Managing commercial property risks with a long-term strategy

Long-Term Property Strategies for a Resilient Future is the focus of a new Zurich North America webinar produced in collaboration with RIMS. The program offers insights into why risk managers need to promote a culture of resiliency within their organizations, fostering a heightened understanding by all parties that the risks their facilities and operations face are changing over time. The webinar offers insights from Zurich North America’s Joffre Mishall, Head of Large Property, and Adam Hurley, Head of Property Risk Engineering, along with Gabriela Madrid, Director of Risk Management, Cinemark. The speakers focus on how a long-term property resilience strategy can help mitigate the impacts of growing natural CAT risks on commercial property.   

Moderator: Morgan O'Rourke, Chief of Risk Management and Director of Publications Risk &Insurance Management Services

Featured Speakers:

Joffre Mishall - Head of Large Property, Zurich North America

Adam Hurley, VP - Head of Property Risk Engineering, Zurich Resilience Solutions

Gabriela Madrid - Director of Risk Management, Cinemark

For additional insights visit Property Insights Collection | Zurich insurance

 (PLEASE NOTE: This is an edited webinar transcript, capturing speakers with natural speech patterns that may include incomplete sentences and/or asides, grammatical errors, verbal shorthand, and some statements that may be less clear in print.)

Webinar Transcript

Morgan O'Rourke - RIMS:

Hello everyone and welcome to today's RIMS webinar sponsored by Zurich Long-Term Property Strategies for Resilient Future. My name is Morgan O'Rourke, I'm the Director of publications at RIMS, the Risk and Insurance Management Society. And before we get started, I have a couple of notes as we go through this, if you have any questions, please put them in the question box. We will try to get to all of those at the end. We're going to save some time. What we do not get to the Zurich team will reply to directly if you provide an email address. Following the session, the recording will be available on the on-demand event page @rims.org. All downloads and contact information will be accessible to the sponsor. Alright, so we're going to get started. Let us begin. As you probably all know, the commercial property insurance landscape has become increasingly volatile marked by market uncertainty unpredictable, catastrophic event, catastrophic events, kind of like what we're seeing in Florida right now and now.

Morgan O'Rourke - RIMS:

So now more than ever, it seems that in a long-term, commercial property strategy is essential. So today I have some experts to discuss all these issues with us from Zurich is Joffre Mishall, he's the Head of Large Property. Also have Adam Hurley, he's the Vice President Head of Property Risk Engineering for Zurich Resilience Solutions. And joining us today is Gabriela Madrid, director of Risk Management for Cinemark, where you can come in, sit back and popcorn as it says on her screen there <laugh>. So they're going to share the point of view and we're just going to get dive right into it. Joffre, the first question I have here is for you, can you tell us why a long-term property strategy is essential, perhaps probably now more than ever in the past few years or so?

Joffre Mishall – Zurich North America:

Absolutely, Morgan. If you think about, we had this rate correction come through the market the last few years as everybody's been experiencing. And usually something like this usually lasts 12 to 18 months. However, it's the first time in my 36 years that we've seen a 26 straight quarters of rate increases. I mean, that's a tough rate environment. So, what are the factors that prolong this particular environment? You know, it all began when we were barely collecting enough premium to cover attritional losses, let alone large loss in cat losses. So we started seeing the rates go up, then we had the covid shutdown, and after that we had the Ukraine attack by Russia. This caused serious supply chain strains that we're stealing feeling today. On top of that, the reinsurance markets, which were lagging behind the retail markets, started correcting themselves as well.

Joffre Mishall – Zurich North America:

And then on top of everything during these few years the climate change, I call them the new climate change perils started becoming more severe and more frequent. And that is severe convective storms, which spin off tornadoes, hail, surface water, flooding. And again, with that, with those severity and frequency going up, it just didn't look good for in the property environment. It looked very volatile. You know, one of the things I did, I was out in Switzerland, and I had to do a presentation on some of the unique coverages we, or excuse me, the exposures we have in the United States. And what I did is I took the US map, and I overlaid, you know, our critical earthquake zones, and I overlaid the critical and named wind zones. And then I added the hundred-year flood, 500-year flood zones. And then on top of that, I started adding the new climate change perils, such as high severe zones for hail, tornado, and fluvial flooding, which is basically rainwater runoff or surface water.

