Curbing the Insurance Spiral 3-Part Series: Policy and Practitioner Strategies to Help Stabilize Multifamily Affordable Housing

Session 1 Transcript

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Janis Bowdler: Hello, and thank you to everybody who's gathered so far. We're going to give it just one more minute.

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Janis Bowdler: To let people gather, and then we'll get started.

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Janis Bowdler: Okay.

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Janis Bowdler: It looks like we still have folks joining, but I'm gonna go ahead and get us started, because we do have so much exciting content to get through.

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Janis Bowdler: Thank you so much for joining us today. My name is Janis Baudler. I have the great pleasure to serve as the President of the Solutions Division here at Enterprise Community Partners.

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Janis Bowdler: And for those of you who might not be familiar, Enterprise is a national nonprofit that exists to make a good home possible for every family.

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Janis Bowdler: We support community development organizations on the ground, aggregate and invest capital for impact, we advance housing policy at every level of government, and we build and manage communities ourselves.

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Janis Bowdler: Since 1982, we have invested $80.9 billion and created 1 million homes across all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. If you need to know more about us, you can find us at enterprisecommunity.org.

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Janis Bowdler: So, so excited to have you here for this conversation, and I think we'll start in the obvious place with the why now, but you're probably here because you know how important this is.

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Janis Bowdler: We are seeing providers and residents across all geographies that are facing rising premiums. Insurers are withdrawing, and we're seeing growing climate-related risks.

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Janis Bowdler: In fact, in 2023, nearly a third of affordable housing providers saw insurance premiums increase by 25% or more in just a single year.

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Janis Bowdler: The increase in frequency of extreme weather events across the country is putting populations at risk, and it's reshaping the financial reality of housing, particularly for affordable housing.

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Janis Bowdler: Underwriting losses are driving insurers to leave markets, increase deductibles, and raise premiums, affecting millions.

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Janis Bowdler: And as you all know, affordable housing operators already run on razor-thin margins. When insurance premiums jump 30, 100, or even 500%, providers are left with difficult options. Do they…

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Janis Bowdler: Defer maintenance? Do they cut resident services? Do they raise rents? Or, in some cases, do they exit the market entirely?

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Janis Bowdler: Reducing housing supply at a moment when demand is unprecedented.

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Janis Bowdler: So, Enterprise released Curbing the Insurance Spiral in February. You're about to hear from some of the amazing experts who helped put this report together, and it was in response to partner requests and to share our own experience. Enterprise Community Development's experience navigating insurance.

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Janis Bowdler: You'll learn more about all of this today.

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Janis Bowdler: The report and the toolkit come at a pivotal moment for the affordable housing sector, as rising operating costs and mounting pressure threatens the stability and viability of homes across the country.

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Janis Bowdler: You'll find analysis of how insurance dynamics are reshaping development and preservation efforts, and glean insights and practical solutions for policymakers, practitioners, and community partners.

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Janis Bowdler: But I'm not going to have you take it on my good authority, I'm going to hand you over to the experts, so let me, hand it over to Matt Morrin, who is leading much of this work for Enterprise. Thank you, Matt. Over to you.

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Matt Morrin: Thank you so much, Janis, and thank you for your very deep engagement on the issue of insurance across enterprise, which is something that, as you'll hear, we're just getting deeper and deeper into as an organization.

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Matt Morrin: So really excited to be here. I'll introduce our panelists in a moment, but I want to set the stage that this is the first of a three-part series that uses the Curbing the Insurance Spiral report as a basis for getting deep into this issue. And the Curbing the Insurance Spiral report

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Matt Morrin: has a lot of different components that really have kind of different audiences in mind, and so our series will address that. So today, we're setting the stage, we're talking about the issue at a broad level, explaining the resource and the report at a broad level.

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Matt Morrin: On July 28th, we will have another session that will go deeper into the components of the report and the issue from the perspective of owner and operators and practitioners, so affordable housing, asset managers, property managers, owners.

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Matt Morrin: and their issues and the components of the report that provide resources for them. And then on September 8th, we'll have a report that, or excuse me, a webinar that will focus more deeply on policy solutions, and how state and local governments.

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Matt Morrin: And other parts of the affordable housing system from a government and policymaker perspective can glean things from this report and issues related to mitigating insurance challenges in that regard.

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Matt Morrin: Next slide, please.

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Matt Morrin: So we're setting the stage here, talking about the big issues that are driving costs, driving challenges, driving coverage limitations, and how, affordable housing providers and the sector at large

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Matt Morrin: are dealing with some of those challenges. We will overview the report itself, which is a really, really extensive document with, again, as I've mentioned, resources that provide context for a lot of different users and a lot of different

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Matt Morrin: types of organizations that are interacting with insurance as an issue. We'll have industry perspectives from the Insurance Institute for Building and Home Safety, and from Enterprise Community Development. We'll have a facilitated discussion with our two experts from those organizations.

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Matt Morrin: And then we'll wrap up, and also we'll, have a preview of that. We're gonna post a link to a survey that we're working with another partner of ours on to help, glean

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Matt Morrin: issues that the broader sector, is having with insurances and, with insurance as an issue, and looking forward to seeing the broader field's perspectives. And so we'll come back to that at the end of the session.

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Matt Morrin: So here's our very distinguished panel. Thank you again to Janis for setting the stage for us. Ayrianne Parks is a Senior Director in Enterprise's Policy Shop, and was one of the people who was most responsible for the production of this report, so very excited to hear from her. Michael Newman is General Counsel for the Institute.

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Matt Morrin: the Insurance Institute for Building and Home Safety, and Todd Del Tufo is the Senior Vice President for Asset Management at Enterprise Community Development.

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Matt Morrin: So with that, I'm gonna turn it over to Ayrianne.

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Ayrianne Parks: Great. Thank you very much, Matt. Hello, everyone. Thank you for joining us today. I am going to spend the first few minutes walking through the report and the toolkit overview, talking about what we're seeing in the affordable housing industry and where we think the conversation needs to go from here.

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Ayrianne Parks: What really prompted this work was the growing recognition that insurance is no longer a background operational issue for affordable housing providers. It has become a core threat to housing stability and preservation.

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Ayrianne Parks: As  highlighted, across the country, we are seeing unsustainable premium increases, particularly in the property and liability coverage. And as we talk about that, it's important to think about it not just being a coastal issue anymore, it's not just a wildfire issue. We're hearing about these concerns from providers in urban, rural, and suburban communities all across the country.

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Ayrianne Parks: At the same time, the coverage is also becoming more limited. Deductibles are increasing, carriers are narrowing terms, and in some markets, insurers are exiting altogether.

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Ayrianne Parks: So the central question we wanted to explore with this report were…

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Ayrianne Parks: What is actually driving these trends? What can providers do right now to manage risks and stabilize costs? And what policy changes are needed to create healthier and more sustainable insurance markets over the long term.

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Ayrianne Parks: One of the things that we emphasize throughout this report is that there is no single silver bullet here. As much as we would like to say, here is the answer, there is… the crisis is really being driven by a combination of factors. There's climate-related losses, which I think most people are familiar with. There's reinsurance market pressure, aging infrastructure, litigation trends.

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Ayrianne Parks: inflation in construction costs, and in some cases, outdated or incomplete underwriting assumptions. But there are also a lot of opportunities that we found for intervention. And most importantly, we think it's…

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Ayrianne Parks: It's clear that it should not be normalized, as a system where affordable housing providers are forced to absorb unsustainable costs while continuing to serve residents in the communities that rely on them the most.

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Ayrianne Parks: So this report was designed to be both practical and actionable. We wanted to create something that was useful not just for policymakers, but also for owner-operators, lenders, investors, insurance partners, and, those who are trying to navigate these challenges in real time.

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Ayrianne Parks: This slide that you see here, setting the stage, really frames something that we've seen repeatedly across different, crises and catastrophic events. Whether we're talking about Hurricane Katrina, the California wildfires, the COVID-19 pandemic, and other major disruptions, there is a familiar pattern that tends to emerge.

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Ayrianne Parks: First, insurers narrow or withdraw coverage. Second, premiums increase dramatically. And third, the underlying need for the coverage does not go away.

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Ayrianne Parks: Affordable housing providers still need to insure their properties, residents still need safe and stable housing, and communities still need long-term investment and recovery.

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Ayrianne Parks: But the financial strain has become increasingly difficult to absorb, and that tension is especially acute in affordable housing because the properties operate in highly constrained financial structures.

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Ayrianne Parks: So, unlike market rate housing, affordable housing providers can't simply raise rents to offset rapidly increasing operating expenses. And while we have seen some of these, insurance premiums, kind of subside in their increases, they have not come down. And so, you know, many properties are just operating on

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Ayrianne Parks: very tight margins.

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Ayrianne Parks: So, when insurance costs spike, providers are forced into difficult trade-offs. There's delaying repairs, reducing resident services, deferring capital needs, or pulling back from future development activity altogether.

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Ayrianne Parks: So this slide right here, breaks down some of the major drivers behind rising premiums, as well as the downstream impact that we're seeing across the sector.

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Ayrianne Parks: On the challenge side, climate-related events and natural disasters are certainly major contributors, but they're not the only drivers. Global reinsurance losses are affecting pricing everywhere, even in areas that may not

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Ayrianne Parks: perceive themselves as a high risk. That can include, as Todd, my colleague, will talk to you about, building age and deferred maintenance that can affect the outcomes of the property that may not have been considered when the projects were being underwritten.

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Ayrianne Parks: liability claims and litigation trends are increasingly, a concern that is driving up costs, particularly in certain jurisdictions. And we're also hearing about concerns raised around the use of crime scores and other perceived risk indicators that may not actually reflect

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Ayrianne Parks: The realities of the affordable housing communities.

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Ayrianne Parks: Then, layered on top of all of this, there's inflationary pressures, including sharply higher construction and replacement costs. The impacts are significant. Providers are paying dramatically more for the insurance while often receiving less coverage in return, and some organizations are essentially self-insuring because they can't secure affordable policies with workable deductibles.

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Ayrianne Parks: And importantly, these pressures do not exist in isolation. The insurance costs are colliding with rising interest rates, higher operating expenses, and ongoing capital needs. And in some cases, organizations are delaying maintenance or scaling back resident services simply to keep properties financially sustainable. And in some of the most severe cases in talking to providers.

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Ayrianne Parks: Some of them are considering exiting the market or shutting down, some of their operations entirely.

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Ayrianne Parks: So, this is not just about a balance sheet. These trends have real implications for residents, property conditions, and the long-term housing supply.

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Ayrianne Parks: We can go to the next slide.

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Ayrianne Parks: One of the goals of this project was to move beyond simply identifying the problem and instead focusing on actionable strategies. The report includes both a policy toolkit and a practitioner toolkit.

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Ayrianne Parks: On the policy side, we outline recommendations at both the federal and the state level. At the federal level, we discuss ideas like increasing transparency and underwriting and modeling, modernizing lending and insurance frameworks, and exploring a public backstop.

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Ayrianne Parks: Models, for catastrophic risk.

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Ayrianne Parks: One example we discussed is the potential for a federal reinsurance or catastrophic risk sharing structure that could also help stabilize markets in the way that the, FDIC helps stabilize banking, banking's confidence.

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Ayrianne Parks: At the state level, this is probably where we see the most opportunity. We discuss opportunities to incentivize competition, reward resilience investments, improve data transparency, and evaluate the legal and judicial reforms where it is appropriate. But policy alone is not enough.

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Ayrianne Parks: The Practitioner Toolkit focuses on steps that providers can take to better manage risk and strengthen insurability over time. We wanted it to be something that

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Ayrianne Parks: could happen now. So that includes establishing stronger internal risk management structures, improving data collection, investing in resilience and mitigation strategies, and exploring tools like insurance pools and captives. And we also spend a lot of time emphasizing communication and partnership. Better alignment between providers, brokers, insurers.

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Ayrianne Parks: lenders and regulators is essential if we want to create a more functional and transparent system. We don't want people with just the best brokers to be able to get the insurance that their properties require. We want it to be available for all.

