The Crushing Rate Hike Reality Impacting Multifamily Housing Insurance Rates

[00:00:01] Welcome to the MultifamilyBiz PowerHour Webcast Series where insight meets innovation in the ever-changing rental housing market. Please welcome your hosts and industry experts, Kerry Kirby and Ernest Oriente. Alrighty, we are set and ready to roll for our MultifamilyBiz PowerHour educational webcast

[00:00:31] for those of you in the property management space and the multifamily sector. And for those of you who are industry vendors and suppliers who have a product or service you sell into the sector and want to be your best and do your best, as we get settled in,

[00:00:43] we're always going to encourage you to do what? Find a quiet spot. Be able to make and take notes. As you're making and taking those notes, we're transferring and infusing the knowledge. Simply stated, the coaching-coaching approach rather than a more traditional training approach,

[00:00:59] which means we would hope that you would get the knowledge. In the coaching model, we want to transfer the knowledge. You'll be able to use the things you learn today in our educational webcast immediately, a signature part of the work that we do.

[00:01:11] It's also not an accident that we don't have something on the screen that would simply create many tasking and multitasking. The very best in educational learning simply says as you're making those notes, you are maximizing your learning experience.

[00:01:25] With me is Kerry Kirby, the CEO of the award-winning 365 Connect and also the innovator and founder behind Multifamily Base. Simply stated, the largest media platform in our industry. Kerry, how about some opening words about all that you've got cooking?

[00:01:41] I'll say a couple of opening words about Power Hour. Then we have some fantastic guests related to our educational webcast today. Yes? Absolutely. First off, I want to thank everyone for joining us today. My name is Kerry Kirby.

[00:01:55] I'm the CEO at 365 Connect, where we deliver the world's most sophisticated, automated marketing, leasing and resident service platform to multifamily communities across the globe. Designed for renters, property management teams in today's changing world, our AI-enabled platformers utilize supplement staff, eliminate redundant tasks, and reinvent operational performance.

[00:02:23] Our innovations also include Multifamily Biz, the largest media resource in the multifamily housing industry. We provide news, resources and events to more than one million monthly friends, fans and followers. Multifamily Biz is also the host of the longest running webcasts in the multifamily industry.

[00:02:45] The award-winning Multifamily Biz Power Hour webcast series which you can find streaming everywhere, including Spotify, iHeart Radio and Apple Podcasts just to name a few. Be sure to check out 365 Connect.com to learn how we are leveraging our 20-year legacy of continuous innovation.

[00:03:11] And Kerry, always a joy and delight. What an amazing 17 years. You've been rolling along with our educational webcast. I want to say thank you to you and to your teams both on 365 Connect and certainly Multifamily Biz. It's a joy and a jet by way of brief introduction.

[00:03:26] My name is Ernest Orientine. My company is Power Hour. This is our 29th year coaching and working with industry leaders on both what? The property management side and the vendor side in 15 time zones globally. Always a joy and delight.

[00:03:42] Kerry, as you know, we have leadership academies that we started more than 12 years ago. There's a recruiting division of Power Hour. We help our clients drive digital success, more than 300,000 leads. And we have what? An M&A division within our company and organization.

[00:03:58] A signature part, Kerry, the work that we do is what? Our LinkedIn groups are more than 180,000 leaders with an annual reach of more than 10 million leaders and those engaged in what we have to share. So every time we come together to those of you who are joining us

[00:04:15] in our educational webcast, we literally bring two things, the telescope and the microscope. Telescope means we're going to do what? We're going to look out far and share with you the macro, the big picture of what's moving around in the world and certainly related to our topic today.

[00:04:30] But then we also bring you what? The microscope for the real-time next steps and action steps. So listen and watch as we move back and forth. Kerry and myself always have three specific goals whenever we come here

[00:04:41] together. Number one, new ideas. We want to share with you new ideas and best practices and the things that we anticipate as we go forward. We want to stir and spur your thinking related to what's new and have you stretch outside your comfort zone and outside your box

[00:04:56] and not only to stretch but to sweat, right? That's the essence of what new is about. Number two, if there's something that we covered in today's educational webcast that you and your team are already doing and deploying, then we send you what? A virtual high-five.

[00:05:09] It means you're literally matching the best practices in our space and sector. And the very last is the serendipitous. Kerry's talking about blue turtles. I talk about pink frogs. We have three amazing guests that are talking about zebras with or without stripes or some that have two tails.

[00:05:26] Whatever it might be, the serendipitous means other ideas will bubble up and other questions for you. So please know that that is one of our stated goals here today. Today we are talking about what? The crushing rate hike reality

[00:05:39] that is impacting the multifamily sector. Lots to cover here. And Kerry, as I pass it back to you, we have three fabulous guests that are going to talk about different aspects related to this. Yes? Absolutely. So Ernest, today we have an esteemed panel of insurance industry experts

[00:05:56] for a long-waited and burning topic in our industry. Let me introduce them. First up, Mark Ness. Mark is the founder of Weather Shield. They are a leader in continuous asset monitoring with a proactive approach to protecting their customer against negative financial implications

[00:06:19] of severe storm damage. Also have Colin Clayback, a partner with Vertus, an insurance brokerage and consulting firm that's a major player in the multifamily insurance space. And we also, rounding out our group, we have Kayton Tinklenberg. He's a licensed public adjuster with Swift Public Adjusters.

