Insurance Costs Continue to Rise, Impacting Housing Providers and Renters
The National Multifamily Housing Council (NMHC) has released its 2024 State of Multifamily Risk Survey and Report, highlighting the persistent financial challenges facing the rental housing market. According to the report, insurance costs remain significantly elevated, adding pressure to an already strained affordability crisis for both housing providers and renters.
Despite this, the report notes a temporary stabilization in the property insurance market, with 2024 marking the first decline in rates since 2017 after 27 consecutive quarters of growth. However, this stabilization does not extend to liability insurance, where rising litigation costs, nuclear verdicts, and shrinking underwriting capacity continue to drive up premiums.
NMHC’s analysis, conducted in collaboration with FHS Risk Management, found that several factors have contributed to rising insurance costs, including:
• Increased replacement cost valuation
• Limited capacity within the reinsurance market
• Social inflation leading to catastrophic jury verdicts
• Restricted availability of guaranteed cost/zero deductible programs
Sharon Wilson Géno, President of NMHC, emphasized the critical role of addressing these challenges, stating, “The current confluence of high insurance costs, interest rates, and construction and material costs make the development and operation of rental housing a financial challenge. A more stable insurance market will help keep costs in check, which, in turn, will improve housing affordability and potentially lower rental housing costs for residents.”
The survey found that 91.8% of respondents own properties in catastrophe-exposed states such as California, Texas, Florida, Louisiana, and Colorado, increasing their vulnerability to extreme weather events like hurricanes and winter storms. In fact, 56% of housing providers reported experiencing losses from named storms or freeze events in recent years.
NMHC urges policymakers to take proactive steps to address insurance market instability, including:
• Reforming and reauthorizing the National Flood Insurance Program to provide long-term stability for rental housing providers.
• Encouraging a more competitive and robust insurance market to improve affordability and access to quality coverage.
The report underscores the need for strategic risk management approaches to help housing providers navigate uncertainty and mitigate potential financial losses.
While the property insurance market has shown signs of stabilization, liability insurance challenges continue to pose risks for multifamily housing providers. The NMHC report highlights the importance of collaboration between policymakers, insurers, and the housing industry to create a more sustainable and affordable rental market.
For full details, access the 2024 NMHC State of Multifamily Risk Report here.