Joffre Mishall – Zurich North America:

And when I was done, you know, at the end, 90% of the US was covered in red, which means basically, you know, we're all in a, in a critical zone, unfortunately, especially with these new climates change perils. And I didn't even put wildfire on there, which is another one we're dealing with as well as atmospheric river phenomenon in the West, which is dropping a lot of rain. So, there's a lot of things going on in the US and it really, my European counterparts we're realizing, wow, it is a tough right in the United States, but we still do it. You know, we, we know people need help. We know we need to have coverages there, so we're still writing in the United States. We just have to do it as best we can, and we need to work with our customers even more to help them through these, to make them more resilient to these types of swings.

Joffre Mishall – Zurich North America:

What are some strategies, you know, what are some things we can do to help iron out these rate spikes that happen? You know, one thing is important to equip yourselves with good management, risk management philosophy. That includes good solid human element programs, good maintenance schedules, make sure you have good vendor relationships, as well as continuing to invest in your risk improvement actions. These will help you overall flatten out some of those peaks and values that we see during these rate cycle trends. And know your CAT footprint, like I just discussed. You know, there's a lot more CAT into our critical wind earthquake and flood that we had before. So, we need to understand where you at, where are your facilities at in these, in this CAT footprint? And lately we've had the evolving risks. These are new exposures that present themselves all the time and we need to be ready for them.

Joffre Mishall – Zurich North America:

Some examples are solar panels on roofs warehousing, dent warehousing, where we're doing automatic picking parking garages because is on the radar now because the cars that are parked in there are no longer just steel. You know, they're full of plastics of all kinds, including fuel tanks. And now we've got the electrical cars coming in with the lithium batteries. And then, as I said before, severe convective storm is definitely an evolving risk the last few years here. I definitely have risk managers asking me, Joffre, what can, if I completed my risk improvement actions, would this give me rate relief? And I told them, absolutely it will. You know, so it it's what you do, what you invest in will definitely help you in these rate, these crazy rate environments. So I would say the last thing is have great communication with your insurance provider and broker partners. This will just help you prepare for these changes, help you gain some insights, you know, and help moderate some of these rate cycles.

Morgan O'Rourke - RIMS:

Interesting. A lot of different things contributing to this sort of environment. So Gaby, from your perspective as the risk manager here, does that all sound true? Are you seeing a lot of the same patterns that Joffre was describing, you know, from the sense of volatility? And how do you feel like it's going to continue to play out in the market, whether it's for your company or just any company?

Gaby Madrid - Cinemark:

Yes, I totally agree with everything that he said. When you're kind of seeing hard market, hard market, at some point you have to kind of ask yourself as a risk manager, like, I don't have any control over that. You know what I mean? It's, this is out of my control. I can only control what I can do internally, right? So that means with our subject matter experts in-house, like our facilities team and our construction department. So we're, so we look internally, and we look at our loss control efforts that make sure that they're enforced, tested and approved and also maintained. And so, as Joffre was mentioning earlier, your human element, I love human element and we have an awesome human element program, and so we make sure that those are updated as needed throughout the years.

Gaby Madrid - Cinemark:

But we're also doing things like right when hurricane starts, hurricane season, starting early June, or, you know, before that we're updating our hurricane preparedness information and making sure that the theaters are prepared for whatever's going to come their way. So, updating those procedures as well is kind of also ties into making sure that our loss control efforts are, continuously being worked on. Little things like routine and facility maintenance. Preventative is one thing that we always do as well is, you know, just simple things is with, our maintenance teams making sure, checking the buildings and having annual inspections and doing PM visits and making sure little things that are really don't cost a lot of money, like making sure that RTU clips are keeping, he HVAC system secure and stuff like that. So we, we look into a lot of, preventative and, proactive measures when the market is hard because there's nothing we can do, right?

Gaby Madrid - Cinemark:

There's nothing we can do with it. All we can do is just navigate it and then go back to the carrier and broker and showcase and let them know all the good that we're doing internally, which also are roofing projects. We have ongoing roofing pro projects, and we run all of our specs through our broker and our carrier, make sure that we're all aligned, and if they have anything that we're missing or any gaps that we're missing with those specs, you know, they give us that feedback. We also look at our programs. Is there an unofficial program that's out there? And what I mean by that is a lot of organizations have like a process in place, but it's not in writing, right? Like they're just kind of reacting to it. And, and then since then it's become habit while we looked at our programs and we're like, you know what?

