Blogs & Articles

Journey through Advocate's Industry Insights and Expertise

  • 12 Topics
  • 1 Reply

12 Topics

Wajahat Raja
Community Manager
Wajahat RajaContent Writer
published in Blogs & Articles

Understanding How Hurricanes and Floods Impact Loan Portfolio PerformanceThought Leadership

In recent years, climate change has caused severe damage to the Earth’s ecosystem. It’s paramount to understand that these changes and damage are now transitioning into natural disasters worldwide. In the United States (US), the adverse effects of climate change include unprecedented snowfall and the risk of flooding in California and hurricanes in Florida.  Where such natural disasters carry negative implications pertaining to the daily lives of the affected, their impact on loan portfolio performance is also evident. Hurricanes and floods lead to the destruction of property and loss of income. Recent reports have shown that Hurricane Ian either impacted or damaged over 80,000 properties in the affected areas and led to damages and economic losses worth $112 billion (about $340 per person in the US).  In addition, the number of unemployed individuals in Florida after Hurricane Ian witnessed an increase of 19,000. Considering these statistics, it can be stated that a large number of re

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Wajahat Raja
Community Manager
7 months ago
Advocate Team
Employee
Advocate TeamOur team of experts
published in Blogs & Articles

Applying Historical Insights to Today's Lending ChallengesThought Leadership

In long-standing industries and markets, crises are often cyclical, and inevitable. While the players on this stage may change, the recurring nature of challenges remains constant. The insurance sector, currently facing challenges, can derive insights from historical crises, particularly the 1980s casualty crisis and financial crisis of 2008. This article aims to draw parallels between past and present challenges, guiding lenders through the intricacies of today’s complex landscape. Today, the insurance industry is facing a potential crisis, underscored by the climate change driven natural catastrophes (NATCATs). Populous states are lacking coverage options and turning to insurers of last resort. In this tumultuous landscape, market participants, particularly lenders, stand at a crossroads, prompting a collective call to action. The 1980s Casualty Crisis: Drivers and Dilemmas In the 1980s, the insurance industry faced a significant challenge known as the casualty crisis, primarily affe

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Advocate Team
Employee
2 months ago
Advocate Team
Employee
Advocate TeamOur team of experts
published in Blogs & Articles

LLMs in Insurance: Can ChatGPT write your next waiver?Thought Leadership

The integration of Artificial Intelligence (AI), particularly Large Language Models (LLMs) like ChatGPT, stands as a transformative breakthrough across industries. This advancement promises efficiency, precision, and cost-effectiveness.  In the insurance sector, these strides carry the potential to revolutionize crucial processes such as writing policy waivers for compliance challenges. This significance is amplified during agency reviews, where regulatory scrutiny is rigorous. Creating waivers tailored to meet the stringent requirements set forth by Fannie Mae, Freddie Mac, and HUD is imperative for ensuring compliance. AI’s ability to analyze vast amounts of data and generate precise, context-aware language makes it a valuable tool in this process. As insurance companies navigate the complexities of agency reviews, the effective use of AI in writing waivers can contribute to a streamlined and compliant insurance process.   The Potential of LLMs in Insurance LLMs are powerful tools fo

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Advocate Team
Employee
3 months ago
Kristine Economus
Employee
Kristine EconomusVP of Insurance Compliance
published in Blogs & Articles

Federal Reserve’s Influence on Multifamily and CRE OutlookThought Leadership

As we approach 2024, the multifamily and commercial real estate (CRE) sectors find themselves at a critical juncture. These sectors, integral to the American economy, are influenced by a myriad of factors, including economic conditions, Federal Reserve policies, and evolving market dynamics. In this article, we investigate the current state and outlook of multifamily and CRE, highlighting their significant impact on lenders navigating short and medium-term expectations from the Federal Reserve. As experts on Wall Street analyze these trends, it's crucial for stakeholders in the real estate and financial sectors to stay informed and adapt to the changing landscape.  Economic and Market Overview The multifamily and CRE sectors are heavily influenced by broader economic indicators. As of the midyear review of 2023, the CRE market, specifically, has been undergoing notable changes. Investment volumes in this sector are expected to decrease by 37% year-over-year in 2023, but are anticipated

