--- title: "Building Risk Outlook 2026: Lessons and Signals | Novem" description: What 2025 losses and falling insurance prices mean for 2026, and five signals CFOs should watch to manage Total Cost of Risk Ownership (TCRO). image: https://www.novemdigital.com/hubfs/novem-resources/blog-building-risk-outlook-2026-featured.jpg --- [![Novem, Property Risk Platform](https://www.novemdigital.com/hubfs/raw_assets/public/NovemZulbera_27/images/novem-logo.svg)](https://www.novemdigital.com/) [Platform](https://www.novemdigital.com/platform/) [Industries](https://www.novemdigital.com/industries/) [TCRO](https://www.novemdigital.com/tcro/) [Partners](https://www.novemdigital.com/partners/) [Resources](https://www.novemdigital.com/resources/) [About](https://www.novemdigital.com/about/) [Contact Us](https://www.novemdigital.com/contact) [![Novem, Property Risk Platform](https://www.novemdigital.com/hubfs/raw_assets/public/NovemZulbera_27/images/novem-logo.svg)](https://www.novemdigital.com/) [Platform](https://www.novemdigital.com/platform/) [Industries](https://www.novemdigital.com/industries/) [TCRO](https://www.novemdigital.com/tcro/) [Partners](https://www.novemdigital.com/partners/) [Resources](https://www.novemdigital.com/resources/) [About](https://www.novemdigital.com/about/) [Contact Us](https://www.novemdigital.com/contact) ![A modern institutional real estate portfolio around a frosted plaza at dawn in early winter](https://www.novemdigital.com/hubfs/novem-resources/blog-building-risk-outlook-2026-featured.jpg) Blog # Building Risk Outlook 2026: What 2025 Taught Property Owners and What CFOs Should Watch This Year Blog January 27, 2026 7 min read By Clint Undseth CFO Playbook Share Download PDF Building Risk Outlook 2026: What 2025 Taught Property Owners and What CFOs Should Watch This Year First edition of the Novem annual Building Risk Outlook. Published January 27, 2026. Insured catastrophe losses passed $100 billion for the second year in a row in 2025, yet property insurance got cheaper. Underneath those numbers, the losses owners faced most often started inside their own buildings: a burst pipe, a battery room, a pump that ran past its warning signs. For CFOs measuring Total Cost of Risk Ownership (TCRO), the full cost of building risk across claims, repairs, downtime, and insurance, that is the story to watch in 2026. Every January, this outlook looks back at the year's industry data on building risk and names the signals worth watching in the year ahead. **What did 2025 teach owners of institutional real estate in Canada, the US, and Europe, and what should they plan for in 2026?** Key takeaways - Losses stayed above $100 billion while insurance prices fell, so price and risk are moving apart. - The most frequent losses start inside the building, with water, power, and equipment. - Owners who can prove how their buildings perform will win better terms and keep the people inside safer. ## What did 2025 cost, and where? Natural disasters caused about $224 billion in damage worldwide in 2025, and insurers covered about $108 billion of it, according to [Munich Re](https://www.munichre.com/en/company/media-relations/media-information-and-corporate-news/media-information/2026/natural-disaster-figures-2025.html). [Gallagher Re](https://www.ajg.com/gallagherre/news-and-insights/gallagherre-natural-catastrophe-and-climate-report-2025/) puts insured losses at $129 billion, with a five year average of $155 billion. On paper, Canada and Europe had quiet years. Insured catastrophe losses in Canada reached $2.4 billion, well below the record $9.1 billion of 2024, according to [CatIQ](https://public.catiq.com/2026/01/20/canadian-insured-losses-from-catastrophic-events-total-cad-2-4-b-in-2025-societal-losses-total-3-4-b/), though the country still recorded 17 catastrophe events. The [Insurance Bureau of Canada](https://www.ibc.ca/news-insights/news/severe-weather-related-insured-losses-in-canada-exceed-2-4-billion-in-2025) reports that insured weather losses nearly tripled over the last decade. Europe's natural disaster losses came in at about $11 billion, against a 10 year average of $35 billion, according to [Munich