WASHINGTON, D.C. — Rising insurance costs are standing in the way of building more affordable housing. According to a survey from the National Multifamily Housing Council (NMHC), about 77 percent of owner/developer firms reported rate increases of up to 20 percent or more compared with 2023 costs. NMHC’s 2024 State of Multifamily Risk Report attributes the high costs to a variety of factors, including increased cost valuation, limited capacity within the reinsurance market, shrinking underwriting capacity and restricted availability of guaranteed cost/zero deductible programs. Previous NMHC research, such as the 2023 State of Multifamily Risk Report, indicated that supply chain issues and high inflation led to higher construction and replacement costs. As insurance costs rise, insurance companies increase the minimum amount a property must earn in revenue to remain financially viable. These costs can be especially detrimental to affordable housing providers who develop rate-capped units. However, while insurance rates remain significantly elevated compared with historical norms, the report also found that there was some stabilization in the property insurance market in 2024. Last year marked the first decline in rates since 2017, after 27 consecutive quarters of growth. The report attributes this temporary stability to increased capacity and competition in the property insurance …
