ExecutivePerils Enhances Real Estate Product to Include Syndications

PRODUCT: RE360

COMPANY: ExecutivePerils

BEST RATING: A+ (Superior), size XV

AVAILABILITY: Coverage is available on an open-brokerage basis.

FOCUS: When ExecutivePerils launched RE360 early last year, the goal was to provide an affordable package policy for diversified real estate companies that opt to offer a wide variety of services—sales, escrow, titling, appraisal, property management and more—under one roof.

Now, ExecutivePerils is sweetening the deal to cover real estate professionals that raise capital via real estate rather than stock or equity—a process known as syndication.

Previously, “there were only four or five underwriters that would consider covering syndication,” explains Peter R. Taffae, managing director, ExecutivePerils—and those markets “are really set up for the big real estate investment trusts and funds that do $500 million, $500 billion.”

RE360, however, now offers a coverage option for what Taffae calls “mini syndications.” Although ExecutivePerils can handle accounts up to $200 million, “most of the ones we’ll be looking at are $10-25 million,” he says—firms that probably “couldn’t afford coverage” in the form in which it was previously available in the marketplace.

Syndication-related claims can be “very, very significant,” Taffae says, which is why most underwriters require a retention in the $25-million range: “We can do this mini syndication option at a lot lower retention, and we don’t have to charge as much because we’re putting it all in one policy.”

Finally, Taffae notes that a “run-of-the-mill” directors & officers policy doesn’t cover general partners, which is a problem for syndications that are set up as limited partnerships. “In the broader market, that requires a different policy—it’s a partnership policy on top of a D&O policy,” he points out. “We include the general partners.”

COVERAGE DETAILS: RE360 encompasses five coverage categories: directors & officers, with reputational management coverage; employment practices, including coverage for tenant and client discrimination; real estate errors & omissions, including coverage for real estate sales E&O, escrow E&O, mortgage brokers E&O, property managers E&O, property developer E&O, title agents E&O, auctioneers E&O, leasing agents E&O and appraisers malpractice; fiduciary liability; and cyber/privacy.

There is no hammer on D&O, EPLI or fiduciary, and no general liability or property damage exclusion. Additional policy highlights include a public relations sublimit, available retroactive/prior acts coverage, and deductible reduction incentives for quick settlement, as well as a sublimit for Fair Housing Discrimination Act coverage.

ExecutivePerils will also cover insured-owned property and up to $500,000 for open house and lockbox.

UNDERWRITING: Broad definition of “real estate service.” Limits available up to $25 million. Requirements include an RE360 application, sample contracts, five years of carrier loss runs and copies of current policies. For syndication, ExecutivePerils also requires the offering memorandum.

MINIMUM PREMIUM: $12-15,000 for $1-million limits.

TARGET: Small to midsize real estate companies that offer multiple services, such as real estate sales, escrow, titling, property management and syndication. “The more diversified the real estate firm, the better the value,” Taffae says.

COVERAGE TERRITORY: All U.S. states except Alaska and Hawaii.

CONTACT: Peter R. Taffae, managing director; ExecutivePerils, 800 Wilshire Blvd., Suite 1525, Los Angeles, CA 90017.

Jacquelyn Connelly is IA senior editor.