Gaby Madrid - Cinemark:

We have something in place. Let's make it official. So, we'll create a written program in place and then distribute that to all the theaters and make it official, right? Which is also part of our emergency guidelines. We have a strong risk and facility philosophy. You know, we work, really closely together. I put them in front of Zurich all the time and to make sure that, you know, again, we're aligned with our processes and procedures. But I think what helps us also to navigate this hard market and to always be prepared for it is as Joffre mentioned, the vendors, we first off, our facilities and construction team is extremely tenured. They've been with us for like 15, 20 plus years. So, they know those buildings in and out. And during that time, they strengthen and foster such great relationship with our vendors and our mitigation vendors as well.

Gaby Madrid - Cinemark:

We build bunkers. So sometimes the hard market doesn't faze me because we do build bunkers. Our theaters are a structure within a structure, and even from a building standpoint got, you know, when I first met with our VP of construction, who is now retired, we're going through a renewal and I was trying to, you know, get him excited for this renewal. And I said, what do I need to tell the carriers? And he goes, Gaby, our buildings don't go down. We really build our buildings, so they don't go down. And they do not. So, that's why I say we're the new, we're the new Ford we're built to last. So with all that being said, yeah, we, lay all this message to our brokers and insurers, and we have a very open and honest relationship, and we communicate what we're doing, and if we're, if we're missing something, we're open to that as well. And so all of that has helped us navigate this hard market.

Morgan O'Rourke - RIMS:

Sounds great. I mean, I know that some of this is probably coming into play right now as we're speaking in Florida and stuff like that.

Gaby Madrid - Cinemark:

It is.

Morgan O'Rourke - RIMS:

You'd be able to get back online as quickly as possible, right? Yes. So Joffre, I think that, you know, a lot of the stuff that Gaby's mentioning is probably part of this, but I think, you know, could you expand on what might be needed for a long-term, commercial property strategy? Obviously, she's got a lot of the risk management elements, but there's probably some others. What can you, can you elaborate on that?

Joffre Mishall – Zurich North America:

I thought, Gaby did a great job explaining, you know, a lot of what we are we're talking about here, right? Good risk management philosophy is number one, you know, and a rock-solid management program that's got to be sustainable for a loss control approach. You know, key thing, just like Gaby said, human element program, she was talking about, you know, the monitoring systems that they have in the different things they're doing, you know, and you got to invest in your risk improvement programs. Believe me, I, we understand that you have a capital expenditure, right? You have a budget, you only got certain amount of money you can spend. So one of the key things is when you have your good relationship with your insurance providers, they can help you prioritize, all right, you know, what is going to give you the best bang for your buck when it comes to, you know, developing or using that CapEx in the, in a in a best way so that you can over time have a full investment, but, you know, get good chunks, you know, taken care of as you go to help your overall protection at your facilities.

Joffre Mishall – Zurich North America:

Also, you know, just, you just want to be able to show you're gaining insights when you're having close relationships with providers and you're showing that you have a long-term term sustainable commitment. You know, you don't want to appear as transactional, right? The other big thing about connecting with your risk manager, or excuse me, your insurance carrier and your broker partners is access to evolving risks, risks and trends. I mean, those are key as well. There's something new, like the ones I brought up earlier. There's just something new that hits the market and we all gotta jump on and make sure we understand it so that number one, we can convey this to our customers. Number two, help them develop solutions so that they can mitigate as much as they can on that exposure.

Morgan O'Rourke - RIMS:

Interesting. You mentioned as you, you mentioned in your comment there that sustainable loss control approach, that terminology seemed interesting. Can you describe what that entails?

Joffre Mishall – Zurich North America:

Key thing is stand on top of human element programs. And the other key here on that is practice your emergency procedures. You know, it's, it's interesting that, sometimes you put it together, it looks great, and you put it on the shelf and they start collecting dust, right? And then when the emergency actually happens, somebody's looking for that notebook. It's like, no, we need, you need to live that more, right? You need to practice it and go through a scenario. You can either do a desktop tabletop, or even actually physically do these things. You know, I had, when I was living in Texas, you know, there was a, grocery store chain, and they did a great job of, they would just shut down one store and say, you know what? We're going to plan for a flood emergency right now. And so they brought bags in, they sandbag, they did everything.

Joffre Mishall – Zurich North America:

They shut down, they got generators in, and they did everything they would have to do in case that situation were to arise. And it, you know, it's successful. So they actually demonstrated that they could do it. So again, good practice on your emergency procedures. Also take a holistic view, you know, what can you invest in that helps not only your property exposures, but it can also benefit any liability exposures you might have. Now, I always look at it this way, if you protect your buildings, your equipment, then more likely the benefit is a safer work environment for your people, you know, and then determine what is your new normal, you know, what is it that, what are the unique risks that you have that is not going to be normal and not an exception. You know, what are your evolving risks? And again, what is your footprint in the current climate change, cat perils, you know, what does that look like so that you can identify it, we can, you know, help provide solutions there.

