Multi-dimensional Thinking in Insurance
by Carole VanSickle Ellis
Many real estate owners — even professional investors with a great deal of experience and exposure in different asset classes in the sector — tend to think only of property insurance when they think about the programs designed to protect their portfolios.
The reality is far more sophisticated, said Alexandra Glickman, senior managing director and global practice leader of real estate and hospitality at Gallagher, one of the world’s largest insurance brokerage, risk management, and consulting firms.
“When we talk about insurance at Gallagher, we are thinking about so much more than just what type of physical structure is located on a property,” Glickman said. “We are considering all of the fundamentals of real estate management, from the type of asset class to the operators to the geographic footprint to the investment horizon and exit strategy. Only once an insurance professional has all this information can they craft an appropriate program for a client.”
Types of investment strategy can also influence the structure of an insurance program, Glickman said. For example, a fix-and-flip investment may have a very different policy from a long-term buy-and-hold investment, and that does not even begin to address differences in sectors, sizes, and locations.
“There are so many differences between groups,” she explained. “There is everything from multifamily, SFR [single-family residential], industrial, flex, commercial, office, retail — and retail is not homogeneous — grocery-anchored, every form and fashion of hospitality, etc. Step One is to understand what the asset is, how it has been built, and how it is being operated. Then, we move on to everything else. Only with this type of context can an insurance underwriter create a policy that is truly effective.”
Glickman highlighted the importance of providing underwriters with information such as when the asset was built, its construction class, the types of improvements, and the presence of sprinklers.
“This is what enables us to create an accurate risk profile for the asset,” she said. For example, a wood-frame, class B apartment building located in Texas and with a relatively new, fortified roof would be subject to a variety of weather-related threats, including tornadoes, storms, hail, potentially deep freezes, winds, and wildfires, which all represent exposures to this building in the Lone Star State.
“The policy should address these risks appropriately,” Glickman explained, adding, “On the other hand, the same building in Florida would face different weather-related exposures. “You must think about assets and protection three-dimensionally. Owners must be willing to prepare for the inevitable losses they will eventually experience. Preparation is paramount.”
A Holistic Approach to Portfolio Protection
Gallagher applies this multidimensional approach across company departments and divisions, including when onboarding new clients. Emily Loupee, an area senior vice president for Gallagher’s Executive and Financial Risk Practice and executive director for its Real Estate & Hospitality Practice, described how new clients enter into a relationship with Gallagher, starting with a discussion about how different facets of the company work together. These conversations are “designed to optimize results and protections on their portfolios,” she explained.
“When we talk to a new company, that conversation is all about understanding the company, its structure, and what it needs,” Loupee said. “With real estate, we are asking questions such as, ‘Where is the capital coming from?’ ‘What services are you providing?’ ‘Who are your investors, and are they individuals, institutions, pension funds, or something else?’ ‘How is the company structured?’ ‘What are your operations?’ ‘Are you vertically integrated and providing property management, construction, etc.?’ The list is long, but it all comes down to what a client cares about, what keeps them up at night, and understanding that nothing in this industry is cookie-cutter. We need this information to be creative and strategic so we can help these companies save money, understand risk, and protect their assets.”
Laila Brabander, president of Gallagher’s Private Client Practice, added, “We apply this in our personal insurance space as well to make sure we are fully versed in the spectrum of challenges and risks faced by those with significant assets to protect. We leverage our market awareness and insight across the country to understand what our clients are passionate about, what they need to protect, and if they have the appropriate coverage in place in case an unfortunate event happens.”
Brabander cited as an example the California wildfires in January 2025, noting that most high-end property owners understand the need to “insure to value,” meaning they have enough coverage to rebuild a home back to a pre-fire state. However, she said, clients often underestimate the need to obtain coverage for adjusted living expenses, which includes rental costs and daily expenses when a client is forced to vacate their home.
Protection from All Angles
In another dimension of insurance and protection, Gallagher consults with their clients on higher excess and umbrella liability limits. In recent years, “nuclear verdicts” ($10 million or more) have become more frequent in the personal injury realm and have extended into real estate as well. Although large judgments against commercial landlords are not new in real estate and most would be familiar with the “slip-and-fall” scenario in which someone slips on a sidewalk in front of a rental property and sues the landlord for damages, Brabander said in today’s environment, high-net-worth clients are being targeted by plaintiffs’ counsel in both occupiers and auto liability claims.
Furthermore, both the litigation costs and settlements or judgments are much higher than ever before. “Our clients need to insure against this sort of lawsuit because a lawsuit could be devastating to their family and their wealth,” she explained.
For commercial real estate, Glickman said the industry is seeing the impact of litigation funding on liability insurance coverage.
“Liability rates are going up because there is an influx of money going into litigation funding,” Glickman said. “Litigation funds are actual investment vehicles where people can invest in funding law firms specializing in lawsuits against insurance companies and owners and managers of large real estate portfolios.”
According to the U.S. Chamber of Commerce Institute for Legal Reform (ILR), litigation funders can be privately held, publicly traded, or hedge or sovereign wealth funds. They are not typically parties to the lawsuits they financially support, and they are not typically required to disclose funding arrangements between the fund and the law firm. The sector emerged in Australia in the 1990s and in the United States in the early 2000s, exploding into a $15.2 billion industry over the past two decades.
The ILR describes litigation funding as “problematic for a variety of reasons,” including “allowing outsiders to secretly use courtrooms as a trading floor [and] incentivizing the filing of non-meritorious litigation,” rising prices for consumers,” and “corrupting the legal system by prioritizing profit over justice [and] putting the interests of funders ahead of others, including the plaintiffs themselves.”
