Habitational Market Takes a Hard Turn

After years of losses in the multifamily habitational market, insurers have become far more cautious for both property and casualty coverages, cutting back capacity or even leaving the market altogether. Rates and deductibles have been rising—sometimes significantly—as carriers, more closely scrutinize the risks they are willing to entertain while adding a variety of exclusions.


In a market that has long been plagued by a high frequency of claims that add to losses and expenses, carriers are moving to contain both. In property, two years of costly hurricanes and wildfires have made an impact along with significant hail losses, but carriers are focused on reining in continued attritional losses on all-other-perils (AOP) coverage. For casualty coverage, crime-related claims and plaintiff-friendly jurisdictions have become bigger concerns.



  • Deductible And Rate Levels Up
  • Carriers Adding Exclusions And Restrictions
  • Heavy Focus On Insurance-To-Value
  • Fewer Insurers Willing To Write Habitational Property
  • Midwest Wind And Hail Very Tough Expect Coverage Options To Get Scarcer


  • Rates Rising, Capacity Shrinking
  • Some Markets Leaving After Continued Losses
  • Individual Risk Characteristics, Like Crime Scores, More Important
  • Subsidized Schedules And Those With Poor Loss Experiences Have Far Fewer Markets
  • Rate Tightening Has Been Accelerating


The habitational property market is turning significantly harder following years of softening fueled by huge inflows of new capital from investors seeking higher returns amid near-zero interest rates. Loss experience is a driving factor as insurers focus on improving profitability by reducing capacity and emphasizing underwriting discipline.

As attritional losses have mounted, more carriers have left the market. Several major markets have pulled out of property in London, while other syndicates have come under greater scrutiny from Lloyds and financial regulators. Some insurers that had been participating in primary now offer only excess capacity. Other carriers have stopped writing hail coverage in areas such as the Midwest, north Texas and Colorado.

As rates have risen, traditional E&S markets are regaining interest, at higher rates. New insurers are also creeping into the market, but they do not have the capacity to fill the void. Through the end of the year, coverage options may become scarcer, particularly if big catastrophes cause large losses in the U.S.


To handle the hard market headwinds, it is crucial to prepare submissions with the right data, to thoroughly market those risks and to explore alternatives for deductibles and restructuring programs where appropriate. Understanding both the models and carrier appetites is key.

In short, it’s a market that calls for executing the basics well. That begins with starting early with a strong sense of urgency and providing quality submissions backed by the right account analytics. Underwriters are increasingly demanding better data to evaluate and price multifamily risks. All carriers in the multifamily space are stressing insurance-to-value with some limiting recovery to the values reported through Occurrence Limit of Liability Endorsement (OLLE) wording.

It’s important to identify locations that are driving the PML (probable maximum loss) and to take steps to manage the impact on premiums. For instance, bringing engineers to a site to review secondary building characteristics for result testing and using mapping software to evaluate the fire PML, can help underwriters determine the optimal program structure and pricing.

To attract more markets, higher deductible options should be explored along with deductible buydowns. For carriers, higher deductibles can significantly lessen the expense of attritional losses and service costs. Fewer carriers, however, are writing all-risk buydowns, and it is often easier to obtain a deductible buydown on wind or hail than on AOP coverage.

Many underwriters have received direct mandates from senior management banning rate cuts on current placements and may be held accountable if an account does not perform. Restructuring placements may help work around this directive. In particular, stretching or compressing coverage layers allow underwriters more room to improve terms. More than ever, it is critical that no stone be left unturned during the marketing process.


The habitational casualty market is beset by rate increases and capacity limitations after a decade of losses, which have worsened in the last several years. Many carriers have experienced significant losses that have driven a retraction of capacity. A number of markets have stopped offering general liability and excess coverage. Rates have risen dramatically stating in the summer of 2019 and continue to steadily rise.

In the last 12 months, carriers have pulled away from general liability and excess coverage for risk purchasing groups (RPG’s), which have traditionally represented significant market share. Particularly excess liability for former RPG members now must be underwritten as individual risks.

In some areas, courts are proving more favorable to plaintiffs in actions targeting apartment owners, resulting in verdicts with higher settlements in difficult jurisdictions, including Mississippi, Georgia and south Florida. That shift is also being seen in Harris County, Texas, home to Houston.

In New York, higher losses stem from so-called “action over” claims, which are claims against building owners seeking settlements above a worker’s compensation claim. New York’s “Scaffold Law,” or Labor Laws 240 and 241 that assign strict liability on contractors and building owners for falls from height, are also driving losses and rate increases, particularly in the five boroughs of New York City. 