Joffre Mishall – Zurich North America:

You want to develop a convergence of your property valuation, supply chain issues, natural disaster recovery events and economic pressures on your business. You want to bring that all together. You know, one of the things I didn't bring up was valuation as one of the issues that prolonged the rate environment. ' It wasn't really rate related, but values dropped off during the covid period, you know, and we had to, it, the last two years, the industry's done a great job getting the values back up. I commend my customers, they able to get the, the values updated and that sort, I know it did cost, you a lot because, you gotta get things updated and you to supply more rate to it, and it's more premium. But everything starts with that. We can't develop good loss expectancy and develop good exposure analysis unless we have good values. So overall, you know, loss control plan includes investment versus just waiting for the rates to come back down.

Morgan O'Rourke - RIMS:

Right. Sounds like it's a lot of active work. It's not just some set, forget, right. Yeah. So, Adam, I'm going to turn to you now Because you know, you got to listen for a little while now, it's your turn, <laugh>. So we're going to we're going to grab that thread about a loss control program. Could you outline what the key elements of a loss control program would be?

Adam Hurley - Zurich Resilience Solutions :

Yeah, I think, you know, building on what Joffre has shared as well as Gaby consistency is really the key driver here. It's, you know, all the things that Joffre just mentioned, taking that holistic view, understanding what your new exposures look like all really are the foundation of, of significant loss control programs. Knowing where your key exposures are, where you're most exposed, understanding what your own risk tolerances and taking actions to make sure that you're staying within, within that is going to be critical. And I also want to touch on, you know, what to do when something happens. Joffre mentioned human element programs and emergency response procedures. But really when something happens, those things get tested. And, and I think really having those things in place, being proactive in your review of them is super critical.

Adam Hurley - Zurich Resilience Solutions :

They need to be ready and tested you know, when something does happen, and inevitably, you know, people are going to experience losses. That's, that's the nature of the business of all business in our own homes. But report quickly, you know, claims teams Zurich and elsewhere have great resources available to help you mitigate as much loss as possible. Communicating early immediately following losses is key to minimizing the ongoing impact. I think as we see things like hurricanes come through and you know, it's easy to say, all right, we're going to be back up and running tomorrow, but that communication is key to make sure people are taken care of, the, the property and facilities are ready to open and you can move forward. One thing that I think gets lost at times and loss control programs is taking that extra step after an event and reflect on what really worked and what didn't.

Adam Hurley - Zurich Resilience Solutions :

Were the emergency response plans, hurricane response plan, fire response plan, were they effective? What were the holes that might have been identified? Is there a new exposure that, that you didn't really, you know, include in that plan? And making sure that you do the work post-event to understand how you can make those plans more effective and that response more effective moving forward. And really just try to prevent a loss similar to that as you move forward. We've talked a lot about human element programs in general, but really these are the foundation of any loss control program. If you don't have good controls around hot work management, water, liquid damage and other emergency response things like inspecting and testing and maintaining fire protection systems, these are all things that are low cost but, but can have a huge impact on likelihood and severity of losses.

Adam Hurley - Zurich Resilience Solutions :

We continue to see water, liquid damage being the most common driver of losses yet, they can be managed much better across the board. And I think taking the time to understand those exposures and how you can control them is a huge piece in preventing losses as we move forward as well. Gaby, you mentioned earlier you've got a great human element programs and, and a great way to not just manage them, but also manage the effectiveness of them. Can you talk a little bit about those programs?

Gaby Madrid - Cinemark:

To answer your question, we have a robust custom-made human element program, and this goes this goes way beyond my time. My predecessor did an amazing job, amazing, amazing job putting this together. And this has probably been in, in effect probably the past 15-plus years. And so what we've done though is that we've updated it, right? We've updated, we actually have it on our Workday platform, so all managers have to go through it on an annual basis. And we also are able to run reporting based on region and theater and look at the success rate of that. And our success rate's pretty good. I mean, I would say we're up there than 99. Okay. 95% completed annually. So they do an amazing job, and they know it's important, right? Because we have these huge buildings. And so the human element consists, it's a four-part program, fire protection, obviously, which is, which involves inspecting sprinkler control valves.