[00:06:44] They are a firm that specializes in navigating that clean process for their clients to maximize coverage and get their clients' properties back to the pre-loss condition. So Ernest, I'm excited to have this group join us today. They're going to bring a wealth of knowledge to the subject

[00:07:06] that has been buzzing across the industry for quite some time. I know you and I have been pinged on asking for some information on what's going on. So I'm thrilled that we're able to assemble this panel. Absolutely. Kerry, as you know, we're always inspired by those of you

[00:07:26] in our space and sector. You push us, you stretch us outside of our comfort zone to watch, to see, and to pay attention to what is happening in our world, not just where we are but where we are going. And this is really a big one.

[00:07:38] So Kerry, let's lean right in. What is the state of the market for securing insurance within the multifamily space and sector? What's happening in this area? Yeah, so Ernest, I'll just share what I know before we pull the panel in here.

[00:07:54] You know, the insurance market for multifamily housing is currently one of the biggest challenges that property owners in operator space today. Insurance premiums have been skyrocketing and I hear rates have risen as much as 50 to 75 percent. So markets, this is an uncontrollable expense.

[00:08:15] I know interest rates are being high, but you know what it is. This thing can turn on a dime. And these rates are affecting the net operating income of multifamily properties, which in turn is impacting property valuations, investor returns.

[00:08:35] The buy-sell side of transactions are seeing decreases in activities because deals just are not penciling out. I read an article recently on this. Ernest stated that underwriters are placing a greater emphasis on property resilience assessments, localized climate data, in building specific attributes to assess risk.

[00:09:07] So I know what some of those things are. I used my imagination on some. So, you know, we've got... I'm going to ping Colin on this one. You know, Colin, you guys, you all sit on the front line there

[00:09:23] on writing new policies and renewals and shopping the best rates you can for your clients. What are you seeing out in the world with insurance rates and both on new deals and renewals? Is there any hope on the horizon?

[00:09:42] Well, thank you guys, Carrie and Ernest, both of you guys for having me on here today. Yes, I do think there is some hope on the horizon. So I'm going to start off with a positive note. I mean, the facts that you mentioned over the increases,

[00:10:01] I mean, over the past six years really since Hurricane Harvey hit in 2017, we had Harvey Irma and Marina, Maria all hit coastal US, the US continent and US subsidiary down in the Caribbean. And ever since that time, insurance has done nothing but spike.

[00:10:28] I mean, I think two to five times depending on where you are in the country, you know, Florida is always tough. Texas, Colorado, California are always tough. But there has been kind of a change as of late. I think 2023 was the hardest win.

[00:10:52] We'll go on record as being the hardest property insurance market and hopefully the high watermark. Hopefully we're starting to turn it back. We've certainly seen that. We insured about 500,000 multifamily units across the country and this year has been much more favorable from a rate perspective.

[00:11:11] Now in loss affected assets or portfolios, we, you know, cares are still pushing hard terms looking for profit. But generally on newer deals, they're coming online either from development or even a new acquisition without loss history, loss affected history.

[00:11:35] We're seeing much more positive trends that we're not rolling. You know, this isn't Walmart. We're not rolling back to the prices back to 2017 or 2018 prices. But we have kind of seen, I think the high watermark this year now

[00:11:50] our fingers are crossed because we are officially in hurricane season. Hurricane barrel made landfall and last week and we're monitoring that and all the in OAA data that says that this is going to be a big year for tropical storms.

[00:12:11] So we're hoping that the in OAA is is incorrect, but I do see some positive trends in the future and what we've seen in the first six months of the year here. Hey, Kerry, I think I heard Colin say there's some hope, didn't he? Some, right? That's right.

[00:12:36] You know, I was talking to some operators in Florida when I was out at NAA and they were like, you know, I said, I've read an article. I actually get numbers insurance had gone from 700 to 1700 a unit

[00:12:51] and I was telling somebody that owns a good bit of property in Florida and they said, man, you know what? 1700 a unit would be a dream. That sounds great. Where can I get the access? The other thing that Colin wanted to ask you is, you know,

[00:13:11] I hear a lot from, you know, some of the smaller operators that say, you know, obviously bigger portfolios get better rates because I guess they're more diverse in different markets and they're able to spread that risk, so to say,

[00:13:31] or maybe the insurance company views it as spreading some of it and they tend to get better rates because they have a lot more property. So the little guys, you know, feel like they get, you know, clobbered I'll say by some of the rates just because they're smaller.

[00:13:54] Maybe it's a guy that owns two or three nice-sized properties. You know, say he's got, you know, a couple of 200 unit, 250 unit properties in Florida, so to say, but he's concentrated in the market. What can you share with us on a situation like that?

[00:14:13] Yeah, so the market over the past six years has kind of changed. Traditionally, the insurance marketplace has always kind of recognized and benefited economies of scale. As the market rapidly hardened, one of the things that we did

[00:14:33] for a lot of our clients was pull out the loss-affected areas. We did a lot of breaking up master programs and saying, well, these assets can either win by themselves better in today's marketplace or lose at less scale than the big master program.

[00:14:52] The marketplace is starting to, in 2024, a trend that we're seeing is that economies of scale are being rewarded again. This was, there was a lot of talk of this out in San Diego at the beginning of the year at NMHC.

[00:15:08] I heard the same NAA a couple weeks ago, but you got to understand it's clean economies of scale. So the losses, if you have economies of scale, but the portfolio looks unprofitable from an insurance carrier's perspective, they're not going to get the best deal.

[00:15:31] So it's, if you can consolidate either with a property manager, with an asset manager, even with other investors to try to create a little bit more economies of clean economies of scale, I think you're going to be in a better situation.

