Streamlining CRE with FinTech: Tackling rising insurance costs with data-driven solutions 

At JLL Spark, we focus on making impactful investments in technology that reshape the real estate industry. A key pillar in our investment thesis is the inevitable intersection of FinTech and commercial real estate (CRE). Much like our peers in banking and financial services who have greatly benefited from decades of FinTech innovation, we firmly believe that CRE will follow a similar transformation through PropTech innovation. We are actively looking to invest in solutions that are helping streamline CRE transactions, optimize asset management, and democratize investment. One example is our recent investment in Sertis, a tech enabled insurance brokerage that is changing the way property and casualty insurance is underwritten. 

Why Sertis? 

Developing accurate underwriting models for parametric insurance in CRE is an actuarial challenge. Traditional insurance relies on historical claims data and actuarial science to predict future risks. However, parametric insurance requires a new framework that effectively correlates specific parameters with losses — a connection that hasn’t yet been sufficiently established in CRE contexts. 

Enter Sertis, a company at the crossroads of InsurTech and PropTech, that aims to revolutionize how property insurance is priced by leveraging detailed property management and underlying risk data. Sertis teams up with property management platforms to create a digital suite of tools designed to offer more accurate, asset-level insurance pricing based on building management data. Sertis operates as a licensed managing general agent (MGA) that uses proprietary risk assessment technology to more accurately underwrite and sell insurance policies for assets that are managed diligently. 

The Problem 

Property and casualty insurance costs have been a significant and growing expense for asset owners. According to a recent study published by the National Multifamily Housing Council (NMHC) alongside NDP Analytics, a staggering 51% of property owners expect commercial property insurance rates to see annual increases of at least 30%. Several factors contribute to this spike in premiums, such as inflation, climate risk, and the adjustment of previously underreported total insured values. However, the insurance industry has traditionally lacked the tools to price risk effectively at the asset level, often relying on regional data to set prices on a per square foot and per unit basis. 

The Solution 

Sertis’ platform uses comprehensive property management data to generate a Loss Run Indicator (LRI) score for each property. This score allows insurers to determine premiums that reflect the actual risk levels of well-managed assets, potentially rewarding property owners with cheaper premiums while still maintaining insurer margins. By applying advanced data analytics, Sertis provides a much-needed mechanism to assess and price risk more precisely, offering a win-win situation for both asset owners and insurers. With continuous advancements in AI and data science, the future of commercial property insurance looks set to pivot towards more tailored and equitable pricing structures, easing the financial burden on asset owners. 

Leveraging Expertise for the Commercial Sector 

Our strategic investment with Sertis presents a unique opportunity for JLL to enhance its property and asset management offering for CRE owners. Through a collaboration with Building Engines, a JLL company, we are working to develop a more precise risk profile for properties, which can lead to better-informed decisions regarding insurance coverage. This Commercial LRI score will leverage JLL’s sheer volume of proprietary data to better understand risk profiles for JLL managed assets, ultimately leading to reduced insurance premiums at scale. As the costs of owning a building rise, JLL, along with its startup portfolio, will be there to help our clients get the most from their assets. 

Written by Daniel Correa, Growth Principal at JLL Spark

Interested in a strategic partnership with JLL Spark? Apply for an investment here.