On September 7, the Senate Committee on Banking, Housing and Urban Affairs held a held a hearing on, “Perspectives on Challenges in the Property Insurance Market and the Impact on Consumers.” Regarding skyrocketing insurance cost increases, Committee Chair Sherrod Brown (D-OH) said, “Owners of our already too-small supply of affordable apartments serving the lowest-income renters may be increasingly left with impossible choices.”
Chair Brown noted that insurance companies are “restricting coverage, raising rates and deductibles, and in some cases, leaving states or geographic areas altogether” while 50% jumps in reinsurance premiums “have been driven in part by frequent and more severe natural disasters for themselves and their investors.” While much of the hearing focused on the impact of climate change and rising reinsurance costs for single-family homeowners, the hearing also aired concerns about escalating premiums and rising deductibles forcing affordable housing providers to pay up, take on more risk themselves, and, sometimes, reduced resident services or increase rents.
LeadingAge member Michelle Norris testified on behalf of National Church Residences and noted her affiliation with several national organizations working to address the “unprecedented and climbing insurance rates and reductions in coverage, and the significant impact this has on the rental housing market, from property owners and developers to lenders and investors, and the families and older adults living in these homes.”
“At National Church Residences, we have seen the property insurance liability for our affordable housing properties increase by over 400% over the last 6 years. In recent years there has been little room left for negotiation — carriers have increased premiums and raised deductibles but adopted a ‘take it or leave it’ approach.,” Ms. Norris, executive vice president of external affairs and strategic initiatives, said.
LeadingAge affordable senior housing members have experienced dramatic increases in their insurance rates over the last several years, with 28% of respondents to LeadingAge’s April 2023 housing survey saying they expect their insurance rates to increase by 10- 19% and 13% saying they expect insurance costs to increase by 20 – 29% this year. LeadingAge has been working with HUD on increased funding for properties and agrees with Ms. Norris’s testimony that, “a greater level of intervention by the federal government in the insurance markets may be necessary given the current market failures stemming from the private market being unable or unwilling to offer property (and other lines) of coverage to property owners of all types.”