[00:15:51] You do see sometimes where there is loss-affected, you've got a portfolio of 5,000 units, you've got some dogs in there that had fires that had been hit by wind hail or a named storm, and the one-off owner who has something that they just acquired from a merchant builder

[00:16:13] is going to have way better pricing that that 5,000 unit portfolio can't touch. So it's situational, but I think it's always best for any owner to consider or an investment firm to consider is, what are your options? What's it look like together? What's it look like separated?

[00:16:37] And so that's many times how we're trying to approach things. So let's just pause. Kayden or Mark, any questions or ask Colin or insight you might share? Kayden, I don't really have anything at this moment. Okay, Mark, before we move through this point.

[00:17:03] No, I just know that there's a resounding frustration on the financial side of things, and it all seems to focus on insurance, and I know we're all hyper-aware of it, and we bring our own solutions, I think, in different angles

[00:17:17] and different aspects of this and how we can help. But obviously pricing is a big one. It's hard to ignore that. So, yeah, I think when we get into some of these other topics, it's definitely be something that we can talk to this session. Gotcha. Okay.

[00:17:33] Kerry, anything else to either ask or add to Colin's commentary related to this opening point? I think the only thing I would like to add to it is, you know, we have a lot of, you know, natural disasters from hurricanes to, you know, West Coast,

[00:17:55] you know, a lot of fires, and we've seen it, you know, burn down entire neighborhoods. And my understanding, I just want to get your input on this, Colin, is, you know, the insurance companies, even though you might be sitting in the market and you're like, wow, you know,

[00:18:16] I haven't had an insurance claim in 10 years, you know, I'm doing great, but your insurance rates are rising. It's because some of those insurance companies, there's two things happening. One, they're spreading that risk across every place they're writing insurance in.

[00:18:35] And two, they are maybe moving in and out of some markets from what I understand. So they might like, hey, I'm getting hit too much in Florida. I'm getting out of Florida, which shrinks the availability of companies that are writing insurance in Florida, which pushes the pricing up.

[00:18:58] Am I correct in those statements? You are 100% correct. There are macro and microeconomics at play, you know, California wildfires as you mentioned. Also, the state government having restrictions on how insurance carriers can operate there. Florida is trying to do the opposite, right?

[00:19:24] They're trying to spur more carriers to come into the market. I guess so many of them have left due to the unprofitable nature that they've had. The real answer, you know, is it comes down to the reinsurance and the reinsurance carriers.

[00:19:43] The reason why 2023 was so bad was because not only were the carriers who are directly writing the coverage to the insurance were taking on rate, but their costs increased overnight. Largely on 1-1 of 2023, the treaty reinsurance market renewals increased anywhere from 25% to 125% at that renewal.

[00:20:14] The loss history and the profitability, the reinsurance carriers had taken on so many hits and been so unprofitable that they said, guys, we can't continue this way. We need to make money. And so that's that reinsurance renewal. Last year, even on 2023, there were 20-plus billion

[00:20:36] catastrophic events that hit the U.S. soil. Roughly the same number as what happened in 2022 from a dollar perspective, but it wasn't as big of a shock losses. In 2022 we had Hurricane Ian that hit Florida at the very end of hurricane season and that November, October, beginning

[00:21:06] November timeframe and just totally devastated part of the state. That's what really was the last thing that the reinsurance carriers saw before they went to the reinsurance renewals. 1-1 of 2024 we saw much better terms. They didn't take that same aggressive tone and so it helped

[00:21:25] set the table for a better 2024. So, yes, it is certainly situational. There are challenges in geographic footprint or most of them. There are some soft pockets there but there is certainly some macro and microeconomics at play. Gotcha. We certainly appreciate your insight and, Kari, let's shift

[00:21:57] gears for just a moment here and let's talk a little bit about the methods that are available to monitor and mitigate potential asset risks. We've heard this as a pretty loud drumbeat in the market. It looks like there's lots going on in this area.

[00:22:15] I know we have some wonderful guidance that Mark will share with us but help us set the framework for this. What's happening related to this monitoring site? This is a big emerging market and it's third party asset monitoring.

[00:22:34] It's growing at a rapid pace and it's becoming key to not only identifying potential vulnerabilities with your asset but also early detection of problems that could arise from a weather event. So, just kind of give you a little case in point.

[00:22:55] We all live through weather events and you might have had a hail storm. These things in my head always come through at night. And the next everybody is like, man, it was bad weather last night. Yeah, and you just kind of go on about your business.

[00:23:12] But you could actually have damage to your property. It's not everything you can see, especially a roof. So let's just say you had roof damage. Hail can damage your roof. As time goes on that might get worse. You might have some structural damage that arises from

[00:23:29] not addressing that damage because again it's not always visible. And as you said, this is certainly Mark's wheelhouse and I want to hand this to him, but I want to hand it to him with a question. Mark, if I don't know I have damage, you know, I mean,

[00:23:49] I live in a coastal market so I've got a little experience in some of these things. So if I don't know I had damage and it turns into something bigger down the road, did I just lose my

[00:24:03] ability to file a claim as in I missed that window to file a claim because most people perceive damage like oh, I see something and now I'm going to file a claim and that kind of starts a clock. So give me your insights on that one.