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Ayrianne Parks: Next slide.

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Ayrianne Parks: And finally, this slide highlights some of the broader solution areas that emerged from our research and stakeholder conversations.

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Ayrianne Parks: At the policy level, there are opportunities to explore the public backstop that I mentioned, catastrophic risk programs, underwriting flexibility, and targeted incentives for resilient investments.

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Ayrianne Parks: At the state level, we also discuss emerging operating relief, fair access protections, transparency initiatives, and incentives that could be tied, to risk reduction strategies.

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Ayrianne Parks: On the provider side, we think there is a significant opportunity around stronger risk management integration. Historically, many affordable housing organizations have viewed insurance as primarily a procurement function, and as Todd will tell you, increasingly, organizations like ours are realizing that

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Ayrianne Parks: That insurance strategy needs to be integrated into asset management, capital planning, maintaining, maintenance planning, and organizational leadership more broadly.

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Ayrianne Parks: We also highlight the emerging tools, like captives, pooled risk models, and parametric insurance products, which may have promising supplemental approaches in some context.

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Ayrianne Parks: Ultimately, one of the biggest takeaways from this work is that we cannot solve this issue through any one sector acting alone. This is going to require coordination across government, with insurers, housing providers, lenders, investors, resilience experts, and community stakeholders. Because if the insurance instability continues unchecked like this, it will directly undermine our ability to

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Ayrianne Parks: Preserve and expand affordable housing at the scale that the country currently needs.

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Ayrianne Parks: And with that, I will turn it over to our next speaker, for his industry perspective, Michael Newman, who is General Counsel for the Insurance Institute for Business and Home Safety.

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Michael Newman: Hey, good afternoon and good morning, everyone. Thank you so much for the introduction. It's my pleasure to represent the Insurance Institute for Business and Home Safety this afternoon. I have the opportunity to lead our teams that work on public policy, private sector partnerships.

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Michael Newman: and building code and standards development. So, it's a really relevant grouping of topics for you all today. Now, IBHS is a 501c3 nonprofit research institute. We're funded fully by the property insurance industry.

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Michael Newman: We recreate severe weather across the perils of wind, rain, hail, and wildfire, and conduct full-scale testing of the built environment, our homes, and our places of work.

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Michael Newman: to identify the vulnerabilities, and then close them with mitigation actions that are affordable, effective, and achievable. We do so ever mindful of the deep need to make our homes and our communities more survivable and insurable.

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Michael Newman: Survivable being simply that our homes and our neighborhoods can withstand the severe weather we know they're going to face.

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Michael Newman: Insurable isn't a guarantee, but it is a reflection that Property owners that invest

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Michael Newman: In science-based and verifiable risk reduction can better access insurance markets.

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Michael Newman: This is particularly true, this need for survivability and insurability, is particularly true for affordable housing, whose residents are more economically vulnerable.

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Michael Newman: To severe weather's aftermaths, and less likely to have the kinds of financial cushions or renter's insurance that could help provide support during this time.

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Michael Newman: Now, last year, my friend Rob Moore, who was at that time with the National Resources Defense Council, wrote a piece in which he stated, and I quote, the so-called insurance crisis is actually an insurability crisis.

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Michael Newman: Most homes were never built to survive the types of disaster events we see today, and will see in the future. Across the country, homes are becoming uninsurable as a result.

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Michael Newman: In other words, insurance is not the source of our problems, it is a reflection of them.

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Michael Newman: And the problem is not just a singular disaster, it's the repeated exposure to severe weather that impacts the insurance market. Insurability is challenged when the realities we don't want to accept intrude into our lives and the insurance markets.

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Michael Newman: So what are these realities that we don't necessarily want to accept? They were just… a few of them were just covered, but they include inflation, right? Affordable housing developers understand how the rising cost of materials and labor challenge the economics of building. Well, these same factors challenge the cost of rebuilding.

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Michael Newman: And the economics of insurance claims.

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Michael Newman: Another factor is population trends. To put it plainly, too many Americans move to and stay in high-risk regions. A 2023 analysis from Schusseries found that population growth is the single most significant driver

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Michael Newman: Behind increases in annual expected hurricane losses.

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Michael Newman: Housing durability is another factor. Only 32 million of the 148-odd million housing units in the United States

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Michael Newman: Have been built since the year 2000, which is generally recognized as the dawn of the modern

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Michael Newman: building code era. And of course, we do have rising risk. From hurricane severity being stoked by warmer oceans, to the boom and bust cycle of precipitation and drought that is driving wildfire and conflagration risk, we certainly have a risk reality in this country.

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Michael Newman: Now, most of these factors are outside of your control.

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Michael Newman: Outside of my control.

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Michael Newman: Outside of the control of affordable housing developers, owners, and tenants.

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Michael Newman: In fact, the only action property owners can take to improve their insurability, and I assure to you, the only action policymakers and lawmakers can take to improve the insurability for their communities is to reduce the risk by strengthening the durability

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Michael Newman: Of our homes and buildings.

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Michael Newman: Fortunately, there are tried and true solutions to reduce risk.

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Michael Newman: In both the Building Science Lane and the public policy lane.

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Michael Newman: When it comes to reducing risk from hurricanes and high wind events, Fortified is the gold standard. Fortified is IBHS's program. It's a voluntary re-roofing and new construction program featuring an above-code set of requirements that reduce the risk from hurricanes

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Michael Newman: High winds, and with the hail supplement, hail.

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Michael Newman: Now, a 2025 study assessed the Hurricane Sally experiences of 40,000 properties in coastal Alabama. Hurricane Sally, you may remember, was a Cat 2 hurricane that sat on top of coastal Alabama for over 7 hours, lashing it with wind and rain. And that study of those 40,000 properties conclusively determined the effectiveness of Fortified.

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Michael Newman: The study showed that fortified designated homes had a 70% reduction in claim frequency and a 22% reduction in average claim amount.

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Michael Newman: Now, for wildfires, IBHS's Wildfire Prepared program is now the best pathway to reduce risk for homes and whole neighborhoods, and now, as of this month, multi-family housing as well.

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Michael Newman: For wildfire-prepared home and multifamily, our essential layer, wildfire-prepared essential, protects against embers, which are the primary ways that wildfires reach into our communities and ignite the fires that lead to urban conflagrations and suburban conflagrations.

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Michael Newman: Wildfire prepared enhanced for both home and multifamily adds on building materials that can help reduce the risk of ignition from flames.

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Michael Newman: Indirect heat content.

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Michael Newman: We have a wildfire-prepared neighborhood lane that opens to Aperture to the whole community, focusing on structure separation.

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Michael Newman: connective fuel elimination, and those decisions at the building-by-building level that add up to collective community risk reduction. These solutions are now available across 14 states, across the American West and in Florida.

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Michael Newman: Now, none of the actions in Fortified or Wildfire Prepared are particularly hard in and of themselves, and IBHS has lots of materials and training on how to do it and why to do it, but it's also true that none of them are free.

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Michael Newman: That's why public programs and investments are helping to close the funding gaps. These range from grants that help individual homeowners put a fortified roof on their single-family homes.

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Michael Newman: To incentives and qualified allocation plans that

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Michael Newman: Make, it… excuse me, that incentivize building to fortified

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Michael Newman: Using low-income housing tax credits.

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Michael Newman: My closing call to each of you is to think about ways to affordably fund and finance these critical mitigation actions, not just for new construction, but also for the vast

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Michael Newman: Housing stock that we have that serves the affordable housing communities and residents.

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Michael Newman: We want to reduce the physical risk of affordable housing so you all can better serve your communities.

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Michael Newman: Looking forward to any questions you may have, but for now, I'm pleased to hand it over to Todd Del Tufo.

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Todd Del Tufo: Thank you, Michael.

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Todd Del Tufo: I want to introduce myself. I'm a Senior Vice President of, Enterprise Community Development, focused, on asset management for enterprise community development,

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Todd Del Tufo: Asset management entails, insurance. I know, insurance sits a lot of different places in different organizations.

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Todd Del Tufo: at, Enterprise Community Development, insurance sits within asset management.

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Todd Del Tufo: Enterprise Community Development is a development arm of, of ECP. We own, operate, and manage 125 communities spread

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Todd Del Tufo: As far north as Pennsylvania, and as far south as, as Richmond, those 125 communities, we've got, about 14, just under 14,000 apartments.

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Todd Del Tufo: It's roughly… the portfolio's roughly split 50-50 between family, and senior, and we do both new construction, and we also do, preservation work as well.

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Todd Del Tufo: So… There's a broad, broad range here of, insurable, values.

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Todd Del Tufo: Next slide, please.

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Todd Del Tufo: I'm here today to tell you about our story at Enterprise Community Development, and I want to start in 2022.

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Todd Del Tufo: When everything was, was really good. We had a great policy. We had, one, one carrier. It was a regional carrier. They insured, our entire, portfolio.

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Todd Del Tufo: And then, well, let me tell you why it was a great, portfolio before I tell you what happened.

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Todd Del Tufo: so the coverage, was a $10,000 deductible for, the entire, portfolio.

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Todd Del Tufo: It was, very, very affordable.

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Todd Del Tufo: And it offered the… the policy offered us blanket protection, across the entire portfolio. So, we are extremely happy. I was paying under $400, a unit, for property.

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Todd Del Tufo: liability, and a, $25 million, umbrella. So, in 2022, things were, things were good. And then.

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Todd Del Tufo: In October, November of 2022, I got that dreaded call, which said, our broker said that your, insurance carrier, is pulling out of, Habitational. They are exiting the market.

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Todd Del Tufo: And, so there's a, a lot of,

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Todd Del Tufo: you know, a lot of worrying that was done. We went out to the market, with our insurance broker, and we didn't have a quote.

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Todd Del Tufo: For insurance. Our, our policy renews, August 1st.

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Todd Del Tufo: of each year. And at the beginning of July, I did not have a single, quote on this, massive, portfolio. So it was some, very difficult, anxious moments.

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Todd Del Tufo: We ended up, getting, insurance, in July,

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Todd Del Tufo: And, we got a, a national carrier to do, do the portfolio, on the property side, and then another national carrier to do, the liability.

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Todd Del Tufo: Our $10,000 deductible, went to, $100,000, overnight, and our premium, increased.

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Todd Del Tufo: Never forget this number, 270%. So what you're seeing on the chart here is, sort of half of that increase impacting 2023, because it was an August renewal.

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Todd Del Tufo: And then the other piece kicking in in 2024. So we topped off at, at $1,000 a unit, for, for insurance.

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Todd Del Tufo: And then… sort of, well, what did we do? So we… we just…

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Todd Del Tufo: we got off, up off the mat, we dusted ourselves off, and we said, well, what can we do to, to, to rectify this situation? I was primarily focused on two things, cost and, and coverage.

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Todd Del Tufo: So we started looking at the portfolio, and we started chopping up the portfolio and taking off little segments. We find a carrier that wanted X, we found another carrier that wanted Y, and we started chipping away at the portfolio to sort of reduce our costs and get better coverage.

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Todd Del Tufo: the, the… We also did another thing. We created a self-insurance retention fund, which,

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Todd Del Tufo: helped us offset the $100,000, deductible. So, the way that, what we call an SIR worked.

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Todd Del Tufo: was, between, we set the minimum at $25,000, and then, so the, the, if there was a loss, say it was, a $100,000 loss.

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Todd Del Tufo: the self-insurance retention fund would kick in between $25,000 and $100,000, so we'd pay $75,000 of that deductible.

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Todd Del Tufo: As we know,

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Todd Del Tufo: You know, in the not-for-profit world, the deductibles, can be very, very, troubling, right, if you do have a loss.

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Todd Del Tufo: the, you know, affordable, communities oftentimes can't afford to pay that, that, that deductible. So we created that, self-insured retention to, to sort of help, lessen that, lessen that blow.

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Todd Del Tufo: So what you can see on the chart is we were able to reduce our costs, by using, some of these strategies. But what happened was our… our… it became a lot to manage.

