The Property Insurance Market Has Hardened

In our February 2019 Industry Insight article, we looked at the insurance industry focusing on building resilience with those insured to be prepared for natural disasters. The underlying premise being that natural disasters will occur; it is no longer an “if”, it is about the when.

In that article, we pointed to the insurance markets hardening to face the pressure of mounting losses. We are now in the midst of a hard property market and the impact on renewals and premiums is certainly felt.

Characteristics of Soft and Hard Markets.

A strong economic climate, a favorable legal environment and/or few catastrophic events can increase insurers’ capacity, creating a soft insurance market. When the market is soft many insurers are competing for business and premiums are generally low. Insurers relax their underwriting standards and coverage is widely available. Underwriters are generally flexible and willing to negotiate coverage terms. Broad coverage is available with some extensions available for free.

A series of catastrophic events, a litigious legal environment and/or a poor economy can reduce insurers’ capacity to write new policies. The result can be a hard insurance market. A hard insurance market is the opposite of a soft one. When the market hardens, insurers tighten their underwriting standards. Some coverages may be difficult to secure as fewer insurers are competing to write policies. Premiums are relatively high and insurers are disinclined to negotiate terms. Broad coverage may be costly or unavailable but some coverage extensions may be available for an additional premium.” (1)

As the chart below depicts, we do have catastrophic events and their costs rising, which are having a direct impact on the insurance market hardening (2).

We are seeing the insurance market acknowledge the hardening of the property market and what that means for insureds, brokers, and property managers in property markets.

“At the end of 2018, the property market had begun to see some firming, and that continued into Q1 of 2019. As we move into Q2, this trend has not just continued; it has accelerated.”

“The message for retailers is that things are changing in property more quickly than expected, and the changes are deeper than anticipated,” says Harry Tucker, Executive Vice President and National Property Practice Leader for AmWINS.

Adverse loss development has been a catalyst in this acceleration. Two consecutive years with combined ratios exceeding 100% across the market has heightened the focus of management teams and underwriters to drive rate and reduce aggregate exposure. Increasing rates are creating a deeper and broader change in the market. The obvious tough classes – including frame habitational, recyclers, and open lot – were the first to be affected, but now the trend has crept into broader classes and non-CAT exposed business.

“Along with rate increases, we are seeing more tightened risk selection, reductions in limits, increased deductibles, and close review of policy forms,” says Tucker.

However, the bright spot for clients is that the market is still well capitalized. “Carriers still want to write premium,” says Tucker. “The difference today is that they are applying a level of underwriting discipline we haven’t seen in quite some time.”(3)

The below graph graphically depicts the pricing trends in property renewals (4):

As property owners and/or tenants, brokers, and property managers, we would encourage you to look at your insurance program against the backdrop of the increase in natural disasters driven by climate change and the changes to occurring as underwriters are dealing with these variables as they develop insurance premiums. You need to understand your exposure, your values, your risk management strategies and your policy wordings. Being forewarned, will assist you exponentially in the event of a loss.

Discuss Property Appraisal w/ one of our Pros!

Using Standard Unit Bylaws as a Risk Management Strategy for Buildings

What is a Standard Unit Definition?

A Standard Unit Definition is a list of what parts of a typical condominium complex could be maintained and insured by the condominium board. The Standard Unit Definition for your development will detail exactly what the Condominium board is responsible for, and not responsible for.

For example, a typical Standard Unit Definition for a residential development could indicate that the condominium corporation is responsible to maintain and insure the structure: electrical, plumbing, and HVAC systems; wall and ceiling finish such as drywall and paint; floor finish such as carpet or tile; interior doors; interior electrical, plumbing, and HVAC fixtures; interior doors, casing, and baseboards; and built-in appliances, etc.

In this example, the condominium corporation is responsible to have adequate insurance in place for those items.

The preceding is not an exhaustive list, and in fact, a particular Standard Unit Definition could include more or less components. For example, the Standard Unit Definition may include the drywall for the walls and ceiling, but not the paint that is on the walls and ceilings.

This is especially the case with Standard Unit Definitions for non-residential units. Quite often, a non-residential Standard Unit Definition includes the shell only, with the unit owners being responsible for all other components.



Do we really need Standard Unit Definitions in the Bylaws?

Our recommendation is YES, for a number of reasons.

Mostly it is about insurance. The condominium corporation is responsible to acquire and maintain adequate insurance coverage for all common elements, including the items in the Standard Unit Definition. Insurance for all other components are the responsibility of the unit owner.

Without a Standard Unit Definition, both the condominium board and unit owners would be uncertain about what they need to insure. This could result in overlaps in coverage, resulting in insurance levies being too high. Worse, a gap in insurance coverage, which is a significant increase in risk.