[00:24:23] Yeah, a great question, a very relevant question. So thank you for that. Before answering, I think it'd be wise to frame this in the sense of when we talk about mitigating risk, we're really talking risk management and in the scope of insurance related multifamily investors and

[00:24:40] property managers, I really see three points of that that matter. There's your risk avoidance. That's just, you know, completely avoiding and escaping it if I'm afraid of bridges, well, I just never will cross a bridge, right? I'm avoiding that risk. There's the prevention and reduction side of risk

[00:25:00] and managing that. There's certain things I can take on. I can do and then there's risk transfer. I can just say now it's not my responsibility, it's yours and that's what insurance is. That's your insurance policy. Well, whether she'll falls into the space more of the

[00:25:16] prevention and reduction side of it. So a lot of our efforts try to be as proactive as we can rather than reactive. But you know when you look at an investor or property, you can't just pick it up and relocate it to a new hurricane prone area.

[00:25:31] We just had one that went through Texas. So as we look at that, you can't really avoid the opportunity of being hit by hurricane. But what can you do to mitigate those things? So the same is true for hail damage.

[00:25:44] So in that example, there are some factors there at play in terms of a hail claim or hail event and what you can do about it to mitigate your risk. But it all comes down to awareness of what happened, the severity of how bad it is.

[00:26:00] And then having that really good information to then make some sound decisions and then you can decide how your business needs to respond appropriately. Without that information, you're kind of in the dark. And I think historically there's a lot of misconceptions and understanding of how insurance works.

[00:26:17] We talked a little bit about it earlier when we were talking about, you know, what does, maybe what does a claim do to my insurance premiums? And I think there's some historical misunderstanding of how certain types of claims affect premium

[00:26:32] and do you lose insurance when they drop you. So all those things do come into play, but, you know, the question in the essence of it is, do I miss an opportunity? Every state and every insurance company, they have stipulations on that. Yes.

[00:26:49] So as the time goes on, you have less and less leverage on how you can respond on the claim as well. And I know, you know, in terms of what Caden does, he deals a lot with the back-inside of that where he's constantly dealing with challenges around

[00:27:04] some problems with the claim and how much time do we have left and, you know, what's the statute of limitations in this state? So I think he probably has some things to add to this as well. So Mark, there's a key thing I want to

[00:27:24] ping back on and then we'll bring Caden in. So you talked about kind of like three tiers of things, and one of them is, you know, your analogy, hey, I'm scared to drive over bridges, so I don't drive over bridges.

[00:27:39] You know, I have a fear driving over a bridge, so it's risk avoid, you know, trying to avoid that risk. Are you saying that, you know, there's maybe a program, hey, we're monitoring weather. There is an event coming. Is it preparing property or weather events

[00:27:58] when you see them coming? Is that kind of where things are moving and it sounds like if you had a program in place like that and you could relay that as well, then you could go to the local government and you could relay that

[00:28:19] as, you know, when time comes for insurance renewals, it might be an asset to you to have such a program. Is that your viewpoint on it? Well, absolutely. So if you think about it in terms of most investors that are in multifamily space,

[00:28:38] most of the time you're dealing with, your job is to put out fires figuratively, but you have a lot of times where you have fires. And I look at something as simple as the strategy of, you know, if you have wood mulch outside of the building,

[00:28:53] well then to avoid the risk of that catching on fire, let's replace that, let's put rock down. So there are some preventative measures and things that can be done, but when we talk about storms, you're absolutely right. You can't control when the storms come

[00:29:07] and what severity of damage they have, but what you can do is once an event has happened, the number of services that we offer is a 24-7 asset monitoring service where you don't rely on your local property managers

[00:29:19] who may or may not be there when the event happens to tell you that something is going on. And the other side of it is they're not trained to respond or detect or recognize what those signs of damage are.

[00:29:32] So one of the things we offer to our clients is just the awareness that event happened and on top of that, the actual physical onsite evaluation of the property post event to then give our interpretation and expertise on what we saw, how bad the damage is,

[00:29:48] and then our recommendation of what steps to take to move forward, understanding the parameters of what this loss could be financially. So that comes in terms of a report that says here's what happened on this day, here's how bad it was, here's some photos of the damage,

[00:30:04] and that's the key information that our clients really value and that they can go and look and say, all right, what's our deductible? What's a loss history at this one? How long do you plan on having this property in our portfolio? And then make a decision,

[00:30:18] does it make sense financially to move forward and pursue a claim or do these deal with it, the property on our own and make the repairs without involving insurance claims. But I think that the worst thing that could happen,

[00:30:32] and I see this happen to clients all the time, is they go to sell a property and in the due diligence period, it's discovered that there is storm damage at the property. And now here they are at the finish line looking to sell this property

[00:30:45] and are unable to do it at the amount that they thought it was valued at because the new buyer is now asking for a discounted price, right? So we look to use that information to be a proactive measure and say,

[00:30:58] okay, rather than if you're going to make the claim within six months, sometimes those claims take six months, within the course of a year, it may take that long before repairs even start. And so you can start moving down the path of getting this property restored

[00:31:14] through an insurance claim potentially and have the ability to not lose the financial side or have a negative financial loss to this property and just be completely unaware of it. Yeah. Yep. Certainly a wonderful service for property management companies and owners.

[00:31:38] What would be the risk to not working with your company? In other words, they're just going to go it alone and make mistakes or have issues that they shouldn't really be having if they were working with your company on that mark?

[00:31:54] Yeah, I think so because one of the things that we finally talked to prospective clients is that they don't know they need us until they need it. And that's one of the challenges is how do I convince you that you need my services

[00:32:08] until you're in the thick of it? And we don't try to scare people away and say, if you don't use us, this will happen. But our value is in the information, the experience that we have. I spent almost 20 years working for a top five insurance carrier

[00:32:25] and I know the ins and outs of all the property insurance side of the business, which is why it can help bring this information to a property investor and say here are some things that if I were in your shoes, I would want to know.

