Why mid-market property owners are paying too much for insurance

Real Property Captives founder Angad Guglani (pictured) said transparency, collective buying power and captive insurance can give mid-market landlords access to the pricing advantages long enjoyed by the industry's biggest players.

For decades, captive insurance has largely been the preserve of Fortune 500 companies and the biggest commercial property owners. The largest portfolios have enjoyed access to lower premiums, greater transparency and more sophisticated risk financing structures, while middle market real estate owners have been left paying significantly higher rates for comparable risks.

Angad Guglani, founder of Real Property Captives, believes that imbalance has created an opportunity to fundamentally reshape commercial property insurance for the middle market.

Speaking about the motivation behind launching the business, Guglani argues that commercial property owners with portfolios between $100 million and $3 billion have been overlooked despite representing a highly sophisticated segment of the market.

Closing the insurance pricing gap

According to Guglani, the company's starting point was recognising the enormous pricing disparity between the largest institutional property owners and everyone else.

“It's the disparity between what the largest owners are able to achieve on their portfolios compared to owners in the middle market.”

He defines the middle market as property owners with portfolios valued between $100 million and $3 billion—a segment large enough to benefit from an efficient captive insurance structure, but often too small for the insurance market to consider worth serving.

“The rates for the largest owners can be as much as 30, 40, 50 per cent cheaper,” he said.

That difference matters because insurance represents one of the largest controllable operating expenses in commercial real estate.

“Insurance is a fairly big line item in terms of our net operating income. It can make up over 10 per cent, so it's a significant margin driver in real estate, which is a commodity business.”

Unlike sectors where companies can differentiate through unique products or intellectual property, commercial real estate offers relatively few opportunities to create sustainable cost advantages. Reducing insurance costs therefore has a direct impact on profitability.

Making captive insurance accessible

Captive insurance has traditionally required substantial scale to justify the costs of establishing and operating a captive insurer. Guglani believes the solution lies in applying a model that has existed for decades but has not been widely adopted in commercial real estate. “It's through aggregation and a group structure.”

Group captives typically bring together dozens of strong businesses that share a commitment to strong risk management. Rather than each company operating its own captive, members share the costs of administration while largely retaining responsibility for their own risks through individual funding arrangements.

“You're basically spreading the cost of running the captive, and you're building scale through the additional members in your group”

Collectively, he argues, the group can become larger than many institutional property owners, unlocking access to the same insurance markets and purchasing power.

To explain the concept, Guglani draws a comparison with another industry. “In healthcare, it's very common to have a group purchasing organisation where many smaller or mid-sized healthcare providers join together to buy medical supplies at a discount. We're doing the same thing for captive insurance.”

The underlying principle is simple: collective buying power can deliver benefits that individual participants could never achieve alone.

Built from first-hand experience

Real Property Captives was not conceived by insurance executives looking for a new market. Instead, Guglani said the platform grew directly out of frustrations he experienced as a commercial property owner. “I built it for my own needs.”

Having spent a decade as an owner-operator, he encountered recurring problems with commercial insurance that he believed the traditional market had failed to address.

His concerns centred on three areas: transparency, incentives and efficiency.

Bringing transparency to insurance costs

Guglani is particularly critical of how insurance distribution costs are typically embedded within commercial policies. “There was no transparency in distribution cost. We had no idea how many fees and commissions were being paid out of the policy.”

He argues that many commercial property owners are unaware of the extent to which commissions can inflate premiums. “The fees and commissions in some of these policies can exceed 20, 25 to 30 per cent on a policy that's seven figures a year,” he said.

For large property portfolios, that can translate into hundreds of thousands of dollars annually. “I don't believe that's fair to the client. The client should know exactly how much brokering service they're paying for.”

Rather than embedding commissions within premiums, Guglani favours a transparent fee-based approach where property owners choose the level of advisory support they require.

"If an owner wants insurance consulting for their properties, they should be able to pay a flat fee, not a recurring fee."

Aligning incentives with risk management

A second criticism concerns what Guglani views as poor incentive alignment in conventional insurance. Traditional insurance, he argues, provides limited rewards for policyholders who consistently manage risk effectively. “If you manage your risk better and you don't file any claims, you don't really get any credit for that in traditional insurance,” he explained.

Captive insurance changes that equation because members retain part of the underwriting risk themselves. “In captive insurance, you are able to get a dividend back based on your performance.”

Members who experience lower claims can receive dividends and benefit from lower long-term insurance costs because the captive retains the initial layer of risk.

For Guglani, this creates a stronger relationship between operational excellence and financial outcomes.

Direct access to global reinsurance

The third pillar of Real Property Captives' approach is bypassing traditional insurance distribution layers.

Rather than purchasing insurance solely through conventional primary insurers, Guglani said the captive accesses global reinsurance markets directly. “We go directly to the best reinsurers in the world across a very large schedule of property.”

Removing intermediaries, he argues, delivers lower base pricing while preserving access to high-quality underwriting capacity.

The combination of lower premiums, reduced distribution costs and potential dividend returns creates what he sees as a fundamentally more efficient model.

“You're saving on the base rate. You're getting incentive alignment with the captive retention... and you're saving a small fortune on distribution cost.”

Long-term strategic benefits

While immediate premium savings are attractive, Guglani believes the larger advantage lies in creating a more predictable insurance environment.

Traditional commercial insurance is often characterised by cyclical market swings that leave property owners exposed to rising premiums regardless of their individual claims experience.

Captive participation, he argues, offers greater stability.

“If you're a better than average manager of your risk, you're going to have a better than average rate for an extended period of time.”

Rather than being driven primarily by wider insurance market conditions, pricing increasingly reflects each member's own operational performance.

“It turns risk into a much more manageable, transparent cost that you can control.”

The growing role of artificial intelligence

Looking ahead, Guglani believes advances in artificial intelligence and data analytics will significantly reshape commercial property underwriting.

“The amount of data collection is increasing by an order of magnitude every year, and the cost to process that data using AI models is decreasing.”

As data becomes more abundant and AI becomes more capable, insurers will be able to predict losses before they occur rather than simply pricing historical risk.

He points to maintenance records as one practical example.

“Let's say you start seeing a bunch of work orders about leaks at a property. There's a likelihood there's a leak claim coming.”

AI systems could identify these warning signs early, allowing owners to intervene before a costly insurance claim develops.

Owners who respond quickly to these operational insights, he argues, should ultimately receive lower insurance pricing because they are demonstrably reducing risk.

“If you're an owner that is responding to these data signals... should you get a lower rate? I believe the answer is yes.”

A different vision for the middle market

Ultimately, Guglani's ambition extends beyond building another insurance company. His goal is to redefine how commercial property insurance is delivered to an underserved segment of the market.

“Our goal is to build the most efficient and cost-effective and best value real estate insurance product ever created for the middle market.”

Perhaps his most striking argument is that mid-sized property owners may actually represent better insurance risks than many of the industry's largest players.

Unlike large institutional landlords overseeing thousands of properties through multiple management layers, many middle-market owners remain closely involved in day-to-day operations.

“Our owners are much more likely to walk every single one of their properties every year than a corporate landlord that may have 10 times the portfolio size.”

That operational engagement, combined with improved data, stronger incentive alignment and collective purchasing power, forms the foundation of his long-term vision.

“We believe the middle market deserves the best insurance prices available anywhere. That's what we're trying to accomplish.”

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