Almost two-thirds of real estate investment managers have seen property insurance premiums increase by more than 15% year-over-year, according to a NAREIM member poll. One-third of respondents said their insurance premiums had risen by more than 20%, while another 29% said their premiums were up year-over-year by between 15% and 20%. Multifamily has been the property type most affected with insurers citing individual and industry loss experiences from recent extreme weather events, as well as declining capacity in the market. As a result, investment managers are often increasing - sometimes doubling - deductibles, as well implementing risk control practices such as risk engineering and evaluation reports and increasing property values, or limiting the insurable value of multifamily assets in an overall portfolio. The majority of managers have not considered self-insurance, although for those that have strategies include:

• Having early discussions with lenders and potential lenders about the possibility of self-insuring assets in loan applications and documents.
• Negotiating higher deductibles in loan documents, and where actual deductibles are higher than the loan allows, have an insurer cover the difference.
• Establish an externally-managed self-insurance program, which is shared with lenders.

To read the full survey responses, click here: NAREIM Member Survey_Insurance premiums and self insurance_final