Re](https://www.munichre.com/en/company/media-relations/media-information-and-corporate-news/media-information/2026/natural-disaster-figures-2025.html). > A quiet year for catastrophes is not a quiet year for buildings. ![Modern institutional buildings and a wet, snow-edged plaza under a clearing winter sky after a storm](https://www.novemdigital.com/hs-fs/hubfs/novem-resources/blog-building-risk-outlook-2026-portfolio.jpg?width=1600&height=900&name=blog-building-risk-outlook-2026-portfolio.jpg) ## Where do building losses really start? Inside the building, with water, power, and equipment. The evidence is the same in all three markets. - **United States.** In [The Hartford's](https://ir.thehartford.com/news/news-details/2025/Water-And-Freezing-Damage-Burglary-Lead-The-Hartfords-Top-Five-Small-Business-Claims/default.aspx) small business claims data, water and freezing damage tied for the most common claim in 2025, at 20% of claims, averaging $34,600 each. [Nationwide](https://agentblog.nationwide.com/commercial-lines/commercial-weather-resilience/non-weather-water-damage-risk-rising-for-construction/) reports that large construction water claims over $500,000 have doubled since 2015, and those over $1 million have tripled. Water damage deductibles of $100,000 to $200,000 are now [common](https://eponline.com/articles/2025/11/25/modern-water-leak-detection-emerges-as-essential-protection-for-commercial-buildings.aspx). - **Canada.** [CNA Canada](https://www.cnacanada.ca/sites/default/files/assets/6b3e9853-6c05-4ada-80bc-63f5ceb8b99d/CNA-Canada-Water-Damage-Mitigation-Guide-for-Emergency+Planning.pdf?fid) found that 70% of large water losses over $100,000 came from water supply lines, most of them pipes that burst in cold weather. In many building types, its [water damage claims](https://www.cnacanada.ca/sites/default/files/assets/c44d6382-b739-448c-a7d5-7cf4b5ca86df/CNA-Canada-Water-Damage-Technology-Solutions.pdf) outnumbered fire, windstorm, lightning, and hail claims combined. - **Europe.** UK insurers pay out £1.8 million in escape of water claims every day, according to the [Association of British Insurers](https://www.alanboswell.com/resources/guide-to-escape-of-water/). Power and equipment tell the same story. In Paris in 2023, a cooling system water pipe leaked into a data center's backup power room and started a fire that took [nearly 16 hours](https://status.cloud.google.com/incidents/dS9ps52MUnxQfyDGPfkY) to put out. In April 2025, a fire at an Amazon data center site in Ohio injured five workers, caused an estimated $50 million in damage, and kept responders on scene for [36 hours](https://www.marysvillejt.com/2025/09/13/data-sinners/). [Uptime Institute](https://uptimeinstitute.com/uptime_assets/d7c049ef5b02a6e0a15540a3e5cb8fbf742c7fa54a1af6caeaaab32b7c15d443-GA-2025-05-annual-outage-analysis.pdf) reports that power remains the leading cause of serious data center outages, and 54% of operators said their most recent significant outage cost more than $100,000. > Each of these losses showed signs of risk before it failed. ## What does this mean for the people inside? The cost of a failure depends on who is in the building when it happens. - **Seniors living and multi-family.** A leak in the night can mean moving residents who cannot move easily, wet floors, and mold. Heat is now part of the same picture: [London researchers](https://www.lshtm.ac.uk/newsevents/news/2025/climate-change-driven-summer-heat-caused-16500-additional-deaths-across-europe) estimated 24,400 heat related deaths across 854 European cities in summer 2025, and 85% were people aged 65 and over. Operators already plan carefully for their residents. Earlier warning from the building gives that care more time. - **Commercial and mixed use.** Partly empty floors let a slow leak run unseen until it reaches a tenant. The owner pays in repairs, lost rent, and a harder renewal. - **Data centers.** Water, power, and batteries share the same rooms. When those systems fail, staff and firefighters are the ones who walk in. - **Venues and large public facilities.