Willis recently announced that it has expanded its real estate team - moves “intended to strengthen the firm’s capabilities in helping clients manage and mitigate risk across property portfolios.” The moves come on the back of a rapid evolution in the real estate landscape, where sustainability and innovation are reshaping risk dynamics.
Paul Turnbull (pictured left), managing director of real estate at Willis, explained “an increased focus on sustainability, in particular transition and physical climate risk, is one of the recurring themes for 2025.” He added that “data centres are likely to be the largest single growth area with investment in build-to-rent also remaining strong.”
Risks are changing in real estate because the landscape of development is changing too. Pete Hopkins (pictured centre), executive director of real estate at Willis, remarked that “traditional commercial developers are branching out into the residential space.” He noted that this is driven by “the lack of demand for offices following COVID and changes to work practice,” alongside the housing crisis. Hopkins added that leasehold reform is now a “key factor” with “greater focus on transparency, placement and fair value for leaseholders.”
Liam Hebron (pictured right), meanwhile, director of real estate at Willis, believes that more developers are also incorporating sustainability into projects to “improve the ESG ratings of a building” and “diversify revenue streams”. Hebron said this includes “renewable energy in core designs”, “greywater systems”, and data centres that “repurpose excess heat”. RICS’ sustainability report also noted “ an increase in occupier and investor appetite for green buildings” in 2024.
Climate change is also escalating extreme weather events, heightening insurer exposure. Hopkins noted that flood risk “has been very topical for a number of years and likely to remain under the spotlight with climate change.” Insurers have also responded with flood mapping tools and niche offerings like “flood excess insurance”, Hopkins said. Hebron added that “climate-focused risk management tools such as mapping software” also help navigate this exposure. According to an Aviva report, “40% of UK homes experienced some form of extreme weather impact over the past five years,” including “22% suffering storm damage and 12% experiencing flooding.”
The adoption of sustainable materials and new technologies is complexity for underwriters too. “Risk factors such as the storage of lithium batteries or the use of timber in construction are perceived as having a significant impact on the insurers’ exposure,” Turnbull said. The report ‘Mass Timber: Challenges & Potential Solutions’ echoes Turnbull’s sentiment, stating that: “Insurance premiums for mass timber buildings are up to 800% higher than for conventional construction, driven by concerns about fire and moisture damage.”
Hopkins expanded on this point, highlighting that underwriters are also contending with “combustible construction and how this is being remediated and managed.” Hebron believes that any retrofitting to reduce combustible cladding will require insurers to “reprice many risks.”
According to Turnbull, “In the commercial space, given the myriad of occupational types and the different challenges they bring, there is greater complexity.” He emphasised the importance of “adequate risk information” and “effective risk management measures.” Shifting focus to residential properties, Hopkins pointed out that “such properties are homes, and the lease has different insurance requirements.” He stressed the importance of understanding leasehold reform and ensuring “transparency, fair value, and quality placement.” Building on this, Hebron added that “clients should be treated as individuals, as many will have specific requirements.” He also noted that competition is driving underwriters to “cater more to specific risks to win new business.”
Relevant covers for brokers to consider for their clients include:
As complexity grows, brokers are crucial partners in proactive risk management and insurer engagement. Some of the ways brokers can assist include:
1. Proactively managing risk using data and insights
Turnbull stated that brokers can act by “enabling property owners to factor emerging risks into their investment strategy.” He added, “analytics can help property owners to identify and quantify the potential impact of climate change on assets, including an assessment of their future insurability.”
Hebron believes that for clients: “It’s a great time to leverage reliable data and to have conversations with your broker about opportunities in their insurance programme or beyond.”
2. Ensuring adequate coverage through lease awareness and regular review
Turnbull explained that “the cover that the owner buys will largely be dictated by what they are required to have in place under the terms of the lease.” Brokers should thus help clients “meet their contractual responsibilities at a reasonable price.” He recommended “shopping around” and seeking “premium reductions and cover enhancements.”
He also advised clients to: “Complete an annual gap analysis of uninsured exposures.” This helps policies align with new risks and insurance solutions.
3. Engaging early with underwriters and developers
Hopkins argued the importance of brokers collaborating early on. He said that brokers should “engage with developers at an early stage to assess the variety of risks and liaise with underwriters for their preferred risk management.”
4. Promoting transparency and investing in defences
According to Hebron, with any interaction, brokers need to remember: “transparency, communication and addressing risks early is always beneficial.”
Practical tips for developers and investors
According to Turnbull there are several key recommendations for investors and developers:
Hebron also emphasised the importance of staying focused during change: “It’s often in times of change that companies neglect to consider insurance... but by working with a broker that can help rather than hinder (even in areas beyond core insurance), you can move forward with your wider strategy with confidence.” Hopkins concluded this is consistent across sectors: “Risk management would be a recommendation,” even for residential or mixed-use developments.
