Rising insurance costs are “putting existing affordable housing under serious financial strain and making it more difficult to finance new affordable housing,” according to the New York Housing Conference (NYHC).
A new study by the nonprofit affordable housing policy and advocacy organization reveals that insurance premiums have been increasing an average of 26% annually while coverage is decreasing or difficult to find.
To better understand the issue, data was collected from owners representing more than 130,000 rental units. The study included detailed multiyear data from 12 owners totaling 55,000 affordable units. These owners are paying an average premium of $1,770 per unit in 2023-24, a 103% increase from the 2019-20 average premium of $869, says the report.
In some cases, owners have seen increases as much as 168% and 175% over four years.
At the same time, owners report receiving less coverage. Insurance carriers are also adding new costly requirements, including additional security cameras, repair work, or requiring approval of contractors or contractors with higher insurance limits.
The study also shares instances of insurance carriers discriminating against affordable housing and providers not interested in insuring developments in New York City. “Declining to cover New York City, especially the Bronx, along with declining to cover affordable housing, suggests discrimination and modern-day redlining,” says the report.
The escalating costs are attributed to different factors, including climate change that has brought on more storms, a tight reinsurance market, discrimination against affordable housing, and fewer insurers that are willing to provide coverage for multifamily housing in New York City, and in the Bronx in particular.
NYHC offers several recommendations, including ban discrimination of coverage or costs for property and liability insurance based upon the income source and income level of residents, require reporting to better understand how insurance companies are serving or failing to serve the commercial multifamily market in New York City, and reduce costs by supporting affordable captive insurers, creating an excess liability fund for affordable housing providers, investing in resilient infrastructure and reforming the state’s scaffold law, which assigns absolute liability to owners in gravity-related injuries.