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Kristine Economus
Employee
4 months ago
Wajahat Raja
Community Manager
Wajahat RajaContent Writer
published in Blogs & Articles

Mastering the Current Multifamily Market as a LenderThought Leadership

As we evaluate the multifamily market's trajectory going towards the end of 2023, we face a landscape of nuanced economic signals and shifting market drivers. Despite its resilience, multifamily real estate is not immune to broader economic forces. For lenders in this space, understanding these dynamics is critical to navigating the waters ahead.  Current State of the Multifamily Market  The multifamily lending landscape of 2023 is marked by cautious optimism and calculated navigation through economic indicators. Fannie Mae estimates multifamily originations to be marginally higher in 2022, ranging from $460 billion, followed by a projected decrease to approximately $440 billion in 2023. This expected downturn aligns with a broader forecast of a market softening, potentially intensified by an economic recession. Freddie Mac's observations corroborate this sentiment, noting that the labor market's robust performance—averaging nearly 280,000 new jobs per month through the first half of 2

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Wajahat Raja
Community Manager
5 months ago
Wajahat Raja
Community Manager
Wajahat RajaContent Writer
published in Blogs & Articles

Navigating California’s FAIR Plan for Commercial Real EstateThought Leadership

In the dynamic landscape of commercial real estate, insuring residential-type properties like multifamily housing and apartment complexes can be challenging. For property owners navigating these complexities, the California FAIR Plan stands as an essential safety net, offering insurance when traditional coverage options fall short. This insurer of last resort should not be an afterthought but a strategic priority. Let’s delve into how California FAIR Plan can protect your commercial real estate investments.   Eligibility Requirements  Commercial properties qualify for the California FAIR Plan when traditional insurance options are not available. Here are the key points regarding eligibility and the type of commercial properties covered under the California FAIR Plan: Eligibility Determination The FAIR Plan is considered as the insurer of last resort when a broker's diligent search in the traditional market fails, as defined by California Insurance Code section 10090 (d).  High-Risk Pro

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Wajahat Raja
Community Manager
5 months ago
Wajahat Raja
Community Manager
Wajahat RajaContent Writer
published in Blogs & Articles

Can Insurance Providers Help Fannie Mae Navigate the Changing Regulatory Environment?Thought Leadership

Climate change, a pressing global challenge, has caused severe damage to Earth's ecosystem, but its ramifications extend well beyond the natural world. The US real estate market finds itself in imminent jeopardy, as experts predict that the relentless rise in sea levels alone could imperil over a trillion dollars' worth of properties. In addition to this staggering figure, climate change has unleashed a range of adverse effects, from record-breaking snowfall in California to heightened flooding risks, and more frequent hurricanes in Florida. It’s important to understand that such changes impact the bottom lines of borrowers in many ways, including limiting their ability to meet operating costs, insurance premiums, and loan payments.  The regulatory environment concerning real estate loans, largely under the purview of the Department of Housing and Urban Development (HUD), has witnessed some changes that now dictate the practices of real estate lenders. Additionally, these changes have

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Wajahat Raja
Community Manager
5 months ago
Wajahat Raja
Community Manager
Wajahat RajaContent Writer
published in Blogs & Articles

Navigating Florida’s Insurer of Last Resort – Citizens Property Insurance CorporationThought Leadership

For commercial property investors in multi-family complexes, insurance isn't merely a bureaucratic requirement—it's the bedrock of financial stability, offering protection against potential damages and economic setbacks. Navigating insurance in Florida requires a structured approach due to local challenges like limited coverage options from weather-related damages and fraudulent litigation. The Citizens Insurance Program, a non-profit insurer, is available to Floridian property owners who can't secure coverage in the private market. Here's a guide to help borrowers understand and navigate the various facets of this program.  1. Eligibility Criteria Under Florida Law  Before diving into the intricacies, ascertain your eligibility under Florida law. Citizens can issue a new policy only if the property cannot acquire coverage from a Florida-authorized insurance company or is subject to premiums from Florida-authorized insurance companies that exceed 20% of the premiums for comparable cove