Another reason to have Standard Unit Definitions is that they set minimum quality and décor standards for all units. This is important to ensure that the entire development maintains its overall level of quality and consistent esthetics. Otherwise, individual unit Market Values could suffer.

Finally, some condominium corporations have used Standard Unit Bylaws as a strategy to limit corporation claims, which can affect their premiums significantly. This strategy can put more onus on unit owners to pay particular attention to their personal coverage and how that fits into the corporation’s coverage.

What are Betterments and Improvements?

It is important to note that Standard Unit Definitions do not include Betterments and Improvements.

Betterments is a term to describe when an owner has upgraded a component that is part of the Standard Unit Definition. For example, consider a residential condominium development where the Standard Unit Definition includes carpet floor covering, and a particular owner has replaced the carpet with hardwood. In a case such as this, the hardwood is the “Betterment”. The condominium corporation would be responsible to carry sufficient insurance to replace the flooring with carpet only, and the unit owner would be responsible to carry insurance to pay for the upgrade to hardwood.

Improvements are those components that are installed in addition to the Standard Unit Definition. This is quite common with non-residential units. For example, a Standard Unit Definition in a commercial office condominium unit might include only “shell space”. The unit owner would be responsible for the costs to install the interior development, and to insure the improvements.

Speak to us about our Standard Unit Definition services today!



Risk Insurance Managers Conference in Boston, MA – April 28 to May 1, 2019

The Suncorp Valuations team will be attending RIMS 2019, the largest Risk Insurance Managers Conference in Boston, MA from April 28 to May 1, 2019. Meet us there at booth #482, and enter to win our draw prize too! More info below.

Register for RIMS 2019 Now!

Event Link:

This is the preeminent convention and trade show for Risk Insurance Managers and Insurance Brokers from the US, Canada and internationally.

Find Us At Booth #482

We will be setup at booth #482, so come visit us! We are right in between booth 387 and 379. In the map, we are the top booth of the two between 387 and 379. See below for where we are in the exhibit map!

Exhibit Map:

Win Our Draw Prize!

We are inviting attendees to our booth, and announcing that we will have a substantial draw prize (right now we are looking at a video game or drone with camera). Visit us, and enter to win our draw prize too!

Our Event #Hashtags

Hashtags we are using throughout social for this event;

#AppraiserServices #ValuationServices #ExpertTestimony #FinancialServices #RiskControl #LossControl #RiskSafetyServices #LossSafetyServices

Agricultural Land Price Trends. Will Values Increase?

Agricultural land value trends are on the rise. As the graph below illustrates, the world population has increased dramatically since the Industrial Revolution, circa 1800. (1)

World Population Growth Chart

Will Farmland Price Values Increase Over Time?

The world population growth coincides with access to energy, which led to innovation in creating and managing food supply. As a full service appraisal firm with offices across North America and completing engagements worldwide, we are often called to assist firms with the valuation of facilities involved in food processing. As many of our clients have grown their facility footprint, we have seen dramatic jumps in the value of agricultural land that provide the inputs for their processing. Unlike new facilities, agricultural land cannot be created. Combine the population growth with the effects of climate change, and it is easy to see the trend for agricultural land values across the globe will continue to rise.

Agriculture Land Price Trends in Europe

Europe continues to lead the pace of growth in agricultural land values.

2016 National and Regional Prices of Arable Land

In 2016, the exchange rate for Euros to US Dollars was 1 to 1.24; accordingly 63,000 Euros (the benchmark price per hectare in the Netherlands) converted to $78,031 US Dollars. Converting hectares to acres at 1 to 2.5 meant that the land agricultural land value in the Netherlands was $31,200 US Dollars per acre. (2)

Agriculture Land Price Trends in North America

In the United States and Canada, we see the escalation in agricultural land values as well. For 2017, the United States Department of Agriculture shows the benchmark value across the country at $3,080 per acre, up from $3,010 per acre in 2016. (3)

US Chart for Average Farm real Estate Value Trends

In Canada, percentage growth rates for agricultural land continues to grow, taking the province of Saskatchewan as an example, you see the benchmark prices per acre trending up-wards. (4)

Percent Change In Farmland Values

Measuring The Risk of Farmland Ownership

Given the trend of rising agricultural values, it is interesting to measure the risk of land ownership. This graph illustrates the security of owning land in various countries as developed by Savills Research. They leveraged various reports and data sources to the lay the foundations of the matrix. Savills Research from 2002 to 2016 highlighted the strong and steady rise in the value of farmland globally. (5)

Farmland Risk & Value Scores

Agricultural Land Price Values Will Continue To Rise

We assert that world agricultural land values will continue to rise in the next 3 to 5 years, in particular in those countries where an adequate risk/benefit score can be achieved, such as shown by the above graph.




Gorgeous Farmland



Gail Tverberg (2012). How Energy Shapes the Economy. The Energy Collective Group

Sara Schafer (2018). Which European Countries Have the Most Expensive Farmland?

