View from Above: Inside the Real Estate, Community Association Umbrella Markets

The impact of today’s hard insurance market – characterized by higher prices, diminished capacity, and tighter underwriting guidelines – is being felt across all industry sectors and, depending on the class of business and its location, much more so than others. Susan DeCarlo, Vice President – Product Manager, Distinguished – provides us with a high-level view of what is taking place in both the Real Estate Umbrella and the Community Association Umbrella markets.

Distinguished offers multiple Umbrella Programs and covers a broad range of risks including but not limited to hotels, restaurants, community associations, apartment/rentals, and commercial real estate.


One area of the market-facing tougher challenges than others is the habitational sector, specifically apartments/rentals. Within the Real Estate Umbrella market, apartment rentals have been the hardest hit class of business, specifically in obtaining high limits. “In the habitational space, apartment/rentals have always been a tougher class to write than associations,” explained Sue. “Location; jurisdictional challenges and social inflation with views toward increased litigation and plaintiff-friendly juries, including the fact that juries and courts are placing a higher standard of care and responsibility on landlords and management companies for security and safety on the premises; broader contract interpretations; nuclear verdicts; and other factors all contribute to the challenges involved when underwriting and pricing coverage for apartments. As a result, we have seen markets exiting this class of business, reducing capacity, and implementing tougher Umbrella underwriting criteria and processes.” Distinguished recently made the decision for now to cease offering coverage for apartments/rentals in its Express Rental Umbrella program which is designed for low-touch, high-volume accounts.

While the hard market hasn’t impacted other business classes to the same extent as apartments/rentals, capacity, in general, is not as readily available. “With larger real estate risks, we have the opportunity to submit accounts to our sister tower, HLI.  For smaller accounts where the average premium is $2,000, $3,000, or $4,000, and too small for our sister tower, we will let agents know what’s available in the marketplace as an alternative for higher limits.”

Capacity, Pricing Vary for Community Associations

Capacity issues are also impacting associations, depending on the location. “In non-high-limit areas, capacity isn’t much of an issue as the preferred limits associations purchase are between $15 million and $20 million, which are available through our Express Umbrella Program. In New York where buying habits differ and associations are looking for $100M, $200M limits, they have options through our other programs to purchase these limits,” explained Sue.

The industry reports that Umbrella pricing, in general, has risen anywhere between 8% to double-digits on renewals depending on the account, its location, and risk profile.

Sue also noted that an emerging concern among not-for-profit condo boards is the uptick in D&O claims, which can impact the Umbrella policy.

Helping Agents to Navigate the Market

The Distinguished teams are reaching out to brokers to discuss accounts and answer questions about the market. “We’re calling brokers ahead of the renewal to get the information we need and to let them know what is going on in the market in terms of capacity availability and other issues so they can make an informed decision early on. “In addition, brokers are also reaching out to their clients to explain the shift in the marketplace and what it may mean for their renewal. It’s prudent to continue to educate clients and manage their expectations in terms of price increases and capacity limitations. Make sure the client is prepared for changes and is aware of why these changes are occurring across the board.”