Lloyd’s Analyzes Growing Coverage Problems of Insuring Vacant Property

July 29, 2008

In an article on its web site (www.lloyds.com), Lloyd’s looks at the increasing concerns over coverage for vacant properties. “As the economy worsens it’s expected that more and more businesses will fail, leaving commercial property owners possibly struggling to fill their factory and office space,” said the article.

“Empty buildings are a magnet for potentials risks such as theft, vandalism and arson, and as such, owners can struggle to find insurance coverage for their real estate if it is unoccupied. Vacant property is traditionally one of the most difficult risks to cover for the property sector.”

Lloyd’s notes that one commercial underwriting specialist, Evolution Underwriting, has launched a product to cater for the under-serviced vacant property market. Evolution’s “Vacant Property Protector” provides what Evolution describes as “a simple solution for brokers in a class of business traditionally regarded as difficult and complex.” The facility enables unoccupied or “silent” risks to be placed quickly and with full contract certainty.

Evolution notes that “brokers often find vacant property risks difficult to place as most SME insurers look to avoid this high risk class of business. The product also offers the financial strength and security of capacity provided by Lloyd’s. Each case is underwritten on its merits. This means Evolution is able to be extremely flexible in terms of pricing, policy conditions and even level of coverage based on the specific features of each risk.”

Evolution Chief Underwriting Officer, Paul Upton, added: “We wanted to fully understand this difficult and high risk area to enable brokers to provide a product that differentiates them from their competitors.”

The product has a range of features including; limits of up to £5 million [app. $10 million] with the option of handling larger risks and a client funded risk management, and a flexible pricing systems that includes perils cover for certain qualifying risks.

“We wanted to offer a full cradle to grave solution for our clients, which enables them to move from the vacant property cover to other property covers seamlessly if the property is subsequently occupied,” added Upton.

Source: Lloyd’s

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