Apartment Insurance Costs Increase for the First Time in Four Years
By the National Multi Housing Council
The cost to insure apartments rose slightly in 2011, the first time in four years, according
to the National Multi Housing Council’s annual Apartment Cost of Risk Survey
The survey, which is based on data covering 750,000 units operated by 57 apartment
firms, shows the average (nonweighted) total cost of risk (TCR) rising 1% between 2010
and 2011. By comparison, [2010’s] report shows a 6% decline in the TCR. (Total Cost
of Risk reflects the cost of the three principal components of insurance premiums;
property, general liability and workers’ compensation.
A 25% increase in workers’ compensation rates was one of the main factor’s behind
2011’s higher TCR, although higher premiums were also recorded for general liability
Our results indicate that the buyers’ market enjoyed by apartment firms in recent years
is reversing, said Jeanne McGlynn Delgado, NMHC’s Vice President of Business and
Risk Management Policy. Although [2011’s] increases were small and limited to a
couple of lines of insurance, we expect to see moderate price increases in 2012 as a result
of both the current investment market and the impact of severe weather in 2011.
Key Findings of NMHC’s ACORS Survey
¢ The mean average property cost of risk, which accounts for 70% of the average
apartment firm’s insurance budget, decreased by 1% in 2011.
¢ The mean average commercial liability cost of risk increased by 9%, from $37 per
insured unit in 2010 to $40 in 2011.
¢ Premiums for workers’ compensation increased from $833 per full-time employee
in 2010 to $1,040.00
¢ 62% of apartment firms require residents to have renters’ insurance with the most
common limit required at $100,000.
About the Survey
The ACORS contains information about property, general liability, umbrella, workers’
compensation, D & O, professional liability, employment practices and environmental
insurance lines. Data were analyzed by Conning Research and Consulting for NMHC
and the survey includes Conning’s proprietary Property-Casualty industry forecast data
and trends to add context to the survey’s findings. Fifty-seven firms responded,
supplying cost data for insurance procurement for more than 750,000 apartment units.
Firms that completed the survey can receive the full data sets, along with the report.
Based in Washington, DC, NMHC is a national association representing the interests of
the larger and most prominent apartment firms in the U.S. For more information, visit
NMHC’s web site at www.nmhc.org. Reprinted with permission from the Landlord
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