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Todd Del Tufo: And the complexity, just was… was too much. And…

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Todd Del Tufo: you know, I'd worried that we were gonna miss something. We were going to miss renewing a policy, or there was going to be some gap that we weren't, covered for. So that led to a two-year discussion with, with HPN's, captive, HIPAC.

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Todd Del Tufo: And, we ended up, joining Hypex, at the, at the beginning of, of 2026. So we're just starting that, that relationship. But,

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Todd Del Tufo: What that does is it allows us to move away from just figuring out how we're going to procure insurance.

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Todd Del Tufo: to actual risk mitigation, which is now the focus, because, we've… within the captive environment with HIPACs, we have, insurance, we don't have to worry about procuring insurance, and now we can just focus on forward-looking, risk mitigation.

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Todd Del Tufo: So that's, that's it. I guess I'll kick it back over to Matt.

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Matt Morrin: Thank you, Todd and Michael both. Really helpful perspectives, and appreciate hearing, sort of, some background. Michael, let me start off with you and talk a little bit more in sort of specifics and depth, if you don't mind, about what are some of the specific

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Matt Morrin: components of these increases in costs for insurers themselves, as well as for the industry in different regions. So, it'd be helpful to hear a little bit more depth about what are the components of the things that are driving these costs.

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Michael Newman: Yeah, so let's talk about hazards. And in particular, I want to focus on a part of the country that often gets overlooked, which is the interior of the country. Severe convective storms are not weather events that typically make the national news.

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Michael Newman: And yet, they are driving a significant portion of insured losses around the country, around the country, not just in those regions. So, severe convective storms, primarily, we're talking about…

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Michael Newman: tornadoes, derechos, thunderstorms on the wind side, and hail.

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Michael Newman: They're driving, for the last 3 years, there has been over $50 billion a year in insured losses.

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Michael Newman: from severe convective storms. And so, again, these are a slow accretion of losses. It's not one big event like the LA County wildfires, or…

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Michael Newman: Hurricane Ida, but it is causing that level of catastrophic loss in total.

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Michael Newman: And now I want you to think about what is driving that, right? We are building bigger and bigger houses, bigger and bigger buildings. I know this is a multi-family group, but we're thinking about this in terms of both multifamily and single-family housing. We have larger buildings with larger roofs. That means more exposure.

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Michael Newman: And when we have these factors like inflation.

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Michael Newman: Like rising cost of materials, whether that's due to federal policy choices, or simply general cost of inflation making things rise, it costs more

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Michael Newman: to rebuild. It costs more to replace a roof in 2026 than it did in 2019. And that has a real impact on the rising cost of insurance. Same with labor, right? When we have changes in our labor market.

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Michael Newman: which are happening for a variety of reasons, that makes labor more expensive, and that makes claims more expensive. In fact, in a lot of ways, there's a lot… we're in a similar boat here between the insurance industry and the housing industry and the affordable housing industry.

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Michael Newman: These same macroeconomic factors that are rising costs for one…

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Michael Newman: sector are also rising costs for the other sector. There's a whole lot of other factors, that Ariane mentioned, things like…

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Michael Newman: tort and litigation issues that on the casualty side of the equation for the cost of insurance for affordable housing is driving things.

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Michael Newman: But we've… we've got all of these, just one factor stacking up on another that is, in total, contributing to the rising affordability issues in the insurance industry.

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Matt Morrin: Thank you, Michael, very, very helpful. Todd, in your discussions with the insurers that you were working with after your 2022-2023 experience, and your conversations with

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Matt Morrin: the housing partnership networks, HIPEX Captive. Can you talk about some of the feedback you got about what were some of the drivers of those increases in premiums, and sort of their evaluation of your risk? Your portfolio is in a part of the country that I think a lot of people would think is relatively climate…

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Matt Morrin: Climate safe is way too strong of a word, but not one of the most extreme parts of the country from a cost and risk perspective, and so it'd be helpful to hear a little bit about some of the feedback you received about what was guiding those increases in evaluation of risk.

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Todd Del Tufo: Yeah, it's a good question. I think initially, in 2021, 2022, we…

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Todd Del Tufo: you know, I mentioned our cost went up 270%, right? A portion of that, and it's hard for me to quantify, but a portion of that was

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Todd Del Tufo: we just had a really good deal. Our broker had, had got us in a, you know, in with a good carrier that was cost-effective, that had low, deductibles. And maybe in some ways, that allowed us to, you know, kind of…

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Todd Del Tufo: Put our guard down. But, but I, I, I think…

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Todd Del Tufo: what I… what I recall happening in 2022, 2023, was, the, the insurance carriers were unprofitable

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Todd Del Tufo: Right? Due to a lot of these issues that Arianne and Michael have been, mentioning, you know, these huge, events, big losses, and…

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Todd Del Tufo: you know, I think insurance is like any other business. When the business isn't profitable, people pull… pull away. And that's what was happening in the insurance industry. The carriers were just disappearing, the demand was still there, the supply wasn't, and prices,

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Todd Del Tufo: prices spiked.

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Todd Del Tufo: Fast forward to today, and we're in the opposite, situation, where the carriers are… we're seeing the carriers come back into the market, and we're starting to get a little bit of price relief, a little more competition.

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Michael Newman: Yeah, Todd, what you're describing is that kind of soft market, hard market cycle that is a normal part of the insurance industry and other industries as well. I think your experience is you've kind of been riding it one way, and now you're riding it the other.

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Michael Newman: One point you made in your presentation I just want to highlight is the rising deductibles.

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Michael Newman: Because I think that's an underappreciated issue, not by you, Todd, but by many, kind of around the country. As deductibles are rising, and we are seeing this in both single-family and multi-family spaces, and it's

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Michael Newman: As deductibles go up, it is a way to help control the cost of premiums a little bit.

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Michael Newman: Property owners have more skin in the game than they ever have before.

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Michael Newman: Which is to say, the value of not having a claim in the first place.

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Michael Newman: is larger than it ever has before. And as we think about how do we express the value of risk reduction, how do we express the value of science-based verified

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Michael Newman: resilience standards, like fortified and wildfire prepared. I think thinking of it in terms of

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Michael Newman: Availability of insurance, of affordability of insurance, and the known value of not having a claim and not having that deductible or self-insured retention come into play is really important.

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Todd Del Tufo: Let me add to that a little bit. One of the,

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Todd Del Tufo: you know, Michael's hitting on something so important here, which is coverage, and I failed to mention this, but one of the things that also happened to us was on the liability side.

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Todd Del Tufo: We, historically had full assault and battery, full firearm, coverage.

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Todd Del Tufo: And… and that, that changed, in 2023, 2024, where the liability, carriers, started pulling back.

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Todd Del Tufo: And, for the, developers, in the, you know, on the call, that is super important, because if you, if you don't have a solid battery coverage on your primary GL, or you even have a sub-limit.

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Todd Del Tufo: Then, that umbrella coverage that you think you have does not attach, to the, to that underlying, general liability coverage, so…

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Todd Del Tufo: Unfortunately, we experienced that as well.

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Matt Morrin: Todd, I'm gonna come back to you in a second, but I want to go back to Michael for a second. Michael, what are some of the things that you would recommend to owners and operators

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Matt Morrin: as they are thinking about, or maybe in advance of, or in preparation for something like wildfire prepared, or putting on a fortified roof. As you mentioned, these things cost money, and many cases are a difficult thing to accomplish.

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Matt Morrin: midstream in the course of a building's capital cycle, or in the middle of a tax credit compliance period, or things like that. And so, what are recommendations you would make to sort of set the stage for those things, or as interim and first steps?

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Michael Newman: Yeah, let me respond to that in two different ways. First, I want to say, what insurers are looking for, generally speaking, is threefold. One, is the risk reduction action actually reducing risk? Is it grounded in science?

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Michael Newman: Is it verified? Is it more than wishful thinking? And third, is…

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Michael Newman: the data about that risk reduction that has been verified being transmitted to the insurer in a way they can ingest. You really want to tick off all three of those things to be able to build that bridge from your investment and risk reduction to something the property insurance industry or your carrier can do something with.

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Michael Newman: I think more often than not, when I hear concern or, or,

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Michael Newman: upset about, well, I spent all this money, and then my insurer didn't do anything with it.

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Michael Newman: If you don't have each of those three things ticked off, then the insurer just may look at what you did and say, that's great, but I don't have a way to

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Michael Newman: Understand it and apply it.

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Michael Newman: So, more specifically in wildfire Prepared and Fortified, which do, by the way, have each of those three boxes checked off.

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Michael Newman: I'd say, one, when you're building new is the best and most economically efficient way to build in resilience. It's… the delta to put in, say, a dual-pane tempered glass window in a new home or new building in a wildfire-prone area is

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Michael Newman: Far more cost-effective than trying to replace all the windows with dual-pane tempered glass windows.

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Michael Newman: But if, let's say, you've already got a portfolio of buildings, I would encourage everyone to look for those moments in your cycle when you're going to be replacing key things. The roof is a perfect example.

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Michael Newman: Roofs have a shelf life.

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Michael Newman: We all know that, we all lament that to various, extents. And, when you are looking to replace your roof, would be the time to say, okay, I know that I have to replace my roof in 3 years.

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Michael Newman: I know that replacing with fortified… a fortified roof is going to make good sense, it's going to reduce my risk, it might… and it's going to be understood and appreciated by the insurance industry.

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Michael Newman: I also know it's going to cost a little bit more. So, in my capital planning for my roof replacement in 3 years, I'm going to set aside a little bit more, understanding that that's the direction I want to go. Having that advanced planning.

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Michael Newman: And then making sure that you're educated on what is necessary, what's required, who you need to hire, what it might be different about it, I think can make a really big difference.

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Matt Morrin: Excellent, that's very helpful.

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Matt Morrin: Todd, I'll pitch it back to you, and talk a little bit about, if you would, some of the things that are the forward-looking things that you're now doing, now that you're sort of out of the

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Matt Morrin: the mode of, you know, purchasing insurance, but not necessarily sort of proactively managing risk. So, you know, talk a little bit about what you've done from a staffing perspective, what you've done from

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Matt Morrin: Sort of building proactive systems into how you manage risk and how that translates into your insurance coverage, but also how it operates independent of that coverage.

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Todd Del Tufo: Sure. So, one of the things that, that…

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Todd Del Tufo: HIPEX, requires is a full-time, risk, manager. So we've, we've hired, that, that person, Tyler Smith. I'm not sure if he's on, but if he is, shout out to you, Tyler. So we're really,

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Todd Del Tufo: really pleased with that. And, really what, Tyler's gonna focus on in the next, couple years is, is that proactive thinking that I was mentioning, before in terms of,

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Todd Del Tufo: you know, he'll be embedded in, the, the development, process. So we typically do…

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Todd Del Tufo: 6, new developments, a year. Tyler will be involved in those design, conversations.

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Todd Del Tufo: Around the built, built environment. And then he'll also, work with, with property management, on, resident education.

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Todd Del Tufo: like, A4 example,

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Todd Del Tufo: is, all of enterprise, communities are, are smoke-free. I wish, that, rule was followed 100% by our, our residents. Of course, it's not. So one of our number one,

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Todd Del Tufo: claims that we've, that we experience are, are fire claims, and oftentimes, those are,

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Todd Del Tufo: The result of, pardon me.

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Todd Del Tufo: Oftentimes those, those fire claims are the result of, a couple things. the kitchen, stoves, or, or, or smoking.

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Todd Del Tufo: So, one of the first things that Tyler's done since he got here was he put out a one-pager for resident education on how to prevent fires in a communal, living, environment.

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Todd Del Tufo: You know, another thing that we're focused on is, lithium ion batteries, and…

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Todd Del Tufo: And educating residents to the, to those, to those risks.

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Todd Del Tufo: So, yeah, really excited about, what's gonna happen now that we can really focus on, you know, prevention, loss, loss prevention, and really start managing the risk.

