Program Structures and Solutions for the Long Term

The observations in this series reflect current RPS marketplace commentary and experience with real estate, habitational and hospitality casualty placements. Outcomes vary by risk profile, loss experience, venue, carrier appetite, program structure and policy terms.

Over the first three installments (1, 2, 3) of this series, we covered the state of the 2026 market, the loss drivers reshaping underwriting behavior, and how to position real estate casualty risks for the best outcomes. This final installment focuses on structure: coverage, retention and form decisions that determine how programs perform over the long term.

Coverage, Retentions and Carve Backs That Actually Matter

For the past several years, insurers in the real estate and hospitality casualty sector often push for forms to include restrictive language around assault and battery, firearms and weapons, habitability, abuse and molestation and punitive damages. Layer on top of that the shift away from first‑dollar "guaranteed cost" programs, and it becomes clear that form and structure are working together to redefine what protection really looks like.

From a retention standpoint, very few real estate owners are being offered true first‑dollar coverage anymore, and when they are, the pricing is often so detached from loss experience that it makes little, long‑term sense. For many, the real choice is between a deductible and a self‑insured retention (SIR). A deductible keeps the carrier from adjusting and paying ground‑level claims and then billing the insured back; this can make sense for smaller operators or those without the infrastructure or appetite to handle claims themselves. An SIR shifts claim handling and funding up to the retention into the insured's hands, often via a third‑party administrator (TPA), which larger, more sophisticated owners and brand‑name hospitality groups often prefer. It allows them to control the claim experience, protect brand reputation by resolving issues quietly and consistently, and present a cleaner loss picture to markets attaching above the SIR.

For owners whose retained losses have become large and predictable enough, the natural next step beyond a deductible or SIR is a captive: formalizing the risk they already effectively self‑insure, capturing underwriting profit and investment income along the way, and building a long‑term asset out of what was previously just an expense line. Captives are not for everyone; they require capital commitment, actuarial support, and real governance. But for the right portfolio, they turn volatility into a planned expense.

Within that broader retention and structure framework, we focus on a few high-impact coverage and retention levers:

• Retentions. Calibrating the retention to the actual loss profile of the portfolio can improve pricing, secure more stable capacity and open up coverage enhancements that are harder to negotiate on a true guaranteed‑cost program. For high‑frequency, low‑severity books, shifting attritional loss to a well‑designed deductible or SIR can be the difference between a perpetually painful renewal and a structure that works.
• Assault, weapons, and abuse. Broad exclusions materially increase risk. Where history exists, negotiated sublimits, defense cost carve‑backs, or location‑specific grants can preserve meaningful protection and help satisfy lender and agency requirements while aligning with carrier comfort.
• Habitability. With definitions still unsettled across venues, overly broad habitability restrictions introduce real uncertainty. Educating carriers on jurisdiction, maintenance protocols, and complaint‑resolution processes is often the key to softening language or securing limited grants that respond to how claims arise.
• Punitive damages. With more verdicts carrying punitive components, and many forms and venues limiting or barring their insurability, we increasingly pair placements with punitive damages wrap solutions where appropriate, so that a jurisdiction's public policy or a form's silence does not quietly become the insured's uncovered exposure.
• Due diligence and construction carve‑backs. For active buyers and sellers, we push for CG 21 44 due‑diligence carve‑backs, so insureds remain protected while inspecting, testing, or otherwise operating in connection with potential acquisitions or dispositions. On construction‑related exclusions, we look for routine maintenance exceptions so normal property upkeep doesn't unintentionally fall into a construction gap in the form.
• Hospitality fungi/bacteria carve‑backs. On CG 21 67 fungi/bacteria exclusions or proprietary equivalents, we focus on preserving carve‑backs for goods intended for bodily consumption. That helps ensure a standard food‑borne illness claim at a hotel, restaurant, or bar is not inadvertently swept into a total fungi/bacteria exclusion.

One caution applies across all these levers: negotiate the tower, not just the lead. A carve‑back or sublimit won at the primary level means far less if the excess layers do not follow form, and buffer and quota‑share layers multiply the number of forms that have to line up. We review excess wording against the primary on every placement, so an enhancement negotiated below is not silently taken away above.

The key is understanding that it is unlikely the marketplace will revert to how it looked a few years ago, pre‑COVID. Our focus is making sure structure and language align with how the insured takes risk, using retentions where they create leverage and targeted form work so that when a large loss hits, or a series of smaller ones, coverage responds in the way the client reasonably expects.

Conclusion

The 2026 casualty market for real estate, habitational and hospitality risks is no longer a pure capacity problem; it is a story, structure and execution problem. Owners and operators who are willing to engage early on venue, asset mix, retentions and form can absolutely improve their outcomes, even in a disciplined environment. If there is a single thread running through this series, it is that the winners in this market are made months before the renewal date, in classification, documentation, structure and story.

RPS helps retail partners translate complex portfolios into clear, carrier-ready stories, evaluate retention and coverage strategies that align with the underlying investment thesis, and engage with markets that remain committed to the space under the right conditions. If you are navigating tough renewals, active acquisition pipelines, or simply want to benchmark where your real estate programs stand today, our team is here to help you and your clients better understand their options and make confident risk management decisions.

Build casualty programs that can perform beyond renewal. Partner with the RPS Casualty Real Estate practice to help your clients align retentions, coverage and structure with their investment strategy and negotiate terms built for the long term.