Gaby Madrid - Cinemark:

Weekly managers have to go out there and inspect the control valve, make sure it's on, and then how to properly report the impairment system to Zurich. And so we actually put like pictures in there to, so they know how to report it, when to report, and to also let Zurich know, Hey, you know, the impaired has been no, there's no longer an impairment. You can clear your records. It also includes implemented fire watch guidelines and a checklist. And so that fire watch takes place when obviously, the trigger it's triggered with fire alarms fire sprinklers or the suppression, or the suppression system is impaired. So that's when they utilize the fire watch. And we also have a hot work program that was pre a couple years ago. We updated it, to implement that. Our theaters don't do a lot of hot work, which is good.

Gaby Madrid - Cinemark:

I mean, it's very rare. If anything, we will have obviously vendors that come in and they got to abide by our program. We also have a hurricane protection shutter system that is also pretty custom to our theaters and our you know, coastal areas know exactly when to start putting those up and where to order them if they need more supplies. So it's a really good program that we've had that we have in place. And again, managers have to go through it, go do it annually through Workday and we can account to see who's taken the course. What we did implement speaking of liquid damage program is we implemented, that was the unofficial program that we had in place for several years, and we decided to really make it into, you know, a program and insert to our guidelines, which is our liquid damage program, you know, water intrusion.

Gaby Madrid - Cinemark:

But what we did is we simplified it, we had to alter it for our industry and not over complicate it. So what we did is we're like, okay, just identify what a water intrusion looks like, identify the class and the category know what to do, what precautions to take based on the water that's there, what PPEs to use, and then how to report it into service channel. And so that our guys on the other end know how which vendors to get out there and how to mitigate the process. So that's, I would say is our human element, but we also have other programs in place. But those are the ones that I can highlight right now.

Adam Hurley - Zurich Resilience Solutions :

Thanks Gaby. Yeah. And, just continuing, I think, really successful loss control programs really involve many, many partners, right? So risk engineers, account engineers underwriters, customers, brokers and risk engineers, I think sit in this unique spot to act as translators in many cases. It's really helped, they're close to customers, understand the business that they're in the steps that they've taken as, Gaby mentioned, they've taken these proactive steps to train staff. Taking that and translating that for an underwriter into what that means as the overall risk at, on an account, at a location. But also working with our underwriters to understand the pain points from an underwriting perspective, and bringing those back to, to risk managers, to brokers to figure out where we can best apply risk improvement opportunities. To fulfill not just the underwriting conditions, but also to minimize the likelihood and severity of any loss that might take place. So that continuous cycle of communication between the customer risk engineers, underwriter, broker really do and, and can have a material impact on a long-term risk improvement. And I think that the story across this whole presentation is really that long-term commitment to continuing to improve what the risk is what it takes to have long-term sustainable property insurance and, and partnerships over time.

Morgan O'Rourke - RIMS:

Yeah, it sounds like it definitely takes a village whatever that, that old saying. So Gaby, I was talking about partnership, and obviously you're partnering with, the insurers, these Zurich folks here. So how does having a good relationship with, our provider contribute to your, like, kind of evaluating and improving your risk exposure? And how does working with, say, Zurich in this case, help you set your priorities for your risk management program?

Gaby Madrid - Cinemark:

I would say we have a very strong relationship. And I think it started on the onset when Zurich came on board. And that was one thing that I worked really hard to coordinate with our internal teams here and Zurich, and just number one is building trust between my facility guys and construction and Zurich, because we have such tenured facility and construction people here, and they know those buildings like the back of their hand. And so when you have, a new pair of eyes, and bringing their recommendations or, suggestions, there may be a little bit of hesitancy, right? And so it was my job to make sure that say, Hey, we're all on one team. We're all one family. Zurich is an extension of Cinemark, just like our brokers an extension of Cinemark.

Gaby Madrid - Cinemark:

And to be able to build that trust and, to know that we are, in this together and, to also be honest and say, this is where we're at, this is what we can't, we can't do. But that's the first thing is that what I wanted to implement was having that trust with one another and two, so that when the recommendations do come up, we talk through that. I think one thing that helps is when the engineers or the underwriter have, they have a suggestion, then we want to know the why, what's the why to that, and then what's your success rate with that? Because if you can provide examples and, and you have a concrete understanding of our industry and how we operate and you understand our exposures, and then you can bring us the why and actually that you've tested and prove that product or whatever recommendations, suggestion you want us to do, we in turn can build a business case and, put that, like send that up the ladder because as you know, we have to get approvals for any suggestions or something that's going to maybe, require a high cost.

