Deductibles are rising, and restrictions or changes in policies are becoming more common.
A new survey focusing on affordable housing providers and insurance costs and availability has found that rental businesses are facing much higher premiums—nearly one in every three policies had rate increases of 25% or more.
The survey, conducted by ndp analytics and commissioned by the National Leased Housing Association (NLHA), aligns with other recent research released earlier this year by the National Multifamily Housing Council (NMHC) that found a staggering 26% of property insurance costs increased over the past year.
Nearly all housing providers are taking actions such as increasing insurance deductibles, cutting expenses, or being forced to raise rents (when possible) to manage higher operating costs due to higher insurance premiums driven by limited markets, claims history and renter populations.
Key findings include:
- For 2022-23 renewals, 29% of housing providers experienced premium increases of 25% or more, compared to 17% the previous year;
- Limited markets and capacity are responsible for most premium increases, followed by claims history/loss and renter population;
- 67% of respondents reported increasing insurance deductibles to manage the increases followed by decreasing operating expenses and increasing rent.
“The impact of rising insurance premiums coupled with the ability to obtain necessary coverage has already begun to impact affordable housing development and preservation efforts,” said Denise B. Muha, NLHA Executive Director. “Further, existing property owners are faced with difficult choices as they struggle with operating deficits related to mounting insurance costs. These cost increases are not sustainable.”
“This is further evidence of what the overwhelming majority of rental housing providers already understand—insurance costs are drastically rising across the board,” said NMHC President Sharon Wilson Géno. “This report demonstrates that while insurance costs and availability are negatively impacting all housing providers, the problem is especially acute for affordable housing providers in particular. Many affordable firms are limited in the cost mitigation steps they can take and already face smaller operating margins—creating even deeper affordability challenges.”
The following organizations distributed the survey to their members:
- Affordable Housing Tax Credit Coalition (AHTCC)
- Enterprise Community Partners
- Housing Advisory Group (HAG)
- Institute of Real Estate Management (IREM)
- National Apartment Association (NAA)
- National Affordable Housing Management Association (NAHMA)
- National Housing & Rehabilitation Association (NHRA)
- National Multifamily Housing Council (NMHC)
- National Leased Housing Association (NLHA) National Association of Home Builders (NAHB)
- Stewards of Affordable Housing for the Future (SAHF)
The full report can be found here.
Based in Washington, D.C., the National Multifamily Housing Council (NMHC) is the leadership of the apartment industry. We bring together the prominent owners, managers and developers who help create thriving communities by providing apartment homes for 38.9 million Americans, contributing $3.4 trillion annually to the economy. NMHC provides a forum for insight, advocacy and action that enables both members and the communities they help build to thrive. For more information, contact NMHC at 202/974-2300, e-mail the Council at info@nmhc.org, or visit NMHC's website at www.nmhc.org.
