Insurance premiums in commercial real estate have continued to increase at staggering rates for property owners. The process for obtaining coverage is based on a combination of claims history and market-aggregated underwriting data.
The problem? Companies that actively measure and manage risk get charged the same premiums as those that don’t.
“Premiums go up for all based on the average risk profile—where the average doesn’t manage risk.”
The true cost of insured events
There are still strong incentives to manage risk—equipment failures, water leaks, and all manner of events occur daily. Many are insured or self-insured, yet even when claimable, the direct and indirect losses almost always exceed what’s paid out.
The hidden cost? Time. Tenants demand immediate resolution, and vendors charge top dollar when urgency is involved. Let’s say a major event occurs every few years and costs your company $100K in total—repairs, revenue loss, and insurance implications. Even if insurance covers 50%, you’re left exposed.
Software-based assurance systems today often cost less than that one event. Yet they reduce the likelihood of all events, minimize tenant disruption, and lower ongoing management and maintenance costs—which are often the biggest area of waste.
Why these technologies haven’t taken hold
Despite the clear benefits, assurance systems still aren’t widely deployed. Why?
- Overpromised, underdelivered: Manual engineering providers dominate building operations and offer over-complicated solutions that either fail to deliver or cost more than they should.
- Limited availability: Only a few global solutions (like CIM’s PEAK Platform) offer low-cost technical systems that don’t require expensive, complex hardware integrations.
- Lack of insurance incentive: Even when assurance improves risk profiles, insurers rarely reduce premiums. The only variable is how much they’ll increase.
“The question shouldn’t be how to reduce insurance costs. It should be how to reduce the chance of an event in the first place.”
It’s time to reframe the question
Insurance is often treated as a standalone cost—making it difficult for CFOs to take action. Self-insurance may help share the cost, but the real opportunity is in avoiding it altogether.
To truly assess cost, everything should be considered:
- Maintenance for proactive risk reduction
- Direct repair costs post-event
- Resource costs of managing incidents
- Indirect costs like tenant complaints and premium hikes
Then compare this to the cost of an assurance system. The conclusion is clear: assurance is not only cheaper—it’s smarter.
Assurance doesn’t just save money—it creates value
Yes, this assumes assurance systems are reasonably priced and don’t rely on costly consulting. But the best platforms meet that standard. In fact, they pay for themselves—reducing waste across energy, water, maintenance, engineering, operations, and reporting.
“Great assurance systems don’t just reduce risk—they reduce waste, improve outcomes, and pay for themselves.”
So, what’s needed to implement these technologies? It’s simple. Finance, risk, and operations need to come together and create a plan that meets both strategic and operational needs. That’s how you make assurance work—and why it’s time for the industry to adopt it.