Gaby Madrid - Cinemark:

And so, the relationship is there to, so we can ask those questions and why, and even challenge Zurich, with specific recommendations that they have. We meet often, and we just had a meeting yesterday to discuss some options and what we can possibly do going forward. And so, I think it's all of all of that. What I just said is just having a understanding of our business and that they're just not a carrier. A carrier just prints paper and signs and issues, but Zurich is really a partner. It's a business relationship partner, and so I don't, so I think that makes a difference between our relationship versus just a carrier.

Morgan O'Rourke - RIMS:

Yeah, it sounds like that's, that's the sort of thing that gets the buy-in from, from your side and kind of makes the whole relationship smoother, obviously. Yeah. Like you said, no one wants to be told what to do by somebody from the outside, but if they trust where they came from, then that's, then you're good. What do you expect from your insurance providers in terms of, say, sharing insights on emerging trends or evolving risks? Is that something that you seek out from your provider?

Gaby Madrid - Cinemark:

I think it's really simple. Just keep us in the know, and they do a great job of that, you know, already. What's really important to me, and I think other risk managers is, you know, we all have a specific industry. We all have a specific industry. We all have specific exposures. The ideal ask would be if a, carrier or, Zurich can provide, upcoming trends like an upcoming trend report or something that's just designated and specifically for my industry, and then provide, products to that, right? But not just saying, these are the trends, you might want to do this and that, but really have like a almost like a plan, and maybe you do like a low medium to high plan, you know, like, this may be a little bit low cost or this may be medium to high, and then we can work through that.

Gaby Madrid - Cinemark:

I guess what I'm trying to say is just, to provide material that's specific to the organization and to our exposures, and then have a plan along with products, and then give us options, you know, low, mid, or high, and see what we can do to work around that. That's really it, I'm not that high maintenance. I may be even once in a while I can be, but just being in the know and then just keep it simple, there's a new trend, a simple report goes a long way. We are inundated with so much information and all the emails coming in. And so I really like that acronym kiss, keep it simple, stupid <laugh>. So that would be ideal to have. And so that's really all I require.

Morgan O'Rourke - RIMS:

That sounds, that sounds reasonable. Does that make sense there? Joffre and Adam? Sound good?

Joffre Mishall – Zurich North America:

Absolutely. Absolutely.

Morgan O'Rourke - RIMS:

<Laugh>, there you go. We didn't even rehearse that part. Excellent. We're going to shift to some questions. If any of you have any questions out there from the audience, please feel free to throw them there in the question box. The first question I'm going to send this to Joffre, so we know we need data for effective property risk management, especially at a time when you've got this whole NAT CAT is in transition and it's totally unpredictable, but all data is based on past events. So how do you use that most effectively help navigate a market like this that's in transition and looking towards the future when you're using past numbers, if you will?

Joffre Mishall – Zurich North America:

The key thing is, inconsistent, inaccurate, and incomplete data. They just meet, they could lead to wrong decisions by both the underwriting engineering, not to mention the risk manager who has to report into their own organizations. And this could lead to inaccurate coverage for the cover the insured as well as over coverage on some of the insured. It can also cause a carrier to take a conservative view of your program because, and it's not really optimizing, what the customer really needs to for a good insurance program. The number one data point is valuation. Everything starts with measuring the exposures. What is it that you're trying to, what is the risk transfer that we're trying to make, and having confidence in the numbers, having confidence internally as well as externally in those numbers to feel good that, hey, I'm dealing, I'm getting my best program insurance program developed for me.

Joffre Mishall – Zurich North America:

A key thing is the engineers need those values to determine loss expectancy to help shape the risk improvement plans and help you prioritize. And a key thing there is the BI values, having accurate BI values using BI worksheets if needed to better understand the results of claims experience, what you want to make sure you have a well-documented process and how your values are originated and how they continue to be monitored trended. So you can manage that process, supply chains and redundancies that are built into your value chain can help, remind underwriters that, if we have industry losses several times, equipment is a lead time item. You can't pick up a transformer that's, sitting on the shelf, you might have to wait 12 to 18 months to two years to get something of a pretty decent size, and outside of values, we have standard scope, but geocoding data, secondary factors such as window glazing or parapets, these are important for good modeling.