“This is why Gallagher’s expertise in this industry is so critical,” Glickman noted. “It is the same as when you are dealing with a chronic health issue and you go to a specialist instead of a general practitioner. Our clients rely on us to have a strong knowledge of what they can do and where they can prevent losses. No asset class is monolithic, and it is imperative that you work with a broker who understands your assets and does not recommend less coverage than you really need or different coverage than what actually applies to your portfolio. We employ a holistic approach.”
Getting the Whole Story is the Key to Success
With this holistic approach comes a deeply personal interest in the “story” behind clients’ assets and their approach to business and asset preservation. At Gallagher, Glickman explained, “We are very keen on introducing our clients to the actual underwriters and having the clients tell the underwriters their ‘story.’”
She noted this is an unconventional practice in the insurance brokerage space, and recalled a client whose narrative ultimately created a meaningful shift in recommended practice and resulted in a significant reduction in cost for the client.
“We were asking a new client about their operations, asset management, and leasing operations,” Glickman recalled. “They told us their model includes research on tenants to see if there are liens or other legal actions currently against them because they have found, statistically, that tenants facing these issues are more likely to default on their leases and require an eviction, which is then more likely to lead to other factors, like slip-and-fall incidents, designed to slow or stop the process. The underwriters were flabbergasted that a client was taking this brilliant extra step, and it showed the client’s operations were in outstanding shape. That extra step led to a better outcome, and we were even able to begin recommending this to other clients and improve their outcomes as well.”
“Our clients have significant collections, homes, and luxury cars,” Brabander added. “We craft coverage reviews that work for each client, and we make sure the insurance is comprehensive. It is our job to get the whole story, identify gaps in coverage, and fix those gaps to prevent uninsured losses. Much can be accomplished with a good dialogue and a broker who knows what they are doing and is willing to put the time in to do things the right way.” She concluded, “It is a great illustration of how Gallagher really adds value.”
“The way that we are organized at Gallagher really empowers brokers to do whatever it takes for clients. It is ingrained in our culture and is always our focus,” said Emily Loupee, an area senior vice president and executive director of Gallagher’s Real Estate & Hospitality Practice.
“We really are helping clients operate efficiently, achieve their goals, and make the whole economy better.”
SIDEBAR 1
By the Numbers
Basic Facts About Real Estate & Insurance
12 — percentage of property owners that do not have active or adequate home insurance policies (Bankrate.com, 2023)
5 — More than five in every 100 insured homes alone had a claim in 2022 (Insurance Information Institute)
$84,0000 — Claims for fire and lightning are the highest, on average, running just under $84,000 per claim (Insurance Information Institute, 2022)
57% — 57 percent of all U.S. adults have incurred costs due to extreme weather events at some time in the past 10 years. These events include hurricanes, tornados, wildfires, earthquakes, flooding, and heavy snow (Bankrate Extreme Weather Survey, 2023)
18.3% — The latter half of 2023 had the highest average premium increases in commercial property insurance ever with increases of 18.3% attributed to “an intense natural disaster season, inflationary pressures, and a volatile property valuation landscape.” (CBIZ, 2025)
SIDEBAR 2
A Brief Overview of Litigation Funding
Litigation funding, also sometimes known as “commercial legal finance” or “third-party funding,” is a method by which entities pay for commercial litigation and arbitration. For example, a business seeking to arbitrate an expensive claim might seek litigation funding in order to bridge a financial shortfall created by the expense of seeking a judgement, or a plaintiff or group of plaintiffs might seek litigation funding to cover the expense of a lawsuit.
In many cases, litigation funding must be disclosed in court, but there is no universal law governing this. Some states, like Georgia, have laws surrounding disclosure and monitoring of litigation funding actions, while others allow courts to regulate this on a local or regional level.
Proponents of litigation funding describe the practice as an “art and hustle” (LawDragon), and suggest it provides “an enhanced access to justice.” However, this “enhanced” justice is, to most not active in the litigation funding industry, a menace, and it looms especially large over the commercial real estate sector. Furthermore, because many litigation funds have historically maintained opaque ownership structures, concerns have emerged about foreign principals, sovereign wealth funds, criminal organizations, and even foreign adversaries participating in and even unduly influencing this type of litigation and its outcome.
For example, a Bloomberg Law investigation taken public in March 2024 revealed an investment firm established by sanctioned Russian billionaires seeking to evade international sanctions was funding these types of lawsuits in the United States and England.
In Georgia, a piece of newly enacted legislation, S.B. 69, requires all funders to register, remain subject to state oversight, and respect regulations that prohibit them from exerting influence on cases by avoiding excessive fees, refraining from forcing the selection of certain vendors, and exercising control over settlement, strategy, and counsel selection. Florida is currently targeting a litigation funding firm involved in a massive data breach, and nine other states are currently pursuing legislation that will require disclosures in third-party litigation.
“We must ensure that our courts remain a place for justice, free from manipulation,” explained Oklahoma representative Erick Harris, co-author on a bill designed to increase transparency in third-party litigation and prevent the “abuse of Oklahoma’s courts.”
Paul Taylor, a fellow at the National Security Institute at George Mason University’s Antonin Scalia Law School, took his assessment of the problem even further, during participation on a panel on the topic at the American Property Casualty Insurance Association (APCIA)’s annual meeting in October of last year, warning that foreign parties involved in this type of funding could access sensitive information about their competitors by virtue of involvement in a lawsuit.
Vishal Amin, head of IP policy at Intel, said it is “almost a form of economic warfare,” and warned, “There is a method to the madness.”