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Wajahat Raja
Community Manager
6 months ago
Wajahat Raja
Community Manager
Wajahat RajaContent Writer
published in Blogs & Articles

Can Insurance Carriers and Lenders Ride Out the Exodus?Thought Leadership

Amidst the backdrop of higher interest rates, unforgiving market conditions, unprecedented natural disasters, and delayed legislative changes, one question lingers: Can these challenges truly jeopardize the future of the insurance industry? Interestingly, the industry could very well face extinction in the face of not being able to recognize, protect, nurture, and grow its most valuable resource, its workforce. The insurance industry has battled that need for sufficient and competent talent throughout time and is yet again facing similar circumstances imposed by trends such as the "great resignation," a widespread phenomenon where large numbers of employees are leaving their jobs. Recent demographics indicate that the average age of an insurance professional in the United States (US) is 59. However, it is preeminent to mention that these demographics also highlight that more than 65% of the workforce is above the age of 40.  A large majority of these professionals are set to retire in

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Wajahat Raja
Community Manager
6 months ago
Wajahat Raja
Community Manager
Wajahat RajaContent Writer
published in Blogs & Articles

The case for OCR in Insurance Compliance – Is 98% good enough?Thought Leadership

No system can promise a perfect success rate over an extended period of time, but not striving towards it is something that industries such as insurance compliance simply cannot afford. While a 98% success rate may seem great in some contexts, like exam grades or how full a glass of wine is, it falls short in critical areas such as reviewing insurance policy documents. In industries where precision is paramount, nothing less than a 100% success rate will suffice. Artificial Intelligence is being paraded as the most significant disruptor since the dotcom boom and with equal reverence by being described as having the ability to impact almost all aspects of commerce and society. McKinsey, in its 2021 report, described the relationship between AI and insurance by stating that the former could “transform every aspect of the (insurance) industry”.  Surely, a technology with such promise must be able to demonstrate its effectiveness. In several cases, AI, through its several, uniquely powerfu

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Wajahat Raja
Community Manager
6 months ago
Wajahat Raja
Community Manager
Wajahat RajaContent Writer
published in Blogs & Articles

Is California becoming the new Florida? Here's what lies ahead for the insurance market in the Golden StateThought Leadership

None of us expected Hilary to show up as a storm, certainly not in California. Who’d have thought that California of all places would get hammered by a tropical storm so bad that a discussion would be needed on the state of property insurance going forward? In reality, however, a lot of experts in the industry have been ringing alarm bells for a good while. While it’s true that their fears didn't stem from anticipating storms to hit the state, their reasons were valid and remain so today.  What are those reasons and is Storm Hilary going to make things worse? If so, then to what extent? Was there a time when Florida was in the same state? Can we learn from Florida to manage California’s impending crisis better? These questions, and many more, are merited and demand intellectual pondering followed by swift, actionable measures. Today, we will discuss what the current state of California’s insurance market is and what lies ahead. Storm Hilary is unprecedented, but destructive, nonetheles

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Davidduford
Enthusiast
3 months ago
Wajahat Raja
Community Manager
Wajahat RajaContent Writer
published in Blogs & Articles

How Advocate is solving the lemon problem for the US real estate insurance marketThought Leadership

 What do lemons and used cars get you? For, Joseph E. Stiglitz and George A. Akerlof, a Nobel prize in economics. But, with Advocate, much better pricing on insurance policies for borrowers, which means more business for lenders.  Property insurance is not getting cheaper. In fact, there has been a lot of talk around big insurance companies trying their best to increase premiums in response to soaring inflation. And when they aren’t able to do that, mostly due to state regulation, they are reconsidering their business in entire states. Where does that leave lenders? Sitting on the curbside watching the sun go down on new and old business waiting for a Hail Mary. Sounds gloomy, doesn’t it?  It certainly is gloomy if you are on the phone with multiple borrowers every day listening to them talk about how finding cheaper options, if at all, when insuring their next property or renewing an existing one is getting difficult by the day. Before we talk about what you could do instead, let’s ex

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Wajahat Raja
Community Manager
8 months ago

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