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Matt Morrin: Todd, let me ask one more question. How are you working to kind of communicate those forward-looking practices or those risk mitigation measures to your insurer? What systems do you go through

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Matt Morrin: To sort of document claims history, what systems do you go through to sort of document the measures that you are putting in place when you're going back?

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Todd Del Tufo: Sure.

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Todd Del Tufo: So we use a, we… we're a Yardi shop, so we're using a, a module within Yardi that's, it's called Task Manager. It's,

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Todd Del Tufo: So, all of our claims, start with an incident report, and, Tyler has, Michelle on his team.

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Todd Del Tufo: who, handles the day-to-days on the, on the claims. So that incident comes in, mechanically, it goes through, goes through our Yardi, task manager, and, and then we…

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Todd Del Tufo: we're working on, getting through those claims on a more timely, basis now that we have, Tyler, helping, helping manage, managing that. Were you referring to on a more, like, a more global basis, or…

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Matt Morrin: Yeah, I think whatever you feel like is meaningful and effective in communicating the benefit of what you're doing to the actual, you know, insurance program itself.

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Todd Del Tufo: Yeah, and then, so, with, with HIPAC, it's another benefit of, there's a lot of peer exchange that goes on, within, within, HPN and the captive.

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Todd Del Tufo: And, and some of these things, we had started doing, prior to us joining, the captive.

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Todd Del Tufo: But then, a lot of… they have a whole risk management department where they require, us to do… to take certain steps.

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Todd Del Tufo: So a lot of carriers will come out and, and evaluate your portfolio. It's quite an exhaustive, process, that we're dealing with, with, with HPN in, in, in, in the best of ways. I mean, it's,

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Todd Del Tufo: like I said, it really allowed us to focus less on buying insurance and more on, on risk mitigation. So, in this case, the captive is pushing us.

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Todd Del Tufo: And I would say, like, if we weren't in the captive, the number one… well, the number one driver of premiums, in my opinion, Michael… Michael might dispute this, but the number one driver of premiums is the market, in my opinion. The number two is your claims history.

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Todd Del Tufo: So, if… and, you know, you can't really control the market, but you can… you can…

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Todd Del Tufo: Try to, control your claims history.

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Matt Morrin: And to set the stage for some of the second and third iterations of this series, you know, I want to address, we recognize at Enterprise that the economics of hiring a full-time risk manager are challenging. Not every owner and operator has 10,000 units or 12,000 units. We recognize that for small portfolios.

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Matt Morrin: That can be a difficult thing to establish, but what we think is in the report, and what we will dive a little bit deeper into the

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Matt Morrin: into, and some of the next challenges are things that you can do even in advance of hiring a full-time person, or things that you can pull from a risk management capacity that can be embedded into your existing asset management and property management systems. And so that's something that we'll

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Matt Morrin: go into a little bit more depth on, on the panels to come. I also want to call out,

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Matt Morrin: HIPEX and Housing Partnership Network. In a second, if I could have the group,

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Matt Morrin: pull up the slide that has the QR code for their survey. I saw a question in the Q&A. Hypex is…

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Matt Morrin: currently only open to HPN members, but the Housing Partnership Network and HIPEX are exploring the creation of a new program. That new program would be targeted and based on our conversations with Housing Partnership Network to,

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Matt Morrin: to nonprofits, and so there again, we recognize that there are captives and other solutions like that are important and a big deal. You might be in a situation where there's not an immediate and obvious

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Matt Morrin: solution in the form of a captive, but the risk management work that you do as an owner, and the way that you document your history, and the way that you assemble it and communicate it to your insurer, all of that matters regardless of whether or not you're in a captive, and so…

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Matt Morrin: Want to make sure that we're kind of, you know, calling out and addressing that the things that go into making captives work well, work well for owners that might not have that as an option as well.

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Matt Morrin: We're getting… and then I also would add, I saw a couple of questions in the Q&A relating to, sort of, financing profiles for things like fortified roofs and state-level buybacks for deductibles and things like that. We'll start to go into a little bit more depth with some of those in the public policy-focused

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Matt Morrin: session that's going to be the last of the three, and all of these are things that Enterprise and some of our other partners across the industry are exploring, you know, whether or not we've got a role to play in helping set those up, or

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Matt Morrin: sort of delivering TA to state and local governments, and sort of partnering with the industry at large. And so one of the other things that we want to make sure we convey to the audience is

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Matt Morrin: let us know when you sort of have ideas like these, and if Enterprise might be a partner. We're really kind of excited about the potential for

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Matt Morrin: our report being something that sparks further innovation and sparks further communication and collaboration with the field at large on ideas like that. I think

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Matt Morrin: we're not aware of as many programs to finance these improvements and to sort of do things like deductible buybacks as we would like to see out there. And I think the industry has come a long way in a few years, but is still, I think, early in building some of the systems and sources of financing.

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Matt Morrin: That'll move things forward, and so, we're really excited to, to help explore those with folks who are interested in this issue.

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Matt Morrin: So we're… I think we're just about at time. Michael, anything more, that you'd like to, to say, or Todd, you two, that, you feel like are sort of important takeaways or, important next steps for people to consider?

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Todd Del Tufo: They were…

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Michael Newman: Yeah, I'd encourage everyone to… Feel empowered that solutions are available. We do know how to reduce risk.

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Michael Newman: to many of these hazards, in ways that are based in research, that are verified, that can be provided to the insurers. So on the action side of risk reduction, I'd say there are solutions out there. I've covered a couple of them today.

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Michael Newman: On the insurance side, I really can't highlight enough how important it is to have a good insurance broker.

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Michael Newman: Somebody who, even if you don't have a risk manager on staff.

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Michael Newman: the way that Enterprise does, that you can work with them, you can talk through your portfolio of buildings, you can talk about what are the risk reduction solutions that make the most sense, what are the insurance strategies that make the most sense. Somebody who can help translate to you

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Michael Newman: What the insurance industry is going to care about from a risk reduction standpoint, and can translate to the underwriters

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Michael Newman: what you've done and why it matters, and how it can be ingested into the CAP models and other tools used by the insurance industry. So, those are two final thoughts. I really appreciate you, Matt, and you, Todd. It's nice to be on this panel with you, and thanks to all those out there.

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Todd Del Tufo: Yeah, Matt, I had one question on the, self-insurance retention come through, and, and, Michelle, if you want to,

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Todd Del Tufo: you know, hit me up after the call. I can walk you through the details, but essentially what we did was we took a look at the historical cost of our losses between $25,000 and $100,000.

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Todd Del Tufo: From a historical perspective. And then we basically allocated those, you know, those, those old claims.

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Todd Del Tufo: to create… to… well, we sized the fund that way, based upon the history, and then we allocated it pro-rata across the, across the portfolio. So it was truly a self-insurance, fund.

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Matt Morrin: Terrific.

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Matt Morrin: Well, Todd and Michael can't say enough thanks to both of you for offering your perspectives here. Thanks also to Janis and Ayrianne for setting the stage on this report. I also want to specifically recognize Simone Malone and Elizabeth Richards, who really were the backbone in kind of putting this

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Matt Morrin: session together. We're really excited for the next two. Encourage all of you to join us. Encourage all of you, again, to kind of reach out on sort of questions or comments or suggestions for sort of ongoing collaboration.

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Matt Morrin: Or, sort of solutions that you feel like need, addressing, in relation to insurance, and enterprises really

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Matt Morrin: I'm excited to be kind of diving, continuing to dive deeper and deeper into this, into this issue. So really appreciate everybody joining. This session will be recorded and available, on Enterprise's Digital Learning Center, and so thanks again to all involved.

Session 2 Transcript

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Elizabeth Richards: Welcome in, everyone. Thank you for being with us today. We see you early joiners. We'll get started in just a moment.

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Elizabeth Richards: One after the hour, we will kick off.

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Elizabeth Richards: Good morning and good afternoon, everyone. Thank you for being with us today for Curbing the Insurance Spiral. This is a second session for us in a three-part webinar series, and we're just really excited to bring this content forward. Thanks for being with us in the middle of summer here. We're happy to have you.

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Elizabeth Richards: Just briefly, my name is Elizabeth Richards. I am a Director of National Programs for Enterprise and work on the Partner Sustainability and Growth Program, so happy to connect after today's session, and forthcoming sessions, should you like.

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Elizabeth Richards: Briefly, for those of you who may not be as familiar with Enterprise as I am, we'll share that Enterprise turns 44 in 2026.

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Elizabeth Richards: And we… many of you will know that we work in several areas to enable and support affordable housing development. We work with organizations like you to develop and plan this housing. We aggregate and invest capital.

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Elizabeth Richards: And we work with stakeholders around the country to explore and uplift policy solutions for an enabling environment that allows us to create and provide homes for individuals and families.

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Elizabeth Richards: In addition, in that red circle in the middle of the slide, you can see we are recently, relatively recently, an owner and operator in the Mid-Atlantic region, one of the largest owner and operators of affordable housing, and always excited to leverage this expertise into the work that we're doing.

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Elizabeth Richards: So, why this conversation? Why now? We won't dwell on this slide. You are all very familiar. Insurance is mission critical to the work that we're doing, to our annual budgets and our annual policy renewals and premiums. We are navigating, in an unprecedented fashion, issues around climate disruption.

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Elizabeth Richards: post-COVID issues around community safety and security, and we're all navigating unprecedented need for affordable housing in our space. So, we'll get into this more throughout today's conversation and our third session coming up.

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Elizabeth Richards: In 2025, the Enterprise team, led by a colleague who will join us shortly, convened a small group of stakeholders and advisors to really tease through the questions around what the sector is facing with insurance.

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Elizabeth Richards: And tee up important policies to be tracking and leaning into, and practitioner strategies.

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Elizabeth Richards: This is what you will find in Curbing the insurance Spiral. We'll be dropping links to this toolkit resource, and we will walk through it in more detail momentarily.

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Elizabeth Richards: Curbing the Insurance Spiral was published in early 2026, and with that, we have the summer webinar series. Our first session included a higher level discussion around what the sector is facing, and really dove into the intersection of climate

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Elizabeth Richards: the insurance industry and residential Strategies with IBHS.

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Elizabeth Richards: Today, we'll lean in on the Practitioner Strategy conversation, and then, of course, in our third session, early September, we will explore the policy solutions. For those who may not be familiar or tracking, there is a lot of policy work happening around the insurance issue in the affordable housing sector, so really excited to lean in there with you.

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Elizabeth Richards: In terms of how we're spending our time together today, we will tee up the first

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Elizabeth Richards: part of our time together with slides and with some level setting and introductions around the content, but really it's going to be the back half, and perhaps the majority of our session, where we'll have some facilitated question and answer. So we'll take a panel format, come off the slides.

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Elizabeth Richards: please join us with Q&A, and we'll get to your questions as possible. Do know that we will be circulating the webinar recordings, so that you may enjoy them in your own time, or share them with colleagues, and the PDFs of the PowerPoint, so you'll receive these resources and have access to them

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Elizabeth Richards: Many of you may know my esteemed colleague, Andrew Jakabovics, who's a policy expert and resource for enterprise, certainly.

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Elizabeth Richards: We rely heavily upon him as he is Vice President of Policy Development in our Policy Department. He's also a lead on the insurance work for us. Really excited to welcome in Housing Partnership Network, and Brendan Dolan is Vice President there.

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Elizabeth Richards: leads the insurance captive work, which you'll hear more about in Hypex. I'm very excited to welcome in Tyler Smith. He works for Enterprise Community Development, and will share more about his role in risk management and the functions, that he oversees in that new role for Enterprise.

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Elizabeth Richards: So, Andrew, calling you, calling you forward.

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Andrew Jakabovics: Great. Thanks so much, Elizabeth.

