Insurance Grabs Attention of CRE Servicers.(commercial real estate and terrorism and mold insurance issues)

Commenting on how insurance concerns have come to occupy center stage in today's servicing environment, Robert P. Vestewig, noted, "A couple of years ago, you got a certificate, checked it off and put it in a file. It is not so anymore."

Mr. Vestewig, chief operations officer, GEMSA Loan Services, was speaking at a session on "continuing insurance concerns" at the MBA's commercial servicing conference here, of which he was the moderator. (For additional coverage of the conference, see pages 18-19)

Daniel Rubock, vice president/senior analyst, Moody's Investors Service, noted that the Terrorism Risk Insurance Act that was signed last November is a situation of "half a loaf better than none" or like "Swiss cheese with holes."

He conceded that pricing on terrorism insurance has improved after the TRIA was effected.

"The rates are not making borrowers very happy, but they've come down from stratospheric rates, even in Manhattan," he said.

The standalone market for terrorism insurance is not completely dead, but is shifting away from this kind of coverage, according to Mr. Rubock.

Janice Smith, managing director, Bank of America, noted that once 9/11 happened, the risk was moved from the insurer to the bondholder.