** A single equipment failure in a recreational venue can generate a maximum probable insurance claim of up to $5 million, plus business interruption. When it happens during an event, thousands of people are inside. ## Why did insurance get cheaper anyway? Capital. Reinsurers entered 2026 with more money to deploy than the market needed. At the January 1, 2026 renewals, risk adjusted property catastrophe reinsurance rates fell 14.7% on average, the largest drop since 2014, according to [Howden Re](https://www.howdengroupholdings.com/news/howden-renewal-report-112026). Loss free programs saw rate cuts of up to 15%, while programs with recent losses ranged from 5% lower to 15% higher in some cases, according to [Guy Carpenter](https://www.guycarp.com/content/dam/guycarp-rebrand/pdf/2026InsightsPDFs/January_1_2026_Reinsurance_Renewal_Report.PDF). The market is getting cheaper, but not for everyone. It is rewarding a clean loss history. ## What should CFOs watch in 2026? 1. **Water, power, and equipment inside the building.** The most frequent claims are the most preventable ones. Watch which systems are most likely to fail, what each failure would cost, and how fast your teams act on early warnings. 2. **A soft market that sorts buildings.** Expect lower quotes at renewal, but the biggest savings will go to owners who can show a clean loss history and a credible plan to keep it. 3. **More risk staying on your balance sheet.** Howden Re notes that the January renewals came with higher attachments and tighter terms. Lower premiums with higher retentions can still mean a bigger bill after a loss. 4. **A rising baseline.** A five year average of $155 billion in insured losses, and a tripling of Canadian weather losses in a decade, point one way. Plan as if 2025 was normal, not lucky. 5. **Evidence as the new currency.** Underwriters, lenders, and boards are asking owners to prove how their buildings perform, not describe it. Owners who arrive with facts negotiate. Owners who arrive with estimates take the price they are given. ![Finance leaders reviewing building risk reports at a boardroom table, seen from behind](https://www.novemdigital.com/hs-fs/hubfs/novem-resources/blog-building-risk-outlook-2026-boardroom.jpg?width=1600&height=900&name=blog-building-risk-outlook-2026-boardroom.jpg) ## How should owners use a softer year? Treat the savings as a window, not a verdict on your risk. A lower premium does not mean a building is safer. It means capital is plentiful. When the cycle turns, insurers will look hardest at the buildings they know least about. That is why the soft market is the cheapest time to build evidence. Measure your Total Cost of Risk Ownership, not just your premium. Find the equipment most likely to fail and price what that failure would cost. Fund the fixes that protect people first. At Novem, our Property Risk Platform values equipment risk with data from a global insurance partner, derived from more than 20 years of insurance claims across 7.2 million buildings and 103 equipment types. Building failure is predictable, and the owners who see it coming will protect their residents, tenants, and teams first. > Building failure is predictable, and the owners who see it coming will protect their residents, tenants, and teams first. ## Where to go from here Head into your 2026 renewal with facts, not estimates. - **See what your portfolio could save.** Use [Estimate Your Savings](https://www.novemdigital.com/estimate-your-savings) to get a reviewed estimate from our team within 1 business day. - **Size your full cost of risk.** Use the [TCRO calculator](https://www.novemdigital.com/tcro#calculator) to see what building risk costs beyond the premium, or [Book a Demo](https://www.novemdigital.com/get-a-demo). Every prevented failure is a resident who stays safe and a team that is not called out at 3 a.m. Next January, the second annual Building Risk Outlook will check these five signals against what 2026 delivered. Until then, read [Insurance Is No Longer a Fixed Line Item](https://www.novemdigital.com/insights/insurance-no-longer-fixed-line-item). Next in this series [Insurance Is No Longer a Fixed Line Item](https://www.novemdigital.com/insights/insurance-no-longer-fixed-line-item) ![Clint