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Andrew Jakabovics: We will jump right in. So, as Elizabeth mentioned, this is the second, in a series of three webinars on this topic. Next slide, please. So, there is a link, as she mentioned, to the report in the chat. Just want to give a little bit of background for those who might be new to the topic, or familiar, perhaps, with kind of your own

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Andrew Jakabovics: personal experience, but may not have a sense of the context in which you might be experiencing challenges or pricing differences, et cetera, in the insurance space. So, one of the things that we've seen, over the last several years are unsustainable premium increases, really, across the board, coming from a variety of different places on different, insurance lines, but particularly in property and liability coverage.

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Andrew Jakabovics: Which are based on either perceived or real risk exposure. And there is definitely a gap there. And one of the challenges is that the insurance industry, without, ability to neatly price, will proxy, for risk.

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Andrew Jakabovics: And we'll assume the worst, that's just the nature of conservative underwriting, but it does show up in premium increases. In fact, premiums are up somewhere between 30% and 100% in recent years. I'm sure folks have their own story and saga.

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Andrew Jakabovics: Of their insurance journey that they've been on, but we've also seen, increases of premiums up to 500% in some cases, in certain markets, and in hard-to-serve,

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Andrew Jakabovics: properties. So one of the things that the report does is it talks about what's driving these trends, and some of the long- and short-term strategies needed to reverse them, both at the property level, but also at the systemic level, and we'll go into that in a little bit. And really, the question is, how can you reduce the frequency and severity of loss? So very much a tactical set of questions that we want to tackle, both in the report, but also in the conversation today.

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Andrew Jakabovics: And so with that, some of just the underlying challenges that are driving up the premiums, and some of these are sort of sectoral in nature, some of them are global, and some of them are property or portfolio specific. So some of the underlying challenges, kind of at the

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Andrew Jakabovics: At the sector level are natural disasters and extreme weather events, both within a state and across states, reinsurance and global catastrophic losses, so they're financial factors driving some of the premium increases that we've seen.

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Andrew Jakabovics: Liability and tort claims, I'm going a little bit out of order here. Again, both specific to a portfolio, but also kind of across an insurer's book of business. More specific to the property are building age and condition, building type,

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Andrew Jakabovics: Certainly concerns around redlining crime scores and other perceived risks. And then at a macro level, just inflation, both the cost of materials and labor have risen, so the cost to replace things that have been lost on the property and casualty side.

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Andrew Jakabovics: are certainly some of the factors driving some of the premiums. And obviously, the impacts, as many of the folks on this call will likely know, not only to the providers themselves, but also to residents, premiums are going up, coverage itself, in terms of quality, is either flat or down. Insurers are exiting markets, and insurer… and providers themselves are sort of choosing in some instances to self-insure, which carries its own set of risks.

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Andrew Jakabovics: counterparties have to approve that kind of activity. But some of the impacts on residents are reduced resident services because of the cash flow constraints. Maintenance and repairs sometimes get delayed, which sort of becomes a self-defeating cycle in some instances.

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Andrew Jakabovics: Rents can be increased, where possible, but obviously, where regulation or, provider.

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Andrew Jakabovics: priorities are different, rent increases may not be on the table. And in some cases, we've seen a combination of operating pressures that force providers to close their doors altogether, obviously, to the detrimental impact both of residents and the employees and those properties. Next slide, please.

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Andrew Jakabovics: So the report itself, includes a number of policy and practitioner toolkits, so some of the things that we're not going to talk about today, but will be teed up for the third

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Andrew Jakabovics: Session are on the policy side. Some of the federal policies are around increasing transparency, modernizing lending and underwriting rules, public backstops, so really kind of federal-level interventions or opportunities at the state level. Increased insurer competition sort of drives down pricing, rewarding risk reduction, that's mandated in some places for certain types of activities. Greater transparency, this is kind of a common theme.

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Andrew Jakabovics: And then legal and judicial reforms, really, to kind of rein in some of the kind of outsized, tort liability claims that we've seen that have led to increased premiums. So, a lot of today's conversation will be focused on the practitioner side. If you've got the report handy, call out some of the toolkits starting on page 30 of the report. A set of owner and operator policies.

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Andrew Jakabovics: That we'll talk about as well, establishing risk management functions, which will be a highlight, investing in better prevention and resilience, kind of calibrating against the cost of doing that, using better data to make good decisions, both for property management, but also for insurance decisions, and then exploring sort of less traditional avenues for risk transfer in terms of insurance pools, captives, and the like. Again, a conversation we'll have today.

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Andrew Jakabovics: And then we also talk in the

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Andrew Jakabovics: paper about insurance industry policies, improved communications between the, providers and the insurance companies, the way you use your broker, and engaging with the underwriters, realistic and current data to inform underwriting decisions, and increased transparency, again, are kind of critical components

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Andrew Jakabovics: For some of that, I'd call out some of the risk management

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Andrew Jakabovics: elements and questionnaires starting on page 36 of the report. Shifting to some solutions.

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Andrew Jakabovics: Again, I've mentioned some of the federal and state ones on the left side that are policy side.

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Andrew Jakabovics: policy-level solutions, but really focusing on the providers. Risk management tools, I'm going to kind of come back to this, as I'm sure Brendan and Tyler will as well, kind of the role of risk management and really operating properties, through a risk management lens, in addition to a focus on residents and their needs. So doing what's right by the property, can lower some of the costs. But there are also, again, emerging tools available, captives pooling.

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Andrew Jakabovics: parametric, etc. And again, talking about, response plans and some of the other, things that can be put in place so properties, when there are incidents, we can minimize damage, and dislocation. So with that, I will turn it over to Brendan to share kind of the, the perspective of the industry.

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Andrew Jakabovics: as well as the experience in running Hypex. So with that, Brendan.

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Brendan Dolan: Thank you very much, Andrew. Thank you for having me here today.

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Brendan Dolan: So, I am with the Housing Partnership Network. One of the unique aspects of HPN is we're a network of affordable housing organizations made up of organizations that own housing, as well as CDFIs and other service providers for the affordable housing space.

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Brendan Dolan: And one of the unique aspects of HPN is creating business innovations to help the members of HPN.

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Brendan Dolan: Next slide.

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Brendan Dolan: One of those, business innovations was a insurance company, Captive Insurance Company is what was started, and

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Brendan Dolan: We did an analysis coming out of an HPN member meeting where a lot of organizations came together, and they were sharing the challenges they had with having affordable insurance.

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Brendan Dolan: At the… with the coverages that they need to provide their…

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Brendan Dolan: the… do their operation for affordable housing. And so, through that analysis, it came back that we should get a captive started. And doing a captive is obviously complicated. It requires data, capital, and enough organizations to join at the same time.

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Brendan Dolan: So some of the many… one of the many, benefits of it is you have oversight and transparency of the company. Also, it allows you to.

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Brendan Dolan: The profit that normally goes to the insurance company in a traditional insurance program, within a captive, it remains

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Brendan Dolan: In your insurance company, and that money that comes back to you in underwriting profits can be used to offset premiums in future years, or potential for distributions down the road.

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Brendan Dolan: Next slide.

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Brendan Dolan: And so, HPIEx was started. It's the captive that we have in operation. It's been in existence since 2004.

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Brendan Dolan: It's really provided incredible transparency, stability, and has been hugely beneficial to the members. We have 23 member organizations within the insurance company.

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Brendan Dolan: That second bullet point you see there is governance, and that is so important in that it truly is an insurance company, not only owned by the members, but the owners have oversight of the insurance company.

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Brendan Dolan: And so myself and others who work on the insurance company on a daily basis.

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Brendan Dolan: We can't make any changes to the insurance company without the approval of the board, who obviously, being from the member organizations, have best interests of the affordable housing groups in mind with any decision that's made.

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Brendan Dolan: Go to the next slide.

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Brendan Dolan: And this is a map of locations within the insurance company. So we have roughly 105,000 units spread geographically across the United States, which is really important as we do purchase reinsurance above the property level.

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Brendan Dolan: And so, when we go to purchase reinsurance, having the spread of risk is really appealing to the reinsurance market, helping us to negotiate favorable reinsurance capacity and pricing for the members.

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Brendan Dolan: This slide on the right-hand side, we'll start on the right-hand side, kind of that structure. This is kind of an important aspect of the program. So, when a member pays their annual premium, it goes into three tranches.

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Brendan Dolan: the green, the gray, and the blue. So that first tranche there are losses retained by HPIEx. So when they pay their premium.

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Brendan Dolan: A portion of the premium goes into that green bucket, the shared loss layer, and within our structures, we pay each property claim up to $500,000 comes from that shared loss layer.

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Brendan Dolan: And then a portion of the premium goes to pay for reinsurance, so any claim above $500,000 per occurrence, we have reinsurance to cover those high loss claims. And then the members share in the expenses, the administrative and the different services, including loss prevention services.

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Brendan Dolan: But that green layer, that's really, where the members really have, kind of control over their own destiny, in that each member is rated individually, based upon their own loss experience, so the more that members are able to control claims, it has a direct impact on the premium that they're going to pay.

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Brendan Dolan: And then on the left-hand side.

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Brendan Dolan: You can see that we have,

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Brendan Dolan: collaborative network, peer exchange, shared insights, but customized risk services are so important. So we are really focused through peer exchange, but also we have loss prevention consultants that go out

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Brendan Dolan: Visit properties and provide pretty specific, risk management recommendations to help our members control claims.

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Brendan Dolan: And we can go to the next slide.

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Brendan Dolan: So, with that, we are looking to expand and create a similar organization to HPIEx for non-housing Partnership Network organizations. So, for the greater

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Brendan Dolan: Nonprofit affordable housing sector.

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Brendan Dolan: And with that, with trying to get something like this off the ground, as I mentioned at the beginning, we need enough organizations interested in providing data so we can aggregate that data and put a program together to get us off the ground.

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Brendan Dolan: And we're… doing this, we're really looking to stabilize insurance costs for… to have a long-term solution to your property and liability insurance.

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Brendan Dolan: And if you're able to, either if you work for a nonprofit affordable housing group, or you know others in the industry, please

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Brendan Dolan: Click on the link, share the link. We'd love data and insights from you. And if you have a nonprofit organization, you're interested in providing some data, that would be much appreciated as we try to get this, get this started.

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Brendan Dolan: And with that, I will turn it over to Tyler.

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Tyler Smith: Great. Thank you for having me. Enterprise Community Development.

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Tyler Smith: Is a non-profit affordable housing and development

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Tyler Smith: Property Management Resident Services arm of Enterprise Community Partners.

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Tyler Smith: We are creating and managing affordable homes

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Tyler Smith: That help residents live with stability and connection with their community.

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Tyler Smith: ECD's footprint is Maryland, D.C, and the surrounding area, including Pennsylvania and Virginia, and more broadly, we're one of the largest nonprofit affordable housing providers in the Mid-Atlantic. So, 120 communities, almost 24,000 residents.

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Tyler Smith: And, you know, increasing that portfolio, on a month-to-month basis with our development team.

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Tyler Smith: One of the questions I was asked is, why did ECD create a risk manager position?

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Tyler Smith: I'll get into these slides in a minute. Analysis of claims is one of those.

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Tyler Smith: But…

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Tyler Smith: I mean, I am procuring insurance, and ensuring compliance, and doing claims management, and risk management, and partnering with all of the, departments within ECD.

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Tyler Smith: It helps to have somebody that has risk management as their goal, and help everybody move towards

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Tyler Smith: protecting tenants and protecting property. Everybody trying to do that in their own silo becomes a little bit more difficult, so with the development team, the property management team,

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Tyler Smith: facilities, resident services, asset management. There's kind of a different role that I play with each one of those teams. Procuring insurance is just one thing that I work with, with asset management and development, making sure that we're compliant.

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Tyler Smith: That premiums are, you know, standard and, up to market.

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Tyler Smith: Brendan's captive.

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Tyler Smith: HPN. We're in the Housing Partnership Insurance Exchange with Brendan and his team, and they've done a very good job. We work well with them. We actually moved from a very, diversified portfolio, you could say, of different insurance policies that made things very complicated.

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Tyler Smith: And, by bringing those together, I've been able to focus a little bit more on risk management and strategy. So, collecting and analyzing the data is… is one thing that's a little bit new for us. We put a,

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Tyler Smith: a system in place called Case Manager, where we track every claim and every incident in a single database.

