If you ask multifamily housing providers what keeps them up at night, the answer will be “rising insurance costs.” These concerns have been declared publicly, with several industry leaders petitioning Congress to intervene. On November 2, 2023, the Congressional Committee on Financial Services Subcommittee on Housing and Insurance held a hearing titled “The Factors Influencing the High Cost of Insurance for Consumers.” Before this hearing, the National Multifamily Housing Council and the National Apartment Association issued a joint statement incorporated into the Congressional record.
The Multifamily Housing Council and National Apartment Association Respond.
In their statement, the National Multifamily Housing Council and National Apartment Association reference an October 2023 report commissioned by the National Leased Housing Association. This study, conducted by NDP Analytics, has been accepted within the industry and distributed to members by various affordable housing organizations. In this study, over 400 housing providers were surveyed. These housing providers manage 2.7 million rental units, 1.7 million federally subsidized. Included in this study’s findings are as follows:
- 61% of the respondents had to increase their deductibles to maintain affordability
- 57% of the respondents indicated that their insurance carriers included new policy limitations to limit exposure
- 34% of respondents reported that their insurance carriers limited or reduced their coverage amounts
- One in three policies for affordable housing providers had rate increases of 25% or greater for their most recent renewal period
How Rising Insurance Costs Make an Impact
Insurance increases compound the effects of an already difficult market for housing providers. Unfortunately, housing providers surveyed said that 58% would increase rental rates to offset the rising insurance prices. Moreover, 64% intend to reduce operating expenses, which may affect whether an apartment community can function properly and efficiently.
After the series of natural disasters that the Southeast has faced in recent years, the issue of rising insurance costs is here to stay.
According to Statista, the US averaged twenty flood disasters annually from 2020 to 2023. To date, 2024 has already seen fifteen named storms. Sadly, Hurricane Helene destroyed many parts of North Carolina and South Carolina. According to a WLOS article, over 100,000 homes, including apartment buildings, single-family homes, and trailers, were lost, impacting more than 200,000 people.
With the cost of multifamily housing in the national spotlight, time will tell whether Congress acts on the rising insurance costs multifamily housing providers are facing.
*******
For more information, visit:
NAA – Resources on Insurance Costs
https://naahq.org/naa-solr-search-content?search_api_fulltext_1=insurance+premiums
Affordable Housing – The Real Estate Roundtable
https://www.rer.org/tag/affordable-housing
Legislative Update – November 30, 2023 – Southern California Rental Housing Association
https://www.socalrha.org/news/legislative-update—november-30-2023
