WHAT TO EXPECT IN MULTIFAMILY INSURANCE IN 2022
EXPECT RATE INCREASES According to industry experts, those average rates are expected to keep increasing during the first part of 2022, but the increases should taper off throughout the remainder of the year. The effects of these rate increases will vary depending on the property’s geographical location, but there are additional factors that are contributing to the rise in insurance prices. WHAT FACTORS PLAY A ROLE IN YOUR RATES The insurance industry is currently in what is called a “hard market” phase, which is categorized by consolidation in the insurance marketplace. There are now fewer insurance companies that offer policies for the multifamily and rental property industry. The billions of dollars spent in COVID-19 legal battles have also caused another layer of unpredictability for insurance rates. When it comes to underwriting multifamily and other rental properties, there are many variables that insurance companies must consider before deciding rates. The main factors that impact insurance rates include: 1. The industry’s overall loss history (how much premium was collected versus how much money was paid out in claims, including both payouts and legal costs) 2. The cost of materials and cost of labor needed to rebuild after a loss 3. How likely it is for clients to face catastrophic claims (hurricane, windstorms, floods, wildfires, tornadoes, etc.) 4. Economic thresholds (supply chain demands, inflation) 5. Social inflation
With 2021 behind us, it’s time to
look forward and prepare for what lies ahead for the insurance market in 2022. Commercial property insurance rates have risen approximately 9% from the same period in 2020, and general liability rates rose approximately 6%.
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