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Tyler Smith: And it makes it trackable, and we're building out what report we can put together in order to best demonstrate

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Tyler Smith: Where we,

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Tyler Smith: where we're having the most claims, the highest number of claims, the most losses, and this is just one example, I thought the most interesting one, of an analysis of the first half of this year. This is just property claims.

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Tyler Smith: And there were 18 total claims. The red… Portion are all fire-related.

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Tyler Smith: And I can tell you that the severity mostly came on the fire side. The highest quantity of claims was in the kitchen, a lot of grease fires. And this is just in the first half of 2026. I mean, we do have 120 properties.

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Tyler Smith: So the claims do… do add up. The water damage

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Tyler Smith: is another significant portion. We had a couple sprinkler claims, we have pipe rupture claims, and one… one…

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Tyler Smith: thing that I look at

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Tyler Smith: when I see these numbers is, alright, what can we do in the kitchen? With the development side,

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Tyler Smith: on the development side, what do we put into place when we're building a property? You know, we need to have…

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Tyler Smith: the NFPA13 fire sprinkler system. We need to have, fire suppression systems on our ovens and stoves.

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Tyler Smith: And on the water damage incidents, does everybody in the building know how to turn off the water? Not just the facilities person, but a property manager, somebody who might be there.

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Tyler Smith: And close to, a water shutoff in order to limit the amount of damage, because it goes through multiple units.

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Tyler Smith: I think there's another similar slide, if we can go to that.

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Tyler Smith: And this is the dollar amount in losses. So, you can see that the severity

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Tyler Smith: Is with fire, and then we have, water damage and some other…

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Tyler Smith: property damage. And what we are working to do, and we have other data, no surprise, I mean, there's a full presentation for the leadership team

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Tyler Smith: Is… Drill down to, alright, what region are some of these items, you know?

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Tyler Smith: what areas are these incidents or claims happening in? And are they senior housing or, multifamily properties?

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Tyler Smith: what are the age of the buildings? And that way, we can help drill down and try to eliminate, some of these preventable losses.

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Tyler Smith: So, that got a little granular. I'm happy to answer more questions as we move on, but I think we can…

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Tyler Smith: We can shift.

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Andrew Jakabovics: Great. I think that's really helpful background, both in terms of the HPIEx,

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Andrew Jakabovics: captive, as well as kind of the way in which enterprise community development sort of monitors, manages, risk on properties, and kind of the insurance approach. So, with that, I will… you know, I think, Tyler, you did a great job sort of teeing up…

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Andrew Jakabovics: The nature of, incidents.

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Andrew Jakabovics: and claims that ECD has had in the first half of this year, and I think it speaks to the fact that, there's a lot of conversation that typically happens around, or expected kind of, like.

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Andrew Jakabovics: large-scale disasters and things like that, sort of catastrophic risk, hurricanes, wildfires, hail, right? But the frequency of the claims is not from, you know, there's that one lightning strike, right? I do like that. So we do have a natural event, right? But a lot of the losses are sort of man-made.

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Andrew Jakabovics: And just come from people living their lives in properties. And so, Brendan, you know, what are some of the…

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Andrew Jakabovics: effective, inexpensive practices that kind of move the needle. Tyler, you can feel free to chime in on this, on underwriting and on premiums, right? So the things that drive insurance costs, and losses is, on one hand, the frequency of the losses, right, but also the severity. And I think, again, like Tyler, that list of both incidents and the costs associated with them gives

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Andrew Jakabovics: Participants here, a sense of, kind of, the range of types of claims that come up.

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Andrew Jakabovics: But, you know, kind of, how do we prevent those, right? What are the preventable losses, and what can we do, that makes sure that, or that encourages, underwriters to look more favorably, at a property because of the risk mitigation that's at play?

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Brendan Dolan: Yeah, Andrew, there…

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Brendan Dolan: It's a great question, and you know, members don't need to do real expensive fixes a lot of times to improve their overall risk management plan.

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Brendan Dolan: It's really a culture of safety at a lot of organizations, and implementing policies and procedures that are uniform and can be documented across properties can go a really long way in preventing future claims.

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Brendan Dolan: So over time, we've found with our properties across the portfolio, is that inspections and documentation

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Brendan Dolan: is really the best form of overall risk prevention. So getting property managers, maintenance staff, maybe even resident service staff kind of on the same page to have a culture of safety and risk management. It's really crucial to have that overall

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Brendan Dolan: Buy-in and belief that risk management is important for the organization, and it has

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Brendan Dolan: There are a lot of ramifications when you have some of these big claims.

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Brendan Dolan: So inspections in common areas, and when there's a potential hazard, that it's reported and gets repaired in a timely manner is really important.

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Brendan Dolan: You know, we see on the property image side, Tyler nailed it. It's interior water, interior fires are what we see. Angie mentioned there are

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Brendan Dolan: Obviously, some… sometimes weather-related losses, and those are hard to control… to control, but if you can control those interior fire, interior water, it's gonna go a long way in making an organization more insurable, to the… to the overall insurance market.

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Andrew Jakabovics: So, kind of picking up on that theme, Tyler, so what… how have you kind of operationalized some of that?

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Andrew Jakabovics: in, you know, kind of in the day-to-day, you know, I think your example of, right, making sure everybody knows how to turn off the water, but what are some of the other things, that you've done, some of the changes that you've made to the management practices with kind of an eye towards risk mitigation?

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Tyler Smith: One thing, or I should say.

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Tyler Smith: I think partnering with the different departments in the company is really crucial. You're working with a lot of different people, some of whom specialize in different aspects.

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Tyler Smith: Facilities, property management, development. They're not necessarily in silos, but you, you work with them where they are.

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Tyler Smith: And, in working with the facilities team, they have a new system called Elise AI, which they're using for their inspections.

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Tyler Smith: And so, in speaking with them, I had the opportunity to put in risk management

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Tyler Smith: questions, things for… because I… I can't make it into every unit. That is, goes from the director of facilities, to the regional facilities folks, to the site-level facility folks, and there's an order of,

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Tyler Smith: command, so to speak. So to have the site-level folks with that system, and be able to say.

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Tyler Smith: Do you see any space heaters? Is there evidence of smoking? Are the,

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Tyler Smith: are there power arrays that are daisy-chained that might cause an issue? Are the exhaust fans covered in dust? Like, could there be a source of combustion there? Those are some things that really help us. And when the team

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Tyler Smith: is also bought in, and I think the folks at ECD work very well together, and, are on the same page, and want to protect

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Tyler Smith: people and properties. With the property management team, tenant education is something that we speak about, putting out communications on the sources of fires and how to protect against them.

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Tyler Smith: And then… On a little bit of a different note, the liability side.

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Tyler Smith: The property management team knowing how to record that information well.

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Tyler Smith: Taking the pictures, getting witness statements, putting it into the system, getting ready for long tail risk, which is a problem with these liability claims. It might take 2 or 3 years for them to even be reported, and we have to be prepared to defend ourselves.

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Tyler Smith: In mediation or in court. So, those are… those are some of, some of the things that we… that we work on.

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Andrew Jakabovics: Great. I want to pick up on that. Brendan, bring you into the conversation on the long-tail risk side of this. Right? Obviously, kind of immediate damage is clear.

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Brendan Dolan: Right? Yep.

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Andrew Jakabovics: But sitting with tail risk, right, obviously has implications long-term for both the finances of a captive, but more generally in terms of, you know, the insurance industry's approach to where the risk might lie. So I want to talk… get your sense of some of the things that Hypex has done to kind of manage some of that tail risk.

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Brendan Dolan: Yeah, you know, a lot of the conversation surrounding, insurance for affordable housing organizations has been on the property side.

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Brendan Dolan: Cost of repair, cost of labor, has gone way up over the past 5 years. Obviously, natural disasters. But the liability line of business has gotten very difficult, not only for affordable housing, but in the insurance sector overall.

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Brendan Dolan: And so, we are just seeing just a much higher, settlement amounts, for liability claims. We're seeing them on…

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Brendan Dolan: just traditional slip and fall claims are settling at higher amounts. We're seeing more habitability claims. Unfortunately, more assault and battery claims.

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Brendan Dolan: And so, what Tyler mentioned was the documentation in a clear and consistent manner across properties is really the best defense over time to protect the organization, especially with the staff turnover at the property level.

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Brendan Dolan: Having these conversations documented in a place that's easily accessible.

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Brendan Dolan: is really, really important. Memories fade over time. Sometimes you're not gonna get these claims until 2-3 years later after they happen, and a lot of the people who worked at those properties may not be there anymore. So having a place internally where you can go and pull up those records

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Brendan Dolan: We'll make the defense much easier for your organization, to defend itself against these liability claims, because, insurance companies are definitely…

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Brendan Dolan: Raising premiums for liability, so it's something that organizations should be well aware of going into these next few years that,

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Brendan Dolan: the claims are coming. It's more… it's become easier for tenants to make these claims with the AI capability now of writing up these claims to bring them to the property managers, and so organizations need to be really diligent in their record keeping.

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Andrew Jakabovics: So, you bring up a good point about staff turnover.

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Andrew Jakabovics: Tyler, how have you guys dealt with the fact that there is often, you know, these are difficult jobs, and there often is a lot of staff turnover? Do you find that the trainings that you've developed, kind of, and the approach around bringing risk management into the training.

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Andrew Jakabovics: Has helped, kind of, get folks up to speed quickly as you're onboarding new staff.

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Tyler Smith: Yeah, we try to bring in somebody experienced to a property that,

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Tyler Smith: as they're coming in, I mean, it's a top-down training focus. For example, if somebody on the property management team

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Tyler Smith: knows how to input our incidents, write a narrative, and do it in the way that is written in our manual. We hope that there are two or three people at the property management office that already know how to do that, so that if one leaves…

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Tyler Smith: somebody else is there. I work with a great teammate, Michelle.

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Tyler Smith: Foster, who, handles a lot of the claims and does those trainings, so if there were to, be somebody that was just… had no idea what they were doing, we, can retrain them.

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Tyler Smith: And of course, we have trainings from time to time to brush up.

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Tyler Smith: But yes, there… there is… is turnover.

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Tyler Smith: You know, other times we have consultants that come in.

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Tyler Smith: That, help bring the team together that are, Are very experienced, so…

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Andrew Jakabovics: So, obviously, HPIEx has, you know, strict…

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Andrew Jakabovics: Reporting requirements and things like that. But prior to us joining

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Andrew Jakabovics: HPIEx, did you find that being able to document those kinds of things, was beneficial in terms of being able to get underwriting that was a little bit more favorable?

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Andrew Jakabovics: And the ability to kind of have the brokers and underwriters be able to tell your story a little bit better in a way that kind of benefited the portfolio.

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Brendan Dolan: Absolutely, absolutely. Having those… some of those policies and procedures already in place, went a long way, in getting the underwriters

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Brendan Dolan: I'm not gonna say comfortable, but understanding the risk and being able to underwrite accurately, moving forward, and some of the things that's been implemented over the past even… even year, since Tyler started Enterprise is really impressive.

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Brendan Dolan: What they put into place, just in terms of policies and procedures, and, you know, when a new organization comes into the insurance captive.

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Brendan Dolan: They have to go through, kind of.

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Brendan Dolan: We call it an enhanced service plan, where essentially it's just,

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Brendan Dolan: working with that organization with specific timelines to get policies and procedures updated into a certain level, that it's gonna put them on the best track to be successful. Because when I went through the slides, I highlighted that

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Brendan Dolan: the better organizations are able to control claims through loss prevention and claim management. It has a direct impact on premiums, and we're all working in the same direction here to lower claims, lower tenant displacement, lower premiums. That's… we all have the same goal in mind, so that's what we're all working towards.

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Andrew Jakabovics: Tyler, from your perspective, what would you say are sort of the top 3 things that are sort of readily implementable that you've seen either ECD do or partners do, that's made a material difference for the benefit of properties and residents from an insurance coverage cost perspective?

