High cost reinsurance, inflation, strict regulation, and an increase in weather-related insurance claims are driving up the price of real estate insurance, which is impacting commercial real estate returns, valuations, and transactions. This has been revealed in a new report.
The Urban Land Institute and real estate investment management firm Heitman released a report this week called “Insurance Rise: Climate Risk and Real Estate Investment Decisions.”
The report explores “the critical intersection of insurance, physical climate risks and real estate coverage in the global commercial real estate sector” and examines the challenges arising from the rapid increase in the number and intensity of natural disasters, Provides tips for managing costs. We combine creative insurance solutions with ‘risk-aware investment strategies’.
Provides strategies to navigate rising property and casualty insurance costs due to rising climate risks, identify creative coverage opportunities, and strategically manage physical climate risks to create portfolios that attract affordable insurance policies. We advise investors to build.
This suggests that real estate and CRE portfolio managers are exploring creative insurance solutions, including:
Connect coverage from multiple carriers, choose higher or comprehensive deductibles, self-insurance, self-insured retention, or captive, and take advantage of parametric or excess and surplus line coverage. Portfolio size and geographic diversity, asset and market exposure to physical climate risks, asset and construction types, and asset size resilience measures that build strategic portfolio construction to better navigate insurance markets. An investment strategy that takes into account.
NFL stadiums and climate change
A new report estimates that NFL stadiums could face cumulative losses of up to $11 billion by 2050 due to the threat of climate change.
A report from climate risk analysis firm ClimateX assesses the vulnerability of 30 NFL stadiums to climate hazards such as flooding, wildfires and storm surge.
It uses high carbon emissions scenarios as the basis for its estimates, which continue to accelerate global warming.
Stadiums are ranked by “total loss percentage”. This percentage compares projected climate-related damage to the stadium’s replacement value. For example, a stadium valued at $1 billion is projected to incur approximately $400 million in losses by 2025, with an annual gross loss rate of 1.5%.
Some stadiums within the zone with potential for significant losses are:
MetLife Stadium in New Jersey, due to its low elevation and exposure to surface flooding and storm surge, is projected to have the highest total loss rate of 184% by 2050, with cumulative losses exceeding $5.6 billion. California’s SoFi Stadium is expected to experience a cumulative loss rate of 69% and $4.38 billion in losses due to increased surface flooding risk in urban coastal environments. State Farm Stadium in Arizona suffered a total loss of 39%, with cumulative damages estimated at $965 million, due to increased flood risk due to hot, dry weather.
less than record heat
Everyone pays attention when a record is broken, such as being declared the “hottest year on record,” and this seems to have been happening for the past few years.
But the near-record heat seems like something people should pay more attention to.
According to a Bloomberg article published in this week’s Insurance Journal, continued record heat has health and economic implications, but researchers believe that chronic (but not record-breaking) heat He says that research on the effects of this has not yet progressed.
The article blames Phoenix for breaking numerous records. But it’s also worrying that there are many days below these records. Temperatures in Phoenix exceeded 95 degrees Fahrenheit for 92 days this year, but never above 110 degrees Fahrenheit.
Tampa, Florida, had 132 days above 90 degrees Fahrenheit this year, and Raleigh, North Carolina, had 111 days above 85 degrees Fahrenheit.
“Chronic fever doesn’t get as much attention as it should,” thermal physiology expert Matt Brearley told Bloomberg. “It’s not that sexy. It’s not going to make headlines.”
Chronic heat has wide-ranging implications, including workers’ compensation.
Brenda Jackritsch, a scientist at the National Institute for Occupational Safety and Health, says that whether workers are starting a job for the first time or returning to somewhere cooler after a vacation, they need time to acclimatize to the hot environment. I warned you it was necessary. According to the article, not acclimating people to high temperatures when starting or returning to work may be a major factor in heat-related workplace deaths.
coastal erosion
Coastal erosion threatens to destroy homes on North Carolina’s barrier islands and accelerates climate change, CBS News reports.
Ten homes have been destroyed by the Atlantic Ocean on Hatteras Island in the past four years, and more are threatened, according to the report.
Local authorities are working to mitigate the problem and fortify homes and neighborhoods against a possible onslaught.
“Large dunes, housing, and infrastructure block sand transport across these barrier islands, leading to more vulnerable barrier islands,” said an executive at the Coastal Research Institute, which is working with local communities to find solutions. Director Reed Corbett said. Adapt.
One of the ways they are working to protect homes is to rebuild the coast by pumping sand from the ocean to the shore, which can cost up to $25 million. Rising sea levels and more intense storms due to climate change are washing away new sand in less than two years, compared to five to seven years, CBS reports.
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