USDA (2017). Land Values 2017 Summary

Farm Credit Canada (2017). 2017 FCC Farmland Values Report

Savills World Research (2016). Global Farmland Index

The Insurance Market Is Changing

Natural Disasters Are On The Rise and The Insurance Market Is Changing – are you prepared?



The UN Office for Disaster Risk Reduction (UNISDR) has released its report on Economic Losses, Poverty and Disasters 1998-2017. The reports opening comments paint the reality of a changing landscape for the insurance market.

“If development and economic growth are not risk informed, they are not sustainable and can undermine efforts to build resilience. The economic losses which often ensue from the creation of new risk or exacerbation of existing levels of risk can have a significant human cost.” (1)

As the graph below depicts, the occurrence and the cost of natural disasters is increasing dramatically (National Oceanic and Atmospheric Administration) (2):


The implications of these natural disasters and their increasing frequency and severity has a material effect on the insurance industry. For the first time in several years we are seeing the signs of the insurance market hardening, this means you as property owners and/or tenants may face revised policy wordings and certainly increasing premiums.

The Canadian Underwriter magazine recently polled commercial brokers, they expressed that premiums are on the rise and there is concern among them about the implications to their clients.
“Ninety-one percent of commercial brokers surveyed by Canadian Underwriter reported seeing price increases in Canadian commercial property lines.

Fifty-nine percent of commercial brokers said higher prices in commercial property lines has had “some” impact on their clients. A further 26% described the impact as large.”(3)

The Canadian experience of natural disasters follows the pattern of worldwide losses, an alarming trend (McGillivray, 2016) (4):




As property owners and/or tenants, we would encourage you to look at your insurance program against the back-drop of the increase in natural disasters driven by climate change and the likely changes to occur as underwriters are dealing with these variables as they develop insurance premiums. You need to understand your exposure, your values, your risk management strategies and your policy wordings. Being forewarned will assist you exponentially in the event of a loss.

One of the best sources of information we have come across is the recently produced brief by BOMA Canada – their 2019 Resilience Brief. A very worthwhile read as you meet with your broker(s) to consider your insurance program.







Pascaline Wallemacq & Rowena House (2018). Economic Losses, Poverty & Disasters 1998-2017. UN Office for Disaster Risk Reduction (UNISDR)

NOAA National Centers for Environmental Information (NCEI) U.S. Billion-Dollar Weather and Climate Disasters (2018)

David Gambill (2019). What commercial brokers are saying about the worrisome market turn. Canadian Underwriter Magazine

McGillivray, G. (2016). Catastrophic Loss Trends in Canada. Institute for Catastrophic Loss Reduction

This Is NOT The Time To Appraise Your Tangible Assets

Picture This Scenario

A fire breaks out at your property and within minutes a major portion of the building and its contents are lost. The fire department responds promptly, but many of the assets not lost to fire are lost to smoke and water damage. Your initial reaction would be to contact your insurance broker. When they report the claim to the insurance company, an adjuster is appointed to handle the claim. The adjuster will ask questions such as; How much is the property worth now in terms of current construction? Without an up-to-date appraisal, you could be scrambling to try to establish replacement costs for your assets and possibly find yourself under insured.

You Are Responsible

In the event of any loss where an insurance claim needs to be processed, the onus is always on you, the insured party, to provide “proof of loss”. An appraisal provides that proof accurately and immediately, when kept up-to-date.


Do You Know The Current Value Of Your Assets?

If you are under-insured and suffer a major loss, this could result in dire consequences. Many property policies contain a co-insurance penalty. Alternatively, if you are over-insured, you are paying for extra insurance you cannot claim. An accredited appraiser can determine the replacement cost of your building and content assets, in accordance with your insurance policy.


Asset values are changing continuously

 Inflation can increase the replacement cost of your building;
 Certain building systems become obsolete;
 Buildings are expanded and renovated;
 Imported components (such as HVAC equipment) are subject to foreign exchange fluctuations;
 Machinery and other equipment are replaced, sold off, retired, or become obsolete (particularly with Information Technology).

READ: Cost Appraisals vs Value Appraisals – What Are The Main Differences?

What are the Benefits of an Insurance Appraisal Program?

 Up-to-date appraisal reports allow for quick loss settlements;
 Insurance premiums are based on investigated, not arbitrary, values;
 A reputable appraisal company backs what it says with professional liability insurance;
 An appraisal avoids any under-insurance penalties.


Did you know?

• Suncorp Valuations has been providing insurance valuations to its clients across the globe since 1960;
• We are the insurance appraisers of choice for some of the largest insurance companies in the world;
• We have expanded our service line to include value added professional services in the areas of loss prevention, including but not limited to playground audits, fleet surveys, custom premises liability and crime surveys.