Another issue facing apartment and building owners is Habitability claims. While these claims seem to be affecting California owners currently, carriers are concerned they could spread across the country. Habitability claims involve the status and living conditions of a property. These claims are related to current living conditions and do not require a specific instance of bodily injury or property damage. Typically, multiple tenants file habitability claims, making them difficult and expensive to defend. Insurance carriers have begun to address these concerns in their underwriting with some carriers now attaching habitability exclusions to their policies. Stay tuned for more information on habitability in a future article.


Regardless of region, overall, the average risk is looking at a minimum of a 10% to 15% general liability rate increase. Schedules with significant amounts of subsidized housing that also have worse-than-average losses are a minimum 30% to 50% higher.

Some major markets have stopped writing monoline general liability for apartments, stopped writing new apartment business, are non-renewing apartment business or limiting schedules to 1,000 units or 2,500 units.

Carriers are also adding a variety of exclusions to address their losses. In New York, particularly the five boroughs of the city, markets are adding Labor Law exclusions as well as exclusions for action-over claims and limitations or exclusions for assault-and-battery claims. General liability rates in New York City are 200% to 300% higher than three years ago. Assault-and-battery and firearms exclusions are becoming more common in Florida as well as in Harris County, Texas.


For excess liability, average risks are experiencing rate increases of 30% to 50%. Those with significant losses and more than an insignificant number of subsidized units may be seeing increases of 100%. There are few options for the RPG market.

Insurers are scaling back limits significantly for lead umbrella or excess coverage. Many carriers have reduced their lead capacity from $25M to $10M and in some instances to as little as $5M. As a result, brokers must broadly expand their marketing efforts to renew the expiring umbrella or excess program limits.

Some markets are no longer considering accounts with more than an incidental amount of subsidized housing, some are only considering risks excess of $5M in limits, and some are exiting the market for excess casualty all together. Other carriers are not considering new businesses and some now have mandatory assault-and-battery and molestation exclusions.


As insurers scale back, they are making greater use of modeling and other data to better monitor their own exposure and react more quickly to the market.

Convective storm models have become crucially important as property underwriters try to stem hail and tornado losses in in the Midwest, north Texas and Colorado. Brokers must generate comprehensive reports with detailed information about the property and construction for negotiations with insurers to offset any default or inaccurate assumptions in the carrier’s risk assessment.

Insurance to value is also coming into play, as underwriters look to more carefully ascertain current property values. The values need to be appropriate because restrictive covenants related to valuation and recovery, which had been ignored in the more competitive market, are now very much active. Most carriers will internally rate using higher values than what is being reported, while others may require valuations to be strengthened prior to quoting. For example, there are a number of examples where losses sustained and paid were 50% plus above what was reported. As a result there is a heavy resurgence of the OLLE wording which limits recovery to what has been reported.

Crime statistics are playing a bigger role in casualty placements, as underwriters increasingly run crime scores for neighborhoods and specific locations based on actual crimes reported. With better empirical data readily available, casualty underwriters are placing more emphasis on crime scores from a variety of vendors for all submissions where they are available. Some underwriters are not quoting above a certain crime score.

While particular locations in the past may have been viewed as better risks than the wider neighborhood, casualty underwriters are taking the view that a higher crime rate in adjacent areas may affect those locations. In New York’s Bronx borough, for example, a rise in assault-and-battery actions has played a significant role. Some casualty markets may add assault-and-battery exclusions or firearms exclusions that will allow them to deny a claim later.

Subsidized housing has become more difficult as those locations may have poor crime scores and histories of assault- and-battery claims. A number of casualty markets will not write schedules with even a relatively small number of subsidized units.


The market for habitational coverage has become highly fluid. Fewer options are available for property and casualty coverage. Rates and deductibles are rising as carriers cut back capacity or exit the market after years of losses. Rate increases have been ramping up as coverage options become more scarce. Data is more important than ever, whether it be modeling for convective storms or crimes scores. Underwriters are basing decisions more on individual risk characteristics to determine acceptability and pricing. In short, this is the kind of market in which experienced, creative, and nimble wholesale brokers can add value for clients with thorough preparation and active marketing.

Contact a CRC Group producer for more information.


  • Ed Magliaro is an Executive Vice President and National Property Practice Leader in the CRC New York office and member of the Property Practice Advisory Committee.
  • David Pagoumian is the Office President of the CRC Red Bank office and member of the Property Practice Advisory Committee.
  • Brent Tredway is a Regional Director and President of the CRC Houston office and member of the Casualty Practice Advisory Committee.
  • Jeff Coles is a Senior Vice President and Casualty Broker in the CRC Los Angeles office and a member of the Casualty Practice Advisory Committee.
  • Bernie Labovitch is an Executive Vice President in the CRC Chicago office and a member of the Property Practice Advisory Committee.