Affordable housing hammered by rising insurance rates

Insurance premiums for affordable housing operators are already pricier. The pandemic and climate change has pushed the costs even more.

At the Terraces, an apartment building in Arlington, Virginia, nobody pays more than 30% of their earnings in rent. Vivian Jenkins, 59, moved in four months ago.  

She moved here after being evicted when she lost her job while in the hospital. Now, between her disability check and part time work drawing blood in a medical lab, she’s able to cover her rent of about $1,300 per month.

“It’s a nice place,” she said. “I love it.”

This is one of 54 properties owned by the nonprofit Affordable Homes and Communities. Josh Childs is a development manager there. He told me the group’s insurance bill soared about 30% this year. He worries that pricier insurance will crowd out programs for residents.

“We have a huge education program for literacy and helping kids from Pre-K through our college high school graduation programs,” he explained.

Affordable Homes and Communities tried to cut its insurance costs by joining kind of an insurance co-op: the Housing Partnership Insurance Exchange. It was created in 2004 by affordable housing operators who couldn’t afford their insurance. Premiums for next year shot up, according to Paul Bernard, vice chair of the Exchange.

“We saw increases as low as 34% and as high as 104%,” Bernard said, adding that the pandemic pushed up premiums — and so has climate change. “Whether it’s flooding or fires on the West Coast, we believe that those are adding inflationary pressure to our premiums.”

This issue was top of mind at a recent affordable housing conference in Washington. The first panel discussion of the day was entitled, “Climate Impact: Housing Insurance Crisis.” Maria Lobo, a senior vice president at the global insurance brokerage Gallagher, was there.

Insurers also charge affordable housing operators more because there’s a perception they’re just a riskier bet, she said.

“Underwriters tend to charge about 10% to 15% more than the standard market rate for affordable housing,” said Lobo.

And, Lobo added, it doesn’t help that fewer and fewer insurance companies are willing to cover anyone in the states most exposed to climate change.