Gary Porter pitches reserve studies as insurance risk tool

Gary Porter of Facilities Advisors says reserve studies can do more than guide property budgeting. He argues they can help insurers underwrite risk, control losses, and adjust claims by showing the condition, age, and remaining life of key building systems.

Why it matters: - Reserve studies can help insurers spot maintenance-driven risk before losses happen. - The same data can support underwriting, pricing, coverage decisions, loss control and claims adjustment. - For property owners and associations, the approach could also improve insurability and long-term cost control.

What happened: - Gary Porter of Facilities Advisors outlined reserve studies as a forward-looking risk tool for the insurance lifecycle. - Porter said reserve studies are usually viewed as budgeting tools for property owners, associations and commercial portfolios, but they also have value for brokers, underwriters, carriers and adjusters. - The release was issued from Las Vegas on June 11, 2026.

The details: - A reserve study inventories major building components, including roofs, HVAC systems, plumbing and structural elements. - The study tracks each component’s age, condition and remaining useful life. - Underwriters can use that information to evaluate the chance of equipment failure or structural issues that could trigger claims. - Brokers can use the same information to address concerns before submitting a risk to the market. - Carriers can use the data to gauge whether a property is being maintained or is slipping into deterioration. - Deferred maintenance is a strong indicator of future claims, Porter said. - Underfunded reserves can delay needed replacements and raise the chance of loss. - Well-funded reserves can signal disciplined asset management and lower risk volatility. - Reserve studies can help underwriters make decisions on risk selection, pricing and coverage terms. - A building with a funded roof replacement plan is a better risk than one with an aging roof and no financial plan, Porter said. - Reserve studies can also support loss prevention by aligning capital improvement schedules with risk engineering recommendations. - In catastrophe-prone regions, reserve studies can show whether components are being upgraded or replaced in kind. - That can create opportunities to encourage more resilient materials, including impact-resistant roofing and fire-resistant materials, during planned replacement cycles. - Reserve studies can reveal gaps between asset values and insurance coverage. - Brokers can use those gaps to recommend limits, deductibles and endorsements such as ordinance and law or equipment breakdown coverage. - For habitational risks such as HOAs and condominiums, strong reserve funding can indicate sound governance and the ability to maintain the property without financial distress. - Weak reserves can point to delayed maintenance, more claims and possible exposure across property, liability and directors and officers coverage. - Porter said reserve studies can help brokers move beyond transactional placement into a more strategic advisory role. - Maintenance and upgrade decisions today can affect future premiums and coverage availability. - In claims work, reserve studies act as a pre-loss inventory with valuation and lifecycle data. - Adjusters can use the data to answer what existed, what it was worth and what condition it was in at the time of loss. - The component inventory can help establish pre-loss conditions and separate sudden damage from deterioration. - Replacement cost estimates give adjusters a baseline for repair scopes and contractor bids. - Documented useful life supports depreciation calculations, especially on Actual Cash Value policies. - The inventory can also help verify the scope of loss and reduce the risk of overstatement or unrelated items being included. - Reserve studies can clarify whether repairs involve like-kind replacement or upgrades, which affects coverage. - Organized third-party documentation can reduce investigation time, limit disputes and speed claim resolution. - For large or complex properties, reserve studies provide a component-level database that helps assess damage across multiple systems and structures.

Between the lines: - Porter is positioning reserve studies as a bridge between property management and insurance decision-making. - The argument suggests insurers can use maintenance and capital-planning data as an early warning system, not just a post-loss reference. - The claims angle is especially relevant for complex properties, where incomplete pre-loss records can slow settlement and increase disputes.

What’s next: - Brokers, underwriters and adjusters could increasingly fold reserve study data into risk reviews, coverage analysis and loss estimates. - If adopted more broadly, the practice could shift some insurance work from reactive claims handling toward prevention and planning. - Porter is a reserve professional with CAI’s RS credential, the RRC credential, and CPA status. - He has served as an expert witness on valuation matters more than 50 times and previously worked as a public adjuster handling earthquake claims. - Porter is the author of seven books and more than 400 articles on reserve studies and has been published or quoted by outlets including The Wall Street Journal and Money Magazine. - More information: Facilities Advisors