[00:32:39] So the way I look at it is that you look at everything as an investor through a certain lens and I look at everything through a different lens and by bringing my perspective to you, I can enhance the way you currently, your asset management strategy

[00:32:53] or your investment strategy even and take it to a new level. So I don't look to change anything or, you know, it's more of an evolution or an improvement on what we currently do. Not necessarily saying it's at a greater risk. You're at the same risk,

[00:33:10] but if you'd like to reduce that risk or improve on your economic opportunities at this property or this location, it's definitely something that we bring to the table and those solutions that we offer. Gotcha. Okay, let's see. Colin or Kayden,

[00:33:27] anything more to either comment on related to this or question for Mark? Yeah, this is Kayden. Mark is 100% on the money and you know in my sphere, the rubber really hits the road after a loss has happened, but the preparation and the anticipation for

[00:33:48] when losses are going to happen is what makes things a lot easier. Having the information, having the experts in place, knowing what your policy covers, that's what really makes the difference a lot of times on these disputed claims and you know there's not a whole lot

[00:34:07] that property owners can do to mitigate the high cost of insurance. You know there's a few things, obviously keeping your property well maintained and doing your due diligence with clients or sorry with tenants and making sure that they're not going to vandalize the property or be negligent,

[00:34:29] certify it, et cetera. But for weather events, other natural disasters, you can't pick up your property and move it to an area less prone to those types of things. But you can take steps and make preparations for when you do have a loss,

[00:34:46] that process goes much more smoothly and that's something that Mark and I both play a part in. Yeah I'm sorry, was that Mark? Well this is Mark, I just wanted to add one more point here and actually give some data to it.

[00:35:06] I think that would maybe carry a little bit of weight because in my experience and in both what I do today and in my previous life in the insurance world, what we found was a little over half of damage that happens from storm events goes undetected and unclaimed.

[00:35:24] So that means it's very likely there's a high percentage chance you have an asset today that has storm damage and you just don't know about it. Additionally when we talk about risk and the value of knowing these types of things and having the right experts in place,

[00:35:37] about 85% of claims that are paid out are underpaid to some degree by the insurance company which means that if you're just accepting the insurance settlement without having your own experts evaluate the scope of work and the value of that loss to make sure it's accurate,

[00:35:54] you're also losing financially. So it's important to know those things going into is not to just trust what the insurance company is telling you, get your own experts involved and let them have a look at it and say,

[00:36:06] all right it looks good or no we need to make some changes, this is accurately represented as part of the insurance claim. Gotcha, gotcha. Okay. Let's see, Carrie. As we come around the bend, any additional comments or questions for Mark? Yeah, I have some, you know,

[00:36:26] probably more than I need insurance insurance claim experience and I live in the New Orleans area had a fair hurricane of my day and you know, one thing I want to maybe, you know, we're going to get into claims in a minute

[00:36:42] but I just wanted to interject this maybe it's a cadence question but I'm seeing insurance companies a lot more sophisticated now, especially roof damage. You know, roof damage is so difficult and you know, they're popping drones up now, you know, there's like, man that drone reads your roof

[00:37:00] and and that's how they determine damage. Hopefully, you know, because I've had some experience with some adjusters hopefully that data is accurate. I don't know you know from that viewpoint and you're relying on an adjuster to tell you hey yeah, that everything's good up here, right? So

[00:37:28] I'm starting to see a lot more technologists want to get you know, Cayden's input on what he's seeing in that aspect on damage being surveyed. Yeah, absolutely. This is Cayden. Technology plays a huge part in insurance. You know, it's almost its own separate industry in sure-tech

[00:37:54] and obviously that comes over on the claims side as well be it with drones or other imaging and testing technology and yeah, it absolutely plays a part whether that technology can be completely utilized to replace the judgment of a human I don't think so yet.

[00:38:16] We're getting really close. There's companies out there that are using AI very widely in their claims and specifically their SIU Special Investigation Unit analysis to help theoretically weed out or detect fraud that may be happening in claims. So yes, tech plays a huge role in modern claims handling

[00:38:42] and I think it will continue to do so. It's our job to make sure that that tech is used correctly and appropriately and isn't abused. Perfect. I appreciate it. Ernest, good question. I'm going to go back to the way it's our next piece which is No, of course.

[00:39:07] Let's go down the path. Let's talk about what, let's get the insight here and Kayden will pass this baton to you but we're looking forward to talking Kerry as you know about what are the smartest ways to file claims and then how do we manage this

[00:39:27] and frame it and then we'll have Kayden share his insight with us. Okay. Yeah, I'll just kind of set the stage with a couple of things I know as I said I've been through a few hurricanes in my day so I could tell you a few things.

