{"id":209,"date":"2024-04-11T15:15:18","date_gmt":"2024-04-11T15:15:18","guid":{"rendered":"https:\/\/iqeq.com\/ky\/insights\/advantages-of-captive-insurance-in-real-estate\/"},"modified":"2024-08-16T12:31:52","modified_gmt":"2024-08-16T12:31:52","slug":"advantages-of-captive-insurance-in-real-estate","status":"publish","type":"post","link":"https:\/\/iqeq.com\/ky\/insights\/advantages-of-captive-insurance-in-real-estate\/","title":{"rendered":"Advantages of captive insurance in real estate"},"content":{"rendered":"
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The global property insurance market is experiencing one of its most challenging periods in decades. In 2023, the estimated total economic cost of global natural disasters alone was USD$357 billion<\/a>, with private insurance entities covering an estimated USD$123 billion of that total.<\/strong><\/p>\n

The resulting hard market has prompted insurers to move away from blanket limits to more restrictive coverage, a shift marked by significant premium increases and reduced market capacity. Reinsurance costs have soared by up to 80%<\/a>, putting increased cost pressure on insurance carriers that get passed along to the insured.<\/p>\n

Against this backdrop, captive insurance solutions have emerged as an attractive option for real estate firms and investors looking to manage risks and control costs. By building a solid risk management foundation through captives, real estate firms can safeguard their profitability, mitigate increasing risks, and increase their level of operational control.<\/p>\n

What is captive insurance?<\/h2>\n

Captive insurance has been an option since the early 1960s, when regulated self-insurance emerged as a way to reduce reliance on the commercial insurance market. During hard market periods, commercial insurance is both expensive and reluctant to cover certain types of risk.<\/p>\n

Captive insurance is an alternative risk transfer (ART)<\/a> solution in the form of self-insurance, where a company creates its own insurance entity to manage its risks. This approach allows for greater control, customised coverage, and often significant cost savings over traditional insurance.<\/p>\n

Conventional insurance products simply do not cover the unique risks many real estate businesses face, making captives particularly beneficial.<\/p>\n

The shift toward captive insurance in real estate<\/h2>\n

The real estate sector is experiencing unprecedented challenges, all of which have impacted the viability and cost of traditional insurance options.<\/p>\n