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Tyler Smith: Top 3 things, well, it… the numbers are the most important thing.

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Tyler Smith: And I think that if you can…

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Tyler Smith: I don't know exactly what the direct

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Tyler Smith: number is, I don't think you can figure it out, but if you are able to properly, you know, have the proper requirements of your vendors, have them listed as additional insureds.

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Tyler Smith: And then when a vendor causes a problem, which happened to us very recently, a sprinkler… a sprinkler head was, busted and…

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Tyler Smith: It went off, caused damage to multiple units, and, it was, it was carrying, a contractor was carrying ply, what's it called, drywall.

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Tyler Smith: And, to be able to file the claim on their insurance?

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Tyler Smith: and not have, you know, a $50,000, $75,000 claim on your insurance from one year to another. That's really helpful, because you could have $75,000, $50,000 of incurred cost

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Tyler Smith: That is affecting your loss ratio. At your renewal.

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Tyler Smith: And eventually, you know, if you don't file it directly with the contractor, it has to be subrogated, and it's on your loss history until you've successfully subrogated the claim, which, it takes a long time.

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Tyler Smith: So that's, one thing that really,

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Andrew Jakabovics: Sorry, just quickly for folks who may not know about subrogation, can you just sort of explain the process and the difference between the direct claim and the subrogated claim?

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Tyler Smith: Right, so, a subrogated claim would be something happens, say a vendor, causes a sprinkler leak, and you file a claim.

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Tyler Smith: To get the damage repaired. And your insurance carrier, you and your insurance carrier say, that's not our fault, that shouldn't be on our… our insurance.

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Tyler Smith: That should be on the contractor's insurance. Well, you've filed the claim, with your carrier.

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Tyler Smith: And your carrier now has to subrogate against the contractor. So, it's a backroom, legal, your carrier's going to their carrier, and it's a little more messy than you would like.

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Tyler Smith: If you can file it directly, on their, on their insurance.

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Tyler Smith: We don't have to deal with subrogation. In order to do that, you have to be an additional insured on their policy, which people don't understand.

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Andrew Jakabovics: Great.

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Elizabeth Richards: Drew,

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Andrew Jakabovics: Yeah, go ahead.

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Elizabeth Richards: We've got a couple questions coming in. Do you want to take them now.

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Andrew Jakabovics: Sure, yeah, I always get caught up in insurance conversations, so yes, yes, please, toss in a couple of questions. I can… I will open up the Q&A box here. So…

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Andrew Jakabovics: question coming in saying, we are considering a shift to more expensive, non-combustible construction, like all concrete instead of wood, even for projects that are as low as 5 stories. Capital cost is higher, but the builder's risk is much less. Clearly an important component of the whole development process.

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Andrew Jakabovics: And the operating property insurance is much lower. Again, they're familiar with all concrete construction, so they are evaluating differently than, STIC.

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Andrew Jakabovics: Are other people moving in that direction? So, kind of tossing that out to the world who's, on the, kind of, on the…

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Andrew Jakabovics: listening side, on the attendee side, feel free to toss comments into the chat on that front. But Brendan and Tyler, from your experience, right, what are the benefits, or I guess the cost-benefit analysis on that?

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Andrew Jakabovics: The… the question who… person put it in the chat also notes that all concrete also allows for easier use of floor drains, and all unit bathrooms minimizes water damage when sprinklers go off. Yes, we know that

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Andrew Jakabovics: Drywall, replacing a lot of drywall for, you know, 2 inches of water, to avoid mold and things like that is definitely a significant expense, carries displacement risk, but the ability to kind of just hose down an all-concrete structure, definitely minimizes displacement, and, and replacement costs as well, so don't know how.

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Brendan Dolan: For… in our portfolio, we still see mainly frame construction. If a group is…

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Brendan Dolan: willing to go to the construction type that the person had the question, that's a huge benefit over time. Your insurance costs are going to be lower. The drains that you mentioned, having drains, interior drains in the center of bathrooms could have a dramatic impact upon lowering claims, so these are

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Brendan Dolan: Great upfront risk management steps that you're taking, and that's… that will be good for your organization over time.

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Andrew Jakabovics: I don't know if we've got any experience with that in our portfolio, or things that you've seen prior to joining ECD.

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Tyler Smith: I have not seen drains. I've heard of the idea of putting in drains, and I think it would really help,

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Tyler Smith: You know, from a… from a loss perspective. But we recently, had a building quoted as frame, and then non-combustible. Let's see, it was…

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Tyler Smith: 20% rate difference, if I remember correctly, it's significant.

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Tyler Smith: Bye.

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Brendan Dolan: And you compound that by a number of years, that's gonna pay for that upfront cost in not too long.

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Brendan Dolan: And the drains in the bathrooms, the reason why that's important is…

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Brendan Dolan: across multifamily housing, we see overflow of tubs, overflow of sinks, just cause a tremendous amount of damage. So if you can mitigate that through having the drains in a bathroom, the center of the bathroom, that's…

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Brendan Dolan: Could be huge.

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Andrew Jakabovics: Yeah, I mean, incidentally, I've also heard that the turn costs end up being lower, because obviously you're not, or potentially you're not replacing drywall as frequently and things like that, depending on how the interior construction is done.

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Andrew Jakabovics: But the term cost can also be a savings on that front as well.

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Andrew Jakabovics: There was another question… related, about building to a passive house standard.

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Andrew Jakabovics: Is that also helpful from an insurance perspective, setting aside the utility cost question?

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Brendan Dolan: From an insurance cost perspective, I don't know how much of a difference it's gonna make. It's, it's, like you said, utility-wise, that's where the real savings are gonna come in.

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Brendan Dolan: It really depends on the construction, whether it's a frame or the other type of construction materials that are being used.

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Andrew Jakabovics: question that's come up around captive policies. So if your premium is reduced, does that mean that the other members of the captive make up the difference, or is the overall premium level that you're collecting lower?

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Brendan Dolan: So when we price for the overall portfolio, we use an actuarial analysis, essentially that

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Brendan Dolan: gives us guidance on how much money we need to collect in that upcoming year to cover claims in that shared loss layer. Each organization is rated individually based upon their own loss performance, so…

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Brendan Dolan: Some members may see a decrease in premium based upon their lost performance, others will see an increase in premium based upon their lost performance. So, it's…

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Brendan Dolan: that there is a sharing involved, like any type of insurance, but organizations really do have a lot of control over their destiny in terms of their insurance premiums going forward. So it's…

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Brendan Dolan: It's a good ques… very good question.

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Andrew Jakabovics: So, Tyler, a question's coming in for you.

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Andrew Jakabovics: about reviewing and approving vendor contracts as it relates to risk management, so is it sort of as a centralized function? And do you have, like, a template that vendor con… template vendor contracts at all properties sort of

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Andrew Jakabovics: have to use, and then I guess a broader question that sort of opened up for both of you, related to the earlier part of the conversation around third-party,

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Andrew Jakabovics: Is, have you seen a shift in best practices, or is there a shift in best practices in terms of

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Andrew Jakabovics: responsibilities that you would keep for your staff, as opposed to hiring third parties, because of the insurance that comes with the third prizes has come up, and some of the research that we had done, particularly around, assault and battery exposure and security

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Andrew Jakabovics: staff. So, oh, kind of two-part question there, Tyler and then Brendan.

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Tyler Smith: So, for vendor contracts, we have a number of people that we

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Tyler Smith: involved in that process. There are some larger contractors where we may have, for example, a fire safety contractor that works with maybe a majority of our buildings that won't sign

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Tyler Smith: our contract. Fire safety is also a specific industry that is a little niche, and so that may be the case, but in general, we have a contract we use for enterprise residential. We've looked at the insurance requirements, we've…

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Tyler Smith: Customize that to an extent according to the amount of risk we see, in each

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Tyler Smith: contractor, you know, what is the… basically, what is the likelihood of this contractor hurting somebody, third-party liability?

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Tyler Smith: I think is the deciding factor on maybe how high this umbrella is gonna be. We look at the indemnification agreement and make sure that we are putting the onus on the contractor.

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Tyler Smith: Rather than taking more responsibility than we need ourselves.

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Tyler Smith: So yes, the property manager should be using our contract in order to hire,

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Tyler Smith: Any vendor that they're using, and if they don't do that, or can't do that, then they have to, escalate that, and ask permission.

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Brendan Dolan: Yeah, I think… I think that's perfect, what Tyler's saying, and a lot of times, if you don't have somebody on staff that reviews these contracts for insurance indemnification language.

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Brendan Dolan: Most insurance brokers have an attorney or somebody on staff that you can get those third-party contacts to, and they can review them for you. So I would say if you're reviewing your insurance broker, that should be a question that you're asking them, that they have that service that they can provide for you.

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Brendan Dolan: The question of security for, for,

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Brendan Dolan: whether to have that in-house, use a third party, I would… I would recommend using a third party for security services, as our members are in the business of providing affordable housing, not providing security. So it's a different type of oversight for people handling security that

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Brendan Dolan: You're probably not going to have the proper training and oversight of those types of people.

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Andrew Jakabovics: That's a great, great perspective on that. You mentioned brokers. Let's…

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Andrew Jakabovics: let's spend a couple of minutes, talking about what should people be asking of their brokers that they might not think to ask? So you mentioned one, right? Sort of like a set of capacities and capabilities that they might bring to the table. But how do you… how should people better engage with their brokers, other than sort of thinking about it as a…

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Andrew Jakabovics: I have to make this call once a year, I source it, they give me a price, and we're done, like…

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Andrew Jakabovics: How do we get people to be a little bit more sophisticated about what they're looking for, as they're… as they're looking for coverage?

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Brendan Dolan: I thought so… Tyler, you start, then I'll go.

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Tyler Smith: It helps to have another set of eyes. We don't all have experience in the insurance world, but you can still take a look at your policy, be aware of

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Tyler Smith: You know, take a close look at your deductibles. Do you have a separate VIN deductible that's 2% and not, you know, the $25,000, all other perils deductible that covers the rest of your policy? I mean, there's intricacies, things that you might see, sublimits. You need to go through your policy.

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Tyler Smith: And, see what you can see. You might not have all of the additional insurance that you've asked for listed. The properties, you know, maybe there's a typo and a property's listed inappropriately. There should be somebody at the agency that is doing

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Tyler Smith: those things, but I think that is,

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Tyler Smith: One way to be a little bit more sophisticated about, what you're doing,

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Tyler Smith: from an agent-broker standpoint. And I know, Brendan, you may get into this

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Tyler Smith: To a greater extent, but…

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Tyler Smith: What does an agent or a broker like to see, or want to hear, or what can they learn from?

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Tyler Smith: Their, their client.

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Tyler Smith: I don't want to pin you in a corner.

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Brendan Dolan: Yeah, no, I take what he says, right?

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Brendan Dolan: Ask the broker, do they have other

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Brendan Dolan: Multifamily Affordable Housing clients. How big is their book? Is this a specialty of theirs, or is…

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Brendan Dolan: Are you their only account in the space that they have? If so, then you need to kind of drill down. Do they know the carriers that write this type of business? What type of services do they provide? Do they provide any loss prevention service, claim management service?

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Brendan Dolan: Are they gonna work on your best behalf when they're marketing you as an account to the insurance market?

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Brendan Dolan: they might struggle if you're their only Multifamily affordable account, to put you in the best possible light with the insurance carriers. So, I think you'll learn a lot from the questions that they ask you in terms of how you run your operation.

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Brendan Dolan: I think that the specification from that broker and the added services, like the… having an attorney on staff to help with the contract review, having loss prevention services that can help with policies and procedures, I think that all…

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Brendan Dolan: Important questions that are… that can be asked.

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Andrew Jakabovics: We've got two final questions, we're almost at time, so,

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Andrew Jakabovics: Quick question for you, Tyler, about the lightning claim.