Joffre Mishall – Zurich North America:

Whichever tool you're using, I would just say overall, at the end of the day, we got to get more creative on how we share the data. Digitalizing the data is starting to enable that the customers can start directly sending their data integration into the, coming from their REMI systems via API into our systems, whether it be the broker systems or the carrier systems. If we've got to share documents through email, you know, we still need to either manually rekey or upload these, this data in order to get it into our various systems, with an introduction of API, we can look into our various systems being more efficient with the data collection, he reconciliation of the data, and just avoid to minimize a lot of the manual intervention that goes on with the data. So I would say, key thing with data is, just making it flow back and forth is as efficient as possible,

Morgan O'Rourke - RIMS:

Right? And that's key. I mean, there's a lot of data, so finding the stuff that's useful is definitely key. Next question, Adam, what are the, key things that company's leadership, the CEO/CFO, or the head of risk management or whomever needs to consider to develop a plan for long-term sustainable strategy for commercial property insurance?

Adam Hurley - Zurich Resilience Solutions :

I really think this comes down to, to a few things. You know, really never stop improving. You need to have a continuous review of what your exposures are, where they're coming from, what controls are in place to manage them. A keen understanding of what your tolerance for that risk is. You know, Joffre talked a little bit about valuation and things earlier that that's really also helping you understand what kind of risk, should be transferred, what kind of risk needs to be improved out of the system, and what kind of risk, needs to be retained and, and obviously that that environment changes over time. Continuous review of your comfort and understanding of those exposures is going to be critical. Staying consistent in your effort to improve regardless of where you are. That commitment shows through. I think, you know, Gaby and Joffre both have mentioned that that commitment to no matter where you're starting from that commitment to growth and improvement in the risk, leads to better outcomes over time. I think, you know, that's without question, carriers see that, risk engineers see that. That's typically reflected in the insurance buying process. So I think at the end of the day, you have to know what your key exposures are and be working on plans to continuously improve those over time. Okay.

Morgan O'Rourke - RIMS:

Makes sense. Another question for you. Can you describe maybe some interesting or innovative kind of ways people can safeguard or companies can safeguard commercial properties?

Adam Hurley - Zurich Resilience Solutions:

Yeah. We've seen we've had some interesting times as of late with, with hurricane Helene and, obviously this latest hurricane. One of the areas we're seeing a ton of development and a ton of opportunity, I think is in flood prevention. We've, many of us have seen the aqua fence that Tampa has installed around Tampa General Hospital to hold back the sea from coming in the front doors. Those sorts of tools are becoming much more common. The applications of them are spreading. As Joffre mentioned earlier, pluvial flooding is increasingly more common throughout the country as development continues to create less space for water runoff to happen to overtax, your older domestic water systems in many populated areas, those sorts of tools whether they're temporary, like the aqua fence or more permanent automatic sort of flood doors and flood gates, I think this is an area where there are many more applications than they're currently being put to use for.

Adam Hurley - Zurich Resilience Solutions:

Understanding the exposure from flood especially pluvial flood, I think there are many more opportunities for things like floodgates, flood doors, automatic flood doors for those more pluvial, fast type flooding. But obviously the manual installation for something obviously around Tampa as we've seen the last couple of weeks. Also I would say simple things. We've seen technology in the leak detection space, you continue to evolve water damage again, we mentioned earlier is the most common sort of loss in softer occupants that we see. Leak detection, temperature monitoring, automatic shutoff valves can pay for themselves pretty quickly in a simple single loss. Taking the time to understand that technology, where it might be useful in your, your operations, I think is, is a great way to, spend some time and energy here in the near future.

Morgan O'Rourke - RIMS:

Okay, interesting. Yeah, that aqua fence is definitely unique. It's getting a lot of

Adam Hurley - Zurich Resilience Solutions:

Had some good advertising these last couple weeks.

Morgan O'Rourke - RIMS:

Unfortunately, having to use it is not what you want to have happen, but it's good it's there, right? I have a question for everybody. You can all kind of chime in on this one if you, if you have something to say. So as Cinemark or Zurich clients, have you determined an effective way to monitor or receive notifications of active wildfires near your locations or insured locations? This, individual said they seen a lot of state by state databases, but what have you, what's your experience with that along lines of wildfires?

Adam Hurley - Zurich Resilience Solutions:

Yeah, I mean, we, go ahead, Gaby.

Gaby Madrid - Cinemark:

Thank you, we have a program that we're on, it's called, I think it's Egan or Egen, it probably called Eagan, I don't know if you're familiar with that. And it, what it does is that I, now, I've seen it a lot for like the flood and, and wild, storms and such, and I believe it does capture the wildfires. And so we, get notified in emails of where, the potential threats, the weather threats are coming, and then it has a list of all of our theaters and the potential exposures with the, the cost associated with that. The TIV and it just, it kind of lays it all out. And so those notifications come in quite frequently, so that may be something you want to look into. And if you want to email me, I'll give you the name of the product.

