Risk managers at property management firms across the United States are facing increasing challenges as they grapple with higher insurance rates and more natural catastrophes.

By placing more emphasis on loss control measures and striving to improve their negotiating powers with insurers, risk managers at the organizations can overcome some of the problems they face, but it can be a tough fight as property values have continued to climb, they say.

"Two of the things property managers have to deal with regularly in this business are increasing insurance rates and property taxes--they seem to go hand-in-hand," said Ben Cecchini, asset manager at Quest Property Management in Portland, Ore.

And for catastrophe exposed properties, the higher insurance rates don't appear likely to ease substantially anytime soon.

"After the 2004 and 2005 hurricanes, insurance companies have only recouped reinsurance costs," said Steve Backman, Tampa, Fla.-based unit manager at Travelers of Florida, a unit of Travelers Cos. Inc.

And few insurers appear to be bucking the trend and tempting policyholders away with lower rates. "Retentions are now in the high 90% (range) and I doubt if anyone will change policies," he said.

Finding adequate capacity for properties in hurricane-exposed areas is difficult, said Robert P. Watson, vp at Watson Insurance, a Gastonia, N.C.-based brokerage.

"Finding wind insurance in New Orleans and Tampa has been difficult, to say the least," he said. "While we are seeing a little relaxation in the wind market, things are still tight."

Mr. Watson, who places coverage for several condominium and apartment buildings in the Southeast, said policyholders are buying lower limits and taking higher retentions to try and soften the impact of the rate hikes. The commercial market remains the principal option for many property managers as capital requirements for establishing a captive are often too high, he said.

Property managers outside of traditional hurricane zones have also dealt with weather-related losses over the past year.

Quest Property Management made its first significant claim in several years after heavy wind and rain hit the Portland, Ore., region late last year, said Mr. Cecchini. The firm, which manages around 1 million square feet of property, routinely carries coverage for everything from mechanical failure to earthquake and flood damage, he said. Its primary insurer is Travelers.

But it's not just property managers with cat-exposed properties that are seeing substantial rates hikes, said Max Perlin, property manager for Signature Associates, a commercial real estate firm in Southfield, Mich.

Most of the properties managed by Signature are located in the Midwest and fall in the range of 50,000 to 100,000 square feet, though it does manage much larger properties, Mr. Perlin said.

Since the Sept. 11, 2001, terrorist attacks, insurance rates for the properties managed by Signature have more than doubled, rising from around 10 cents per square foot to more than 20 cents, he said.

"In our opinion there were two factors that caused this," Mr. Perlin said. "First, the insurance industry was spreading its risk-loss ratio of terrorism...over its entire portfolio in an attempt to make up for some of those losses. Second, the insurance industry was spreading losses for natural disasters, floods and hurricanes that were occurring," he said.

That sharp increase prompted the firm, like many other property mangers to increase its loss control and safety measures, Mr. Perlin said.

Risk managers say that they start with the basics when trying to curb their property risks and insurance premiums, including making sure tenants are aware of city codes and safety requirements; in areas in which municipalities have safety and building requirements, property managers require their tenants to closely adhere to those standards and some sponsor quarterly inspections to ensure compliance.

In addition, paying attention to basic safety measures, such as making sure stairways are well lighted and ensuring that tenants are informed about evacuation procedures, can help reduce insurance rate increases, Mr. Perlin said.

Quest also makes efforts to make its risks more attractive and reduce policy costs, said Mr. Cecchini.

"We have added things like sprinklers to our warehouses and have recalculated hydraulic factors in some of our older buildings to make sure they meet current code requirements," Mr. Cecchini said.

In addition, "we require tenants to determine what they are putting in their space, how high they are storing it, whether storage racks are permeable to water and if anything they are storing is hazardous," he said. "Then we go to the city and have hydraulic summary calculations made to make sure there is enough water coverage to take care of any issue that might occur.

"Portland requires businesses to have racking permits which specify what can be placed on shelves, what types of storage boxes they have and how high products are stored off the ground," Mr. Cecchini explained.

"All our tenants have to obtain these permits," he said. "This can be a little bit of a pain for some of them, but in the long run it keeps our costs down."

Quest also periodically conducts inspections with its insurer to check on basic safety requirements that might have been overlooked, such as overloaded surge protectors and outlets in offices, and people using space heaters.

Although, some of the checks may seem obvious, even if you have signs spelling out the importance of safety measures, sometimes people will find a way to be careless, Mr. Cecchini said.

Once the risks are made more attractive, property managers can turn their attention to maximizing their leverage with insurers, Mr. Perlin of Signature said.

"I used the total square footage of the properties we managed as leverage," he said. "I went directly to large insurers, emphasized that we manage more than 8 million square feet of commercial properties and obtained much more reasonable rates."

In addition, "our clients also appreciated our efforts to reduce their costs," Mr. Perlin said. "We made our efforts at no cost to our clients and gained client satisfaction and tenant retention simply because we showed that we were looking out for their interests.

"When looking for new business, we also showcased this effort as a good example of how we attempt to keep costs down for the owners of the properties we manage," he said.