August 5, 2022
  • August 5, 2022
  • Home
  • Property insurance
  • Briefing: The New Reality of Post-Covid-19 Commercial Property Insurance | Latest news

Briefing: The New Reality of Post-Covid-19 Commercial Property Insurance | Latest news

By on August 19, 2020 0

The news from Main Street is grim.

Every day, new ranks are added to the growing list of companies laying off staff as the coronavirus pandemic lockdown wreaks havoc on the economy and shopping habits, in particular.

Likewise, commercial office buildings remain largely empty as employees continue to work from home.

As the public health crisis recedes – for now – the economic impact of Covid-19 is still to play, and those who insure and distribute commercial real estate are at the heart of the crisis.

We could see dramatic changes in the real estate owner market over the coming months and perhaps even years to come, as commercial property portfolios diversify and long-term changes in the use of real estate assets. properties unfold.

Some of the issues they will face include change in use, companies needing to adapt their premises and the resulting change in risk profile, as well as the risk to properties that have been left empty either because staff works from home, or a business is no longer in operation.

A large-scale, long-term withdrawal of large retailers from city centers – like Birmingham – will lead owners to seek new sources of rental income.

One obvious way to do this is to convert commercial properties into residential apartments, a trend that was already prevalent before the pandemic, but could now accelerate, especially if it is supported by the simplification of planning rules by the government. .

Brokers will need to respond to these trends and discuss with their owner clients whether their insurance will match the new risk profiles of their premises.

For newly empty buildings, brokers will need to tell clients whether the wording of the policies is resistant to the change in risk.

Commercial real estate clients of brokers are likely to see their rental income decline over the next few months as the economic downturn unfolds, but the flip side is that low lending rates could encourage borrowing from homeowners looking to take advantage of the downturn. cheaper financing.

Every crisis has a positive side, and it will be the brokers and insurers who best adapt to the needs of their clients who will eventually survive and thrive in the post-Covid-19 world.

Ultimately, this is a rapidly changing situation and working with companies that understand and can respond to such changes will be even more critical for brokers to consider when choosing to place business on behalf of. real estate needs of their clients.