During the past few years, commercial real estate insurance premiums have been on the rise in Europe. These price hikes have been driven by the growing number and severity of fires, floods and other extreme weather events; the rising cost of repairs and reconstruction; and more extensive coverage demands by mortgage lenders.
While premiums have not reached the dramatic levels seen in the United States, where property insurance costs have surged by 9.7 percent annually since 2017, according to Moody’s Ratings, European price hikes have still been substantial enough that investors are starting to look for ways to limit the pain of further increases.
Part of the challenge for investors is that property insurance costs are not a risk that is easily hedged. “One important thing to note is, as an investment manager and a real estate investment manager, we’re making bets for years at a time, buying assets, whereas insurance is a one-year premium,” says Laura Craft, gl
