HUB International 2022 Risk and Insurance Real Estate Outlook

A hoped-for “return to normal” in real estate isn’t yet on the horizon. Instead, 2022 will be about how owners and operators position themselves to maximize opportunities while still coping with the impact of COVID-19.

To survive, some real estate owners and operators reinvented themselves in 2021, repurposing property to meet new market demands.

In 2022, they’ll continue such efforts to deal with ubiquitous catastrophe exposures, rising liability risk and shifting demand. At the same time, residential real estate portfolios face heavy challenges.

And with the surge in working from home, commercial real estate demand still falls well short of pre-pandemic numbers.¹ Retail has rebounded somewhat, benefiting from pent-up demand, but the transformation of the sector—think repurposing empty storefronts and turning vacant shopping malls into warehouses—will accelerate.²

In terms of risk, it wasn’t just COVID-19 that shaped the 2021 real estate market. Wildfires, coupled with an unexpected deep freeze in Texas, ate up a significant portion of property insurance capacity.³ Hurricane Ida alone packed a $25 billion punch.⁴

At the same time, in the shadow of the tragic Champlain Towers collapse and several natural disasters, residential property risk increased. As a result, real estate owners with multi-family high-rises in their portfolio must layer policies to secure even baseline coverage needs.

Because coverage is harder to secure, and policies cover less, many small single-property and large portfolio owners fear frequent and significant claims without adequate coverage during another pandemic lockdown or bout of civil unrest.

But some real estate sectors—entertainment, institutions and to a lesser extent, retail—are seeing improvement in business and insurance. Painting a picture of risk management and operational controls for underwriters is now essential to securing coverage.

Interested in learning more? Download our proprietary transportation insurance market and rate report to see the rate changes we anticipate in 2022. The report also provides recommendations on how to minimize your business risk and enhance your position with insurance carriers.

¹ VTS, VTS Office Demand Index (VODI) Monthly Report, August 2021.
² PwC, Urban Land Institute, Emerging Trends in Real Estate 2021, accessed September 17, 2021.
³ S&P Global, “As US wildfire threat grows, insurance capacity shrinks,” July 21, 2021.
⁴ “Hurricane Ida losses could reach $25 billion: Fitch”, Business Insurance. August 30, 2021.