Willis Executive sees Benefits to REITs from Excess Capital in Insurance Market

Joe Downey, EVP and global client advocate at Willis, joined REIT.com for a video interview during REITWise 2015: NAREIT’s Law, Accounting and Finance Conference held in Phoenix.

Willis is a leading global risk advisor, insurance and reinsurance broker.

Downey observed that the property insurance market is a particularly low-priced environment at this time.

“With returns down for so many different classes of investment, people have sought higher returns in the insurance market. Right now there’s a tremendous amount of capital chasing return in the insurance industry,” he said.

Asked how REITs should take advantage of the trend, Downey urged the sector to be “smart” with regard to how it presents itself to the insurance marketplace.

“As these greater pools of high-end capital come in they are seeking a pretty sophisticated set of data points from the REITs to be able to estimate what their costs should be… how much credit they can give them,” he said.

Downey also urged REITs to consider a wide swath of insurance companies, including those located abroad.

Meanwhile, Downey said REITs should be prepared for the point when capital exits the insurance market.  Downey pointed out that REITs would be advised to hold back funds that would be spent on insurance, and do other things from a risk management standpoint.

Turning to potential cyber liability issues facing REITs, Downey said the industry faces more of a threat from classified business information being stolen than credit card information.