JF 4225: Transforming traditional insurance, Stacking risk management, and How a Disruptive Insurance Model Could Save CRE Investors Millions, ft. Nicolas Lares

In this episode of The Best Ever CRE Show, host Matt Faircloth dives into a transformative conversation with Nicolas Lares, founder of InsurTech, about the long-overdue disruption of the traditional property insurance model in commercial real estate. Lares, who previously worked at Amazon managing insurance for its vast network of independent delivery contractors, shares how he was forced to innovate when carriers pulled out of insuring gig-based logistics businesses during the pandemic. This led to the creation of a self-insured, collective captive model where independent operators pool their risk and become shared owners of the insurance company, aligning incentives and generating profit returns. The model eliminates third-party profit margins, reduces premiums, and allows operators to benefit from underwriting profits—especially when residents' renter's insurance is stacked into the system. The discussion explores how this approach flips the adversarial relationship between insurers and policyholders into a cooperative, performance-driven ecosystem, with potential future applications of blockchain and AI for proactive risk monitoring. Lares emphasizes that the goal is to become the 'last insurance entity' real estate investors ever need, offering true cost pricing and long-term value through shared ownership and reinvestment of savings. Key takeaways include: 1) Traditional insurance creates misaligned incentives where insurers profit from claim denials, while operators pay fixed costs with no upside. 2) InsurTech’s grouped captive model allows smaller operators (under 10,000 units) to pool risk and share in profits without the high capital burden of traditional captives. 3) Stacking resident insurance with property insurance creates a 65% margin product that can fund deductibles and boost NOI. 4) The model incentivizes proactive maintenance and best practices through peer-to-peer knowledge sharing. 5) Future innovations like AI-driven predictive maintenance and blockchain-based claims verification could make insurance proactive rather than reactive. 6) Operators retain profit shares through rolling them into renewal premiums, and while they can’t sell their equity stake, they can pass on the insurance value in asset sales. 7) The system rewards honesty and risk mitigation, turning insurance from a cost into a growth engine. 8) InsurTech’s business model is sustainable through investment yields and reinsurance returns—not from extracting value from policyholders.