Christian Hartman, AVP at Arch, and Steve Kelly, director at Alliant Insurance Services, participated in a video interview during Nareit’s REITwise: 2024 Law, Accounting & Finance Conference held March 19-21 in Hollywood, Florida.
Hartman and Kelly provided insights into the current insurance landscape for REITs, focusing on securities class actions (SCA) and emerging trends such as sustainability.
Hartman noted a 26% year-over-year increase in core securities class action filings, emphasizing a rise in lawsuits against traditional public companies despite declines in IPOs and SPACs. He noted that dismissal rates remain steady at 50%, yet elevated defense costs pose financial risks even for dismissed claims. Regarding REITs, he mentioned observing three core SCA filings in 2023 within the REIT sector, with settlements aligning similarly to non-REIT companies.
He also discussed the growing emphasis on ESG factors, noting increased regulatory and investor focus. He stressed the challenges posed by differing disclosure requirements across jurisdictions, which may strain resources and increase litigation risks.
On the insurance market side, Kelly discussed market cycles, highlighting a recent softening in the D&O (Directors and Officers) market after a prior hard cycle. He noted a stabilization in pricing for 2024, signaling healthier industry conditions.
Arch recently published a report detailing what companies need to know about new ESG disclosure requirements, and includes a comparison of recent disclosure requirements from the SEC, California, and the EU. Read the paper.
Arch is the endorsed primary carrier for Nareit Directors and Officers Liability (D&O) program, which offers Nareit members market-leading, broad REIT-specific coverage. The Nareit D&O program is anchored by Arch’s expertise and extensive resources, Nareit, and Alliant Insurance Services, which serves as the exclusive program administrator.