COMMERCIAL LINES
SUBMISSION QUALITY IN REAL ESTATE PORTFOLIOS: THE GOOD, THE BAD AND THE UGLY The insurance industry has faced the most significant digital revolution in the recent decade, completely changing how real estate portfolios are underwritten, bought and sold. In a hardening market, with narrowing carrier appetites, this puts pressure on real estate transactions to be adaptive, competitive and meaningful with terms and conditions provided. The most significant barrier to meaningful terms and conditions is the quality control of submission data between parties. A quality submission, or lack thereof, could make or break a business relationship or a sale between parties. How does the quality control of submission data play such a pivotal role? "It starts and ends with a good submission," says Joe Quarantello, senior vice president, Risk Strategies. Submission quality for a risk sets the foundation for a win, whether it's for a broker to an insured, an underwriter to a broker, customdesigned technology systems for underwriters and brokers, legal team to brokers, and so forth. The revolution of technology, constant quality control of submission data, and the heart of insurance— utmost good faith—are fundamental to creating favorable outcomes among partners in real estate transactions. A group of experts answered the burning questions on submission quality in real estate portfolios.
Disorganized Data
In an airing of grievances at an underwriter's Festivus—see “Seinfeld," season 9, episode 10— the most pronounced undoubtedly has to be: Why does the schedule of values (SOV) never match the environmental site assessments? The amount of time and energy that all parties spend reviewing and analyzing data in submissions is highly inefficient. “I really think that people in the real estate portfolio world for environmental insurance spend half their time battling organization of the submission," says Michael Gill, Partner, Synapse Services LLC. “This has been an ongoing issue in this space for as long as I have been in environmental insurance."
22 | MAY 2022 |
wisconsin INDEPENDENT AGENT
The disorganization of data is one of the biggest barriers to thoughtful terms and conditions. How can the most crucial part of the submission be given the least amount of time in a portfolio presentation? We have all heard the term “time is money," and when accessing a deal or opportunity, presentation is everything. Thoughtful presentation of data by default shows receiving parties the seriousness and professionalism of the presented portfolio. In transactions like real estate portfolios, there will always be teams of experts on the opportunity. An organized presentation of data is the equivalent to dressing for success. Equally, the result of an unorganized submission with a lack of data can portray a lack of seriousness or indicate a lack of controls in place to receive the necessary data to offer the best terms and conditions for that risk. A great rule of thumb is to lead with your best submission foot forward.
Industry Experience
This isn't to say that meaningful terms and conditions are not given ample consideration by underwriters, even if some submissions resemble Swiss cheese rather than a real estate portfolio. Industry knowledge and experience play a crucial part. “In the past, underwriters understood these real estate portfolios' risk historically and industrial usages were underwritten to that historical knowledge. But with emerging contaminants, you are also going to get more questions," says Hiral Shah, senior vice president, Environmental Sompo Global Risk Solutions. For example, different kinds of industrial use indicate potential exposures that need to be underwritten. “Many emerging contaminants are changing in the marketplace now, not just the usual ones we hear about," Shah says. “Today, there's more of a renewed focus around the tenant uses, what kind of tenants are being brought on, [whether] they have environmental insurance in place—that data is even more pertinent now to the underwriting review."