[00:39:41] One, and I'll let Kayden make sure I'm on the right path but documenting damage is just critical and I'm talking pictures videos notes dates times you know it's almost like it is the scene of an accident as much documentation you can do to me that's always been

[00:40:03] the key to the claim and then the other side of my experience is once I file that claim insurance company assigns an adjuster and that's where the rubber hits a road and I've always found that there's two things that happen depending on the claim

[00:40:21] they either come to you and say hey we're you know I guess they have kind of I call it a playbook here's the number we're going to pay you or they physically send an adjuster out to inspect that damage and in some cases you won't be happy

[00:40:39] because they'll be like they'll blame it on something else at your policy yeah it has nothing to do with I mean in my experience in hurricanes everything's flood right they want it to be flood because then it falls over the FEMA which is a government

[00:40:57] and this is where a lot of disputes happen which end up in litigation if you go to any state the litigation is crazy on hurricane related claims it's costly it's not only costly it can also stop you from getting your property back up and running because you're

[00:41:17] in dispute with an insurance company like my experience I'm going to write you a chat so public adjusters you know what you are a lot of people are not aware of what that is right I have hired a few in my day best thing I ever did

[00:41:37] but walk us through a little bit how that process works and you know in my experience why maybe calling a public adjuster might be the first call you make before you even you know you got some damage before you even call your insurance company

[00:41:57] and make a claim in my opinion my experience so walk us through the process let our audience know what is a public adjuster that may not know and how does that all come into play yeah thank you the simple answer is we're the experts as our name

[00:42:17] implies we are adjusters so we document prepare and present claims but instead of doing that on behalf of the insurance company as either a staff adjuster or an independent adjuster we do that for members of the public that can obviously be homeowners churches business owners

[00:42:41] but obviously investors as well and so probably the best comparison to the role that we play in the claims process it's think of us like a CPA or a tax attorney in the midst of an audit or a criminal defense attorney in the midst of a trial

[00:43:05] right like it or not the insurance claims process the modern insurance claims the SS is adversarial these are not your grandad insurance companies they are staffed with people who crunch the numbers and figure out the best way to be profitable and as you can see with

[00:43:29] the rate increasing the pressure is on and there's two ways that insurance companies can increase their bottom line take more in on the front end or lose less on the back end and what that means is paying less on claims now they have to

[00:43:49] do that in a manner where they won't be held accountable for it and in some cases that is legitimate ways to cut expenses make the process more efficient we talked about technology a little bit that's a big part of that but then unfortunately it's also incorrectly wrongly

[00:44:11] and in some cases in bad faith paying less on claims than they should or they know they should and so where the public adjuster comes in is in that process identifying and telling our clients the insured what they should be getting paid helping them through that process

[00:44:33] to make sure that the insurance company does pay that claim and if they don't that everything is documented so that they have a viable case that they can take the litigation if they choose to take the matter that far I'm sorry Arnaz go ahead No, no, please

[00:44:57] I was going to say that Kate's saying is absolutely correct in some of these catastrophic incidences the adjusters come out and unfortunately we don't want to think that but like you said it's not your grandfather's insurance anymore and it's like okay there's billions of dollars of damage here

[00:45:25] we need to mitigate, you know the insurance companies like we need to mitigate this best we can and you got adjusters that come out and try to in my opinion, in my experience push that damage elsewhere on Flutter or whatever so

[00:45:47] I think the key to the kingdom is you get somebody in the front end on your behalf that assesses the damage and says oh no here's a here's a damage report because the best outcome Arnaz said I think you can have an claim

[00:46:03] that you get this thing worked out and you're not sitting trying to bring this thing to litigation or sitting in litigation for a couple of years while your asset that may be badly damaged just further deteriorates Yeah, this piece about documentation

[00:46:29] you know, Kayden is so vital and key to hear this as we've worked in the sector for so many decades tell us from a laser focus what are the 5, 6, 7 things that we need to do in the first 8 hours, 24 hours just walk us through a stream of consciousness

[00:46:47] regarding that could you please Yeah, absolutely so it starts before the claim right before the event you should have all of your documents meaning your policy, your deck page, all of that information prepared for it to be easily accessed in the event of a disaster or an emergency

[00:47:09] and then secondly kind of to mark points you have to be aware that something is happening right so having a good loss monitoring process in place or having competent property managers, people that you can trust that aren't going to gloss over damages because it makes their

[00:47:31] job more difficult right and then once you become aware of a loss as far as being in charge of how to respond to that the first thing you want to do is provide prompts notice to your insurance company assuming it's a loss that your competence caused significant damage

[00:47:57] if you have something small that doesn't cause much damage maybe you should talk to a contractor and see what the cost is going to be first or maybe you should call a public adjuster or your agent someone to provide some insight into whether that's

[00:48:15] an event that should or should not be claimed at that point if you decide you do want to move forward with the claim my recommendation is to bring in representation bring in the expert and that of course is a public adjuster and what we're going to do

[00:48:33] from that point on is take over the communication of your claim with your insurance company we will have personnel on site to document all of the damage we'll gather all the necessary measurements you know if it's a water claim or a booster reading if it's a fire claim

[00:48:53] we're going to swab and test for contaminants all of that sort of stuff to make sure that our file is bullet proof everything that we do is anticipation or in preparation for a lawsuit because unfortunately a fair share of claims that are disputed are involved in the courtroom

[00:49:19] and if we don't have the moisture readings to prove that this floor, this material was wet our case failed so it's very important to have everything documented all the T's crossed all the I's dotted and realistically very few property owners even know of what they're supposed to do

[00:49:47] and so we gather all of that we have that kept all in our system by law we have to keep our records depending on the state for a number of years but then we package all of that up and we put together a holistic estimate

[00:50:03] for what we think the value of the claim is depending on the policy that may be valued at the actual cash value it may be replacement costs it depends and we submit that to the insurance company often times with a document that's called a proof of loss

[00:50:21] and that kind of satisfies all of what are called the post-loss obligations so it's everything that's required of the policy holder of the insured to, you know, uphold their end of the bargain as far as what they need to do when a claim happens from that point

[00:50:41] the ball shifts into the court of the insurance company to review all of that documentation we're supposed to review all of that in good faith if they have any questions or need additional documentation they can request that but ultimately they have to make