Undseth](https://www.novemdigital.com/hs-fs/hubfs/clint-undseth-headshot-1.png?width=80&height=80&name=clint-undseth-headshot-1.png) Clint Undseth Clint Undseth is CEO and Founder of Novem, with 25+ years in building performance and digital transformation. [Connect on LinkedIn](https://www.linkedin.com/in/clint-undseth-81655420) See what predictive looks like for your portfolio. Estimate how much risk-related cost your portfolio could avoid, then talk to an expert about where to start. [Estimate Your Savings](https://www.novemdigital.com/estimate-your-savings/) Contact Novem ## How can we help? Pick the path that fits where you are. Every route reaches our team. [Estimate Your SavingsSee what predictive operations could save your portfolio. Reviewed by our team.](https://www.novemdigital.com/estimate-your-savings/) [Book a DemoSee the platform live and what it surfaces in your portfolio on day one.](https://www.novemdigital.com/get-a-demo/) [Talk to an ExpertHave a question first? Reach our team directly and we'll point you the right way.](mailto:connect@novemdigital.com) Ready to see what surfaces in your portfolio? [Estimate Your Savings](https://www.novemdigital.com/estimate-your-savings/) [![Novem, Property Risk Platform](https://www.novemdigital.com/hubfs/raw_assets/public/NovemZulbera_27/images/novem-logo.svg)](https://www.novemdigital.com/) Novem is a Property Risk Platform that makes building failure predictable, so CFOs and asset owners can reduce Total Cost of Risk Ownership (TCRO), lower insurance costs, and protect net operating income (NOI). Headquartered in Vancouver, Canada. 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All rights reserved. Failures are Predictable. 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It connects live building signals to claims history, insurance records, and maintenance patterns, so risk is visible and measurable in dollars at the asset level." }, "name" : "What is a Property Risk Platform?" }, { "@type" : "Question", "acceptedAnswer" : { "@type" : "Answer", "text" : "A building management system runs and automates building equipment and reports alarms. A Property Risk Platform sits above it, predicts which failures are likely, and shows what each one would cost if no one acts." }, "name" : "How is a Property Risk Platform different from a building management system?" }, { "@type" : "Question", "acceptedAnswer" : { "@type" : "Answer", "text" : "No. It should layer on the systems you already own and send prioritized work into your existing work order tools. If a vendor requires a full rebuild, you are buying a capital project." }, "name" : "Does a Property Risk Platform replace our CMMS or BMS?" }, { "@type" : "Question", "acceptedAnswer" : { "@type" : "Answer", "text" : "TCRO is the full cost of building risk: losses and claims, downtime, insurance premiums and retentions, inefficient operations and maintenance, risk management overhead, and compliance. It treats those costs as one number a CFO can manage, not as separate line items." }, "name" : "What is Total Cost of Risk Ownership (TCRO)?" }, { "@type" : "Question", "acceptedAnswer" : { "@type" : "Answer", "text" : "No. Total cost of risk (TCOR) is the established insurance industry measure, covering premiums, retained losses, and risk administration. TCRO adds the physical side of building risk, such as downtime and reactive maintenance, so it can be reduced before a loss happens." }, "name" : "Is TCRO the same as total cost of risk (TCOR)?" }, { "@type" : "Question", "acceptedAnswer" : { "@type" : "Answer", "text" : "It gives underwriters audit-ready evidence that failure frequency and severity are falling. That evidence can support better terms at renewal, rather than insurance being treated as a fixed cost." }, "name" : "How can a Property Risk Platform lower insurance costs?" }, { "@type" : "Question", "acceptedAnswer" : { "@type" : "Answer", "text" : "Ask for case studies that name the building type, the avoided loss or saving, and the timeframe. The examples should look like your assets, and the numbers should be backed by audit-ready data." }, "name" : "What results should a vendor be able to show?" } ] } ```