Morgan O'Rourke - RIMS:

Excellent. Adam, Joffre, you have any other thoughts?

Adam Hurley - Zurich Resilience Solutions:

I think that, there's products and services out there that I'm sure you know, Gaby can share as well. It can be a little state by state. I would say that right now some of the most updated up-to-date information is coming directly from state by state opportunities, but more and more you're seeing, again, the aggregation of that data on larger platforms. I do think we can point to some products or services that are available. But certainly there are now the aggregators in place that help operations that are larger and have many more opportunities for exposure throughout many states at one time.

Morgan O'Rourke - RIMS:

Excellent. Anything to add? I think we got that.

Joffre Mishall – Zurich North America:

That is where I pick up the phone and call Adam Morgan.

Morgan O'Rourke - RIMS:

That's kinda what I figured,

Joffre Mishall – Zurich North America:

<Laugh>,

Morgan O'Rourke - RIMS:

That's why we let Adam ask first. So Joffre. I'm going to give you a question then, since they handled the last one, now it's your turn. So considering all the recent catastrophes, what do you think your forecast is for the rate trends? What's this going to do for rates throughout the next, you

Joffre Mishall – Zurich North America:

It's amazing, Morgan, a couple weeks ago I would've had a different answer, obviously, you know, right? Unfortunately the past couple weeks, we were seeing the hyperactive hurricane season that was predicted, are these market chain events? We're not going to know that. It's way too early to tell, but it does remind us that, property's volatile and it, as it as it always is, and it shows you how fragile the commercial property environment rate environment can be. And we still got six plus weeks to go in this hurricane season. And I know I keep repeating myself, but I always want to remind people that we tell our insurerds, invest in resources to develop and update the sustainable human element programs, as well as invest investing in your human, your improvement actions. You know, it only takes a hurricane or two to put you back to a situation where we gotta explain double digit rate increase to our CFO.

Joffre Mishall – Zurich North America:

So again, how do we flatten out these rates as best we can during these cycles? We know you have capital expenditure budgets, so what can we do to work with you and prioritize these improvements that give, you the optimal investment to help you flatten out these rate cycles a bit more. Again, if you got a highly protected risk, you're going to see a much more moderate rate than you are if you're, if you're not. We still have other areas of concern that we're looking at that are new due to this climate change. We got atmospheric river phenomena that goes on in the west, dumping heavy rainfall on the west coast, and we still have severe winter storms that we've had at least two in the last three years that have caused a lot of damage throughout.

Joffre Mishall – Zurich North America:

So there's just a lot of things going on. And again, when it comes to communication with your carrier, communication with your broker, making sure that the risk engineers are understanding what's going on so that we can talk through these things, develop solutions, and really do the best we can. Because again, it's, hard to predict what's going to happen with rates, especially after these two events. But there's ways that you could flatten that out, you know, with the climate changes. And we live in a very dynamic CAT environment right now, and rates are very sensitive to the environment. So, good communication with your carrier and your brokers is key.

Morgan O'Rourke - RIMS:

Makes sense, along with a solid risk management program like Gaby was describing before. Yes, that, that'll help. Thank you. If there's no more questions, I'll give anybody out in the audience. If you have a, question, throw it in there. We'll answer it. Otherwise, I think we may be at our, at our end here, folks, and that's, that's not a bad thing. I think this is very informative. I hope you guys all enjoyed it. I think it was great. I want to thank Joffre Mishall and Adam Hurley of Zurich. I want to thank Gaby Madrid from Cinemark. Thank you for your time, for your expertise. You guys are great. If there's any other questions Zurich answer them offline. And a copy of this webinar will be available@rims.org within a few business days, give or take.

Morgan O'Rourke - RIMS:

If you want to hear more from Joffre on, he's going to be on RIMS Cast, which if you want to access that, that's at that's rims.org/rimscast, check that out. So our podcast, and if you'd like to hear more on property risk and rate trends, Joffre and Adam will be joining Zurich's Head of Middle Market Property and Grace Ries for Zurich's Future of Risk podcast. That's on October 16th. You can find that and more on zurichna.com. And please follow Zurich North America on LinkedIn and please consider joining us in Boston for the RIMS ERM conference. That's on November 18th and 19th. For more information on that and if you want to register, please go to rims.org/ermRM2024. I hope to see you there. I'll be there. Maybe I'll see you there too. So, once again, I want to thank Zurich for sponsoring this webinar. I want to thank all of our panelists for sharing their expertise. And most of all, I want to thank you, the audience for listening.