[00:50:57] a decision and they have to make a decision promptly and that's often times where things start to go off the rail so there's a couple books that have been written about this process delayed and I defend is the title of one of them and unfortunately that

[00:51:15] is a very common I don't know if I want to necessarily call it a tactic but a result you know a pattern that we see in the insurance claim process and we use state statutes certain triggers in the policy etc to try and get past that point

[00:51:37] and try and settle the claim and again if the insurance company doesn't want to come to the table or they're taking too long to come to the table or they're at the table but they're off or just you know isn't it

[00:51:51] that's when it's time to escalate the matter by either referring it to an attorney to go through litigation or some alternative dispute resolution method whether that be appraisal arbitration, mediation etc. So that's kind of a walk through in the typical claim process

[00:52:11] and you know obviously we're the conductors along that way we know every route to take every switch to throw what speed we should be going at all that sort of stuff Right, gotcha and just help us again maybe just in a very laser format how would somebody choose

[00:52:31] or know how to choose public adjuster? What might be the 3, 5, 7 things that they should do to make sure they're choosing the best order? Yeah so obviously first and foremost 46 out of the 50 states require licensing so make sure that the public adjuster is licensed

[00:52:51] in the state that the loss is occurring Right Try and determine how much experience they have and what kind of experience that is Right, someone who adjusts a bunch of single family roof claims probably isn't the best pick for an industrial manufacturing facility fire and then of course

[00:53:19] references right what kind of losses have they handled in the past or the client leaves with the outcome that sort of stuff So pretty much the same as any type of service provider Do your due diligence Alright let me just come back around the bend Colin or

[00:53:39] Mark, any additional comments or observations regarding what Kayton has shared? Yeah this is Mark here I love everything Kayton said and I just want to put it in a different perspective because if you think about the responsibility at your organization of what this falls on

[00:53:59] without representation or without the right experts and the strategy or the concepts around insurance companies pushing out the settlement it all speaks to a common theme of fatigue and that fatigue since then and once you get there your motivation is gone

[00:54:19] you're just to a point where you're like I'll accept whatever and that's a risk as well So having all those responsibilities predeligated and the relationships of your experts is so critical and I think you can see that in the examples of laying out exactly all the things

[00:54:37] that have to happen to be successful and making sure you have a success on your claim Got ya Okay let's see anything else? So Colin here I would agree with Mark and Kayden that preparation is key I have a team of experts in place ready to go

[00:55:01] at the time of loss is great it gives the insured and their broker an ability to hit the ground running and a public adjuster should they choose to hire one I did have a question Kayden you talk about significant damage I was curious as to

[00:55:21] what would assume that most of that work is more on catastrophic related weather related wind and hail, tornadic or named storm time is money in every scenario you're preparing as you mentioned poor loss what is the average size of claim that you guys are working on

[00:55:41] and what is the average timeline from data loss to check Yeah it totally depends on so many different factors we handle small residential claims at 20 and 30,000 and we handle eight figure claims as well and as you can imagine there's a wide range of variation in time and

[00:56:07] expectations throughout that whole process one thing that does come into play pretty frequently is the statute of limitations and the fact that there's a certain limitation so that is in most insurance policies state that you have a certain period of time

[00:56:27] from the date of loss to file a lawsuit and if you don't you lose the right to do so right so essentially the insurance company gets a get out of free get out of jail free card so some states allow the policy to dictate that

[00:56:43] and those states it's mostly one or two years other states have a minimum like Florida used to be three now it's down to two Missouri 10 South Dakota 6 so it just kind of depends a little bit there as far as how long are part of the piece takes

[00:57:03] generally we can get most stuff unless there's unique pieces unique aspects of the claim most of our stuff we're getting turned around and we're getting it in two to three months and at that point the ball is in the insurance company's court

[00:57:21] and they can either you know like I said trying diligently resolve that claim or they can delay the night that got you wow carry so much so much we could be here for days carry let's lean back right let's lean back and imagine

[00:57:41] the future right where are we going here related to property insurance especially as you look at it across the multi-family space let's sort of take a take a look into the telescope of the future okay we love looking through the telescope Ernest and our family certainly

[00:58:01] gonna have better insights and I you know where this is heading there they live and breathe that industry but just my two cents and I touched on a little bit earlier is technology you know I've been doing a lot of things with AI lately and I think AI

[00:58:17] is gonna play a bigger role in the insurance industry and be able to you know predict claims analyzes weather patterns and also one thing we touched on and it's a whole subject we'll have to come back is regulatory requirements vary greatly for state like some states

[00:58:39] they have so long to answer your claims and etc etc in some states I think California it's everything's equal so you could have a property hanging off a cliff on the ocean and one way up in the mountains it's not going to get touched by anything

[00:58:55] and they're treated the same on premium so I think technology is gonna come to well into play here it's sure tech is came put it and the other thing I'll leave you with before we turn over to the group Ernest and you and I

[00:59:15] recently did a webcast on this is housing affordability issue I mean when insurance gets out of site our multi-family operators have nowhere else they can do with that except move that cost along in the form of rents to try to have some recovery there so I think

[00:59:35] you know I'm looking to protect and help with housing affordability issues so from there let's Ernest I'll let you back to the panel and get everybody's in the item where's this going absolutely so Colin from the top give us your views of the telescope

[00:59:55] what does the future look like give us your perspective yeah I would say that the insurance marketplace is always evolving right and so from a pricing perspective what can owners do to paint a better picture to the carrier marketplace is going to put the people who are buying

[01:00:17] and using the insurance in the best position I do think and have already seen insure tech coming to this business we're trying to embrace it every day but we've seen carriers that have changed guidelines and said well we'll offer pricing at this level

