored as it has the potential of impact insurer capacity and drive up costs.
Increased focus on older buildings properties for detailed information on what insurers have identified as risk elements and opt not to renew without upgrades being undertaken.

How to keep property insurance costs down?

As the hard market continues to soften and property owners and condominium corporations adjust to the influences impacting pricing, you can impact insurance costs by²:

Complete preventative maintenance and improvements to buildings and property
Monitor your claims history and take steps to prevent future losses.
Invests in a risk management program and loss prevention planning.

Emerald Management & Realty Ltd. continues to focus on the current insurance environment and taking steps to minimize the impact of this shift on the pricing and coverage term for our clients. As we head into Q2 of 2022, our team continues to negociate and advocate for our stakeholders. Part of our proprietary process includes our focus on achieving stability and retain loyal insurers for our stakeholders on our program.

Contact our team today to learn more about Emerald Management & Realty Ltd.’s practice and process that includes a program dedicated to achieving: low corporate rates, reasonable deductible levels, prompt claims management, coverage during vacancy, and rental revenue loss coverage in the event of an approved claim.

The team at Emerald Management & Realty Ltd. is thrilled to share the news that they have received the PLATINUM CommunityVotes Calgary Award for Best Property Management 2021.  This is the 2nd year that the team at Emerald has received this prestigious award. More information about the award can be found under Media.

Lloyd Sadd | The Gap Between Hearing & Seeing (November 2021)
CapriCMW | 2022 Strata Insurance Outlook

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