Kairos

Here's the latest intelligence from the world of distressed debt. 282 banks are vulnerable because their commercial real estate loans make up over 300% of their total capital, and they also have a large amount of unrealized losses on their books. The profile: primarily community banks with less than $10 billion in assets, although 16 regional banks are on the risk list as well. Read the full story below. 

Do your properties offer internet as an amenity? The FCC is considering a ban on multifamily single-provider bulk billing for broadband, arguing that residents deserve a choice in who provides their internet. Opponents say that bulk billing allows internet service providers to better bear the cost of their infrastructure installation, knowing they will have guaranteed customers afterward. The FCC's commissioners are currently reviewing the ban but there is no indication of when they may reach a decision. More details at the link below.

New data from the National Association of Homebuilders (NAHB) demonstrates shifts in multifamily development trends at the start of 2024. The Northeast experienced a 64.5% increase in permits and the Midwest a 13.6% rise year-over-year. In contrast, the South and West witnessed notable declines, dropping 32.5% and 27.9% respectively. Despite this, the South and West still saw excellent representation amongst the top 10 busiest multifamily markets: New York, Dallas-Fort Worth, Phoenix, Austin, Miami, Orlando, Houston, Los Angeles, Cape Coral, and Boston. Visit the link for more insight from NAHB. 

Where should the typical real estate firm begin when auditing their cybersecurity risk? -Assess operational technologies and their internet accessibility—throughout your entire tech stack. -Address cybersecurity in vendor contracts and lease provisions. Do the proper due diligence to ensure the people using your space, or working on your space, aren't themselves risk vectors. -Conduct technology audits to identify vulnerabilities, even in seemingly isolated areas, like appliances. -Don't neglect the human element. Develop comprehensive security policies and training programs to mitigate a big failure point. -Obtain cyber insurance tailored to specific property risks - informed by your tenant mix, portfolio composition, and size -And of course, talk to an expert. The article shared in the top comment is an excellent deep dive into the subject. 

The risk of property damage from floods is rising. Looking at homes with federally backed mortgages alone, the Congressional Budget Office projects Estimated Annual Damage (EAD) of $9.4 billion for the period centered on 2020. This figure is expected to increase to $12.8 billion by 2050, assuming no changes other than climate. For the analysts out there, the present value of this EAD over a 30-year period is projected to rise from $190 billion in the 2020 period to $258 billion in the 2050 period. This illustrates the significant long-term financial impact of flood damage on homes with federally backed mortgages. What would you do with an extra $258 billion? Access the full publication below.

Question for the commercial brokers: What would you tell a client are the biggest insurance trends to watch in 2024? Increased premiums: It's what everyone is talking about. The big drivers here are more frequent risk events, frequently tied to climate change, as well as inflation. Properties in areas prone to floods, wildfires, and hurricanes will see the biggest hikes. Meanwhile, owners with well-prepared resilience plans may score discounts. Cybersecurity: Insurance policies covering cyber threats will become more critical. Again, insurers will increasingly look to their policyholders to do their own part in shoring up cybersecurity vulnerabilities Changes in coverage terms: Anticipate shifts in coverage terms, including limitations or exclusions for specific risks. Counsel clients to be meticulous in their policy decisions, even when working with longtime insurers. Tech tools to mitigate risk: Utilization of advanced technology for risk assessment, including AI and IoT devices, will play a bigger role in determining insurance premiums and coverage terms. Deploying sensors on-site may help policyholders keep rates down. Read more at the link below. 

"By nature, the insurance industry is particularly exposed to external factors like climate change, cybersecurity threats and an evolving economic environment. AI will offer more sophisticated recommendations for how insurers can prepare and protect against unpredictable events like extreme weather or unplanned policy changes. For example, AI models could use climate data like geography, temperature and historical weather trends to develop a predictive analysis of weather patterns, which will, in turn, enable them to make specific solution recommendations to a customer, like developing a three-month policy on flood insurance in anticipation of hurricane season." ~Nicole Carrillo, Managing Director, Financial Services at Workday In our experience, challenges like these can manifest in unexpected ways and quickly cascade from there, even in new properties with modern plumbing systems. A burst pipe could represent not just an insurance claim, but a hotel bill from a displaced resident, a bad review, and a non-renewing renter. Read the rest of Nicole’s take in the InsurTech Digital article linked in the comment below.

Jeanette Flory-Sagan, CRE, CCIM, LEED AP congratulations! Crew is blessed to have you and this honor is a testament to your heart to serve. At kairos we are also thankful to the time, talent, and treasure you’ve delivered as a senior advisor since the earliest days of our journey. We’re proud of you and wish you all the best.

Kairos is empowering global real estate with resilient and sustainable solutions using Semtech’s LoRaWAN chip architecture. From monitoring historic sites like Ghirardelli Square to high-rise multifamily apartments, our technology revolutionizes insurance interactions in the real estate world. The future of property casualty insurance underwriting models is on the brink of a transformative shift, and this is just the beginning. #Resiliency #assetprotection #leakdetection #insuretech #proptech #constructiontech #riskmanagement