[01:00:37] but we want you to use this property management software we want we want to have a approved vendor list that you can when you have a claim you can you're eligible for replacement cost coverage but it's on these select vendors to try to expedite the claims process

[01:01:03] from that standpoint there are several different evolutions coming through there there's new products parametric coverage as we talk about I spent a lot of time talking about the coast and tier one and coastal issues where deductibles have gone through the roof we saw deductibles

[01:01:27] in tier one up at 10% of insured value which is insane but we've seen a new entry into marketplace to help fund for those in parametric products that pay out based on limit you choose based off of wind speed or the size of the hail stone for

[01:01:51] parametric hail coverage and different things like that so I think you know the thing I think there's going to be a lot of technology involved I think that carriers are going to continue to evolve I think the brokerage space is continuing to evolve we're trying to underwrite

[01:02:11] on behalf of our clients to make it easier and expedite the process so those are the kind of things that I'm seeing firsthand and I would expect more of that into the future Appreciate your insight there Colin and Mark from your perspective as you look through the telescope

[01:02:33] Yeah I think it's 100% is evolving the one thing I've seen over the years regarding insurance companies is the ebbs and flows of it it always comes back and so whether you call it cyclical or like a roller coaster whatever it is it's still going to look

[01:02:51] the one thing I see with a lot of our clients in taking actionable steps to mitigate some of this is you know the use of some you don't look at it as technology but in terms of property restorations that we do when there is rough damage

[01:03:07] and hail damage is the use of a class 4 impact resistant shingle a lot of insurance companies will offer discount on the premium because of that type of technology used in that shingle so sometimes it's as simple as looking at as you acquire property or you start to spend

[01:03:25] money and cap X money on it and you want to put new riffs on well let's find a way to reduce our insurance costs maybe by choosing the right type of shingle so there is some technology on that side of it too to be aware Gotcha, thank you

[01:03:41] Mark from that perspective and Kate from your perspective as you look into the future in our space and sector your take Yeah, I mean I think we're between a rock and a hard place you know the the the climate is such that there have been

[01:04:01] a lot of events that have caused a lot of insured losses and you know there's a lot of contributing factors to that people building in you know less and less habitable location building costs themselves going up and none of that helps the insurance market

[01:04:23] you know you as a owner of a property in a you know relatively safe place safe from wildfires, safe from hurricanes safe from you know large damaging hail may go well why does that affect me well it's because you're part of a risk pool

[01:04:39] and the other properties in that risk pool you know are facing on average more risk and I think that's a large part of what what's driving up the cost is you know the overall market moving into riskier and riskier places and there's really not a whole lot

[01:05:01] that the average policy holder can do about that you know they can't you know tell someone not to build somewhere that can I guess if they're the government but you know you're largely beholden to what the rest of your risk pool is doing

[01:05:17] and you don't have control over that but what you do have control over is when a claim happens making sure that it's realized and my hope for the future is that the technology you know and the services provided help property owners capture the opportunity that comes along with

[01:05:39] and avoid the long-term ramifications of not capturing the claim on property that has been damaged gotcha listen guys so much insight so appreciate all that you've shared your prep for our webcast today lots that we've covered but before we come around the bend carry anything else

[01:06:03] staying closing related to this topic I know we've been extremely excited about the topic I know there's way more questions and answers yet what an amazing panel and loving their their insight but your observations as we're finishing up our webcast here yeah Ernest there's

[01:06:23] so much more here to unpack you know I have some notes this regulatory things we you know we didn't get a chance to get into and I definitely you know been grateful to this panel for coming today and sharing our knowledge would love to circle back with them

[01:06:43] and expand on what we started today because there's so much more here so I would love to come back at a later date and tackle some more of these issues because I think this is something our industry is just craving knowledge on this subject because they're all

[01:07:05] encountering it some of them getting you know battered by it and there's some deals not going through because of cost issues and it sounds like there's a lot here that you can do to mitigate you know where costs can go so I think

[01:07:23] it sounds like I could keep here in the word getting that narrative to the insurance company so I would love to circle back and this one mm-hmm yeah no listen a hundred and seventy hours later 170 plus what webcast later we've covered everything QR codes ADA

[01:07:43] AI more recently affordable housing you know we could go on and on and on but this is the first right that we've really leaned into this subject matter tells us that it's pressing it's important significant and here's what we want

[01:07:57] to know as we come to the end of our webcast and that is in the moment we finish this webcast the news will change again it's like a train pulling out of the station at 502 it was there but if 503 it's gone

[01:08:11] we will stay current on this you let us know tell us what your challenges are your opportunities are your concerns are you stretch Kerry and I we go way outside our comfort zone and then we bring together wonderful topics and wonderful guests in our educational program

[01:08:27] and Colin and Mark and Kate and thank you so much we appreciate your insight your information will live long after the webcast ends it'll live on multi-family biz across all of our social and LinkedIn sites as well and then please keep us current as you're

[01:08:43] seeing the world as well let us know if there's another tsunami we should be talking about please let us know so thank you to each of you all of you come into multi-family biz you'll be able to listen to this education

[01:08:59] webcast long after we wrap up and there's 170 plus more with topics that run literally a to z so thank you so much to all of you have joined us live who will listen to us long after Colin Mark

[01:09:13] and Kate and thank you so much and Kerry always a joy and delight to be connected thank you for listening to the multi-family biz power our webcast series with your hosts industry experts Kerry Kirby and Ernest or NT be sure to visit multi-family biz calm

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