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Andrew Jakabovics: Do you know if a lot of those properties that you have have lightning protection, and do you advocate for providing protection on properties? And then for both of you, a question about best practices or templates for claims documentation. That's not… we don't have a detailed

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Andrew Jakabovics: claims documentation discussion, in the, report itself. We've got a lot of, kind of, pre-coverage types of questions, but kind of a…

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Andrew Jakabovics: property management best practice, I don't know if we have anything available, for sharing on… from either of you around claims documentation, policies, and procedures, so just tossing both of those out to you.

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Tyler Smith: Yeah, the lightning question is a great question. We advocate for lightning protection. I need to talk to facilities and see

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Tyler Smith: what are…

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Tyler Smith: the measures that we take for lightning, it happens so infrequently, you know, it's not… it's not on my list of top 5 things. The, lightning protection, but it's a really good point. That lightning hit a panel

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Tyler Smith: a fire panel and caused some short circuit that affected the broader system and put us out of commission for a number of days. We were on fire watch for over a week due to that. So it's important,

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Tyler Smith: To have that in place, and the next step for us would be to do an audit of what we have at each property.

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Brendan Dolan: For report of claim, we do have a first,

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Brendan Dolan: you know, first report form, that, that should be no problem that we can share. Incident report, pretty, pretty common to have.

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Andrew Jakabovics: Great.

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Andrew Jakabovics: We will circulate that, as well.

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Andrew Jakabovics: Last question, before I toss it back to Elizabeth to take us down the home stretch. Can a vendor sign a waiver of subrogation and be an additional insured at the same time, almost like a double protection for us or the landlord?

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Andrew Jakabovics: So, just from a technical perspective,

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Andrew Jakabovics: Either of you want to take that.

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Tyler Smith: Can you rephrase the question? Sure.

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Andrew Jakabovics: So the… is it the ven… so the vendor would be signing the waiver of subrogation, and an additional insurer… list you as an additional insured at the same time? Do they do both, or could they do both?

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Andrew Jakabovics: Or…

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Tyler Smith: They… so, that's something provided through the policy, so it's not something they need to sign individually. Their own policy will be capable of adding waiver of subrogation

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Tyler Smith: and additional insured. By, by having the waiver of subrogation, the contractor would be…

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Tyler Smith: waiving its right to subrogate against your insurance carrier. So, it's a double protection for you as the owner-operator to have both, and standard to do that.

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Andrew Jakabovics: Elizabeth?

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Elizabeth Richards: Thanks.

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Elizabeth Richards: Thank you, Andrew, and Brendan and Tyler, and thanks all of you for a really fantastic conversation. What great questions. We can continue the conversation after today's session, so please reach out. Just a reminder,

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Elizabeth Richards: In terms of the captive Brendan was speaking to, and Tyler as well, we… they are in expansion mode and exploring, so want to hear from you in terms of how you are navigating insurance questions and issues.

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Elizabeth Richards: We have links, and certainly this barcode here, if you want to drop in and take that survey, you will make folks very, very happy. And then just want to wrap up. Our final session is in early September, as you can see here, September 2nd. Please join us to drop in and explore policy solutions.

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Elizabeth Richards: When it comes to affordable housing and insurance. So, really appreciate all of your participation and interest today. We look forward to seeing you again in September, and thanks for the fantastic conversation.

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Elizabeth Richards: Have a great rest of your week, everyone.

Session 3 Transcript

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Elizabeth Richards: Good morning, good afternoon, welcome in. We will get started in just a moment. Two minutes after the hour. Welcome in.

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Elizabeth Richards: Welcome in.

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Elizabeth Richards: We will get started at 2 minutes after the hour. Thank you for joining us.

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Elizabeth Richards: Good morning and good afternoon. Welcome to Enterprise's Curbing the Insurance Spiral webinar series, and thank you for being with us. Today is our final session.

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Elizabeth Richards: Focused on policy and promising approaches, and solutions in the policy space.

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Elizabeth Richards: So, for those of you not familiar with Enterprise, just a moment to remind you who we are and what we do. You can find lots more online if you go to enterprisecommunity.org, but Enterprise is a national nonprofit that exists to make affordable homes possible for families and communities.

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Elizabeth Richards: We support community development organizations. Many of you are these partners, with programs on the ground, policy, and grant making.

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Elizabeth Richards: In that blue circle to the right, you can see we aggregate and invest capital solutions, and in that orange circle on the left, you'll see that we build and manage communities ourselves. Today, we are one of the larger owner and operators in the Mid-Atlantic with affordable housing.

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Elizabeth Richards: Since 82, we've invested over $80 billion, creating 1 million homes across all 50 states, DC, Puerto Rico, and the Virgin Islands.

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Elizabeth Richards: Again, you can find lots more online and understand the markets we work in and the issues we focus on. So insurance, which brings us here today, is mission critical for our sector, for all of you, for all of us, and has been for a while.

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Elizabeth Richards: Earlier this year, Enterprise released

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Elizabeth Richards: Curbing the insurance Spiral. It's a report, so lots of good information around what's happening in this space, in the sector.

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Elizabeth Richards: Also a toolkit. Lots of strategies for practitioners and for policy operators. So if you haven't taken a look, we will be dropping the link, and we'll make the link available multiple times throughout the webinar. Do so.

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Elizabeth Richards: We think you can find it helpful. We worked with many of you to produce this, and we're excited to bring it to you, today and, going forward.

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Elizabeth Richards: So we kicked off a webinar series, and this is the third session. In June, we had IBHS join us and focused on the intersection of climate, affordable housing, and insurance.

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Elizabeth Richards: In July, we leaned in on practitioner questions, really looking at the risk management function within the organizations, and also focused on the insurance captive strategy. And we'll talk a little bit more about that as we wrap up today.

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Elizabeth Richards: Today, as you know, it's policy, so really excited to bring you what will be a robust conversation. We're excited and thank all of the panelists for joining us. As you see, my colleague Flora will join us momentarily, Associate Vice President of Policy for Enterprise.

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Elizabeth Richards: We then will have Lincoln Avenue Communities, the Louisiana Department of Insurance, the Colorado Department of Insurance, and of course, our colleague in New York, who's a lead on insurance as an issue for us.

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Elizabeth Richards: In terms of how we'll be spending time together in this hour, you can see the bulk of our time will go to a panel discussion, so about 20 minutes after the hour, we'll kick into a panel conversation, and please feel free to drop questions.

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Elizabeth Richards: into the Q&A. We will hope to get to many of these today, and if not, we will elevate them for answer after today's session. We also want you to know that we are recording the session, and we'll circulate this and our first two sessions to everyone who's registered, so more to come there.

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Elizabeth Richards: Flora, over to you to take us through a little bit of information about the toolkit and our panel.

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Flora Arabo: Great. Thanks, Elizabeth, and happy to be here.

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Flora Arabo: So, as Elizabeth mentioned, in February, we published a report that looks at the causes and effects of the insurance crisis on affordable housing specifically.

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Flora Arabo: Housing providers' ability to survive in this funding environment has been quite remarkable, given the premium increases that they've experienced.

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Flora Arabo: We actually examined Enterprise's own portfolio, and just in California, for example, providers were experiencing increases between 50% and 500% in 2024 alone.

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Flora Arabo: So we knew we needed to dig deeper into the drivers that are increasing exposure to risk.

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Flora Arabo: And therefore, insurance costs. And what can be done on a short-term and long-term basis to really curb those trends.

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Flora Arabo: This report includes an in-depth examination of the frequency and severity of loss, something you'll hear us refer to many times in the report, both as a driver of cost, but also as a risk that can be mitigated to reduce costs.

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Flora Arabo: The report also has a provider toolkit that's created to help owners and operators navigate short-term risk exposure and reduce premiums

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Flora Arabo: And then finally, a policy toolkit that's really aimed at lawmakers and regulators who can make structural, long-term changes that'll move the industry towards stability. Next slide, please.

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Flora Arabo: So let's talk a little bit about what we found. There are, of course, a lot of challenges that are driving premiums, particularly in property and liability insurance. So.

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Flora Arabo: On the property side, of course, the top driver is catastrophic claims. These are climate-driven disasters, billion-dollar events.

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Flora Arabo: That's a main driver, but there are also a lot of day-to-day claims, like deferred maintenance, building age and condition, e-bikes, and other causes of fires, and inflation.

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Flora Arabo: And then on the liability side, the top driver is really tort claims. These are nuclear verdicts, which is when a jury pays out a payment of more than, excuse me, a verdict of more than $10 million, which really increases risk exposure for carriers.

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Flora Arabo: But we also look at other things like insurance redlining. We do know that affordable housing is a data point for some insurance underwriters, and the use of crime score, source of income, and certain proxies are unfortunately at play in some markets.

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Flora Arabo: And then, of course, drivers can vary by building type, so it depends on if you're talking about permanent supportive housing, commercial, residential, and so on.

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Flora Arabo: And the impact to owners and operators has been severe. To stay in business, providers have had to make really difficult decisions, including whether or not to keep up with maintenance and repairs, and many are assuming greater risk through increased deductibles, reduced coverage.

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Flora Arabo: Effectively self-insuring, by not filing claims, or even all of the above.

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Flora Arabo: Next slide, please.

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Flora Arabo: So, as I mentioned, the report has two toolkits. One is for practitioners, and one is for policymakers.

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Flora Arabo: In the short run, we do know that there are a lot of things that providers can do to reduce their premiums, but in the long run, the most impactful area for change is at the state level with policy solutions, because that's the level where the industry is largely regulated.

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Flora Arabo: The solutions we offer in the report are geared towards legislators, governors, and insurance commissioners.

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Flora Arabo: But because we know there are major geographic variations on what's driving the crisis, as we'll talk about later today, we attempt to lay out a wide variety of solutions that can meet a market's unique needs, understanding

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Flora Arabo: That some states will have to take an all-of-the-above approach to reduce frequency and severity of loss.

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Flora Arabo: Next slide, please.

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Flora Arabo: Okay, finally, the report outlines, a huge inventory of policy tools at our disposal.

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Flora Arabo: Ranging from federal to state action. For state legislative and executive officials, including state insurance commissioners who are the primary insurance regulators at the state level.

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Flora Arabo: It does include many specific ways in which they can take action to invite insurers back into the market to increase competition and thereby lower prices.

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Flora Arabo: In the report, we also urge states to reward risk reduction strategies, like investing in prevention and resilience measures that can make properties better able to withstand adverse weather events and just generally last longer.

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Flora Arabo: We also talk about ways that states can improve transparency and enact legal and judicial reforms that curb the phenomena of third-party litigation, financing, nuclear verdicts, and things of that nature.

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Flora Arabo: And for developers, owners, and operators of affordable housing, we have a lot of ways that they can integrate risk management functions

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Flora Arabo: Invest in resilience and prevention, use better data, explore a captive, many things that they can do with really tailored recommendations

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Flora Arabo: Depending on whether you are a small, medium, or large owner-operator.

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Flora Arabo: And then last but not least, we offer suggestions for the industry itself. There are a lot of things that carriers and brokers can do to increase transparency and consider resilience in their pricing decisions.

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Flora Arabo: So, with that kind of rundown of what's in our report, I'm going to turn it over now to Thom Amdur. Tbom is the Executive Vice President for Policy and Impact at Lincoln Avenue Communities.

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Flora Arabo: And he's going to give us the provider and really national perspective on what's happening around the country. So, Thom, over to you.

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Thom Amdur: Thank you, Flora. First, I just want to thank Enterprise for the opportunity to join you today, and just to re-endorse the Curbing Insurance Spiral Report. It's a great resource, it very much aligns with

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Thom Amdur: our assessment of the market and the series of policy interventions that we think could be effective. So, just a very quick little bit about Lincoln, just to give you some context on why this is such an important issue for us.

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Thom Amdur: We're one of the largest owners and developers of affordable housing in the country, working across 33, soon to be 34, states.

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Thom Amdur: We have a lot of different risk, across our profile, and a lot of exposure to,

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Thom Amdur: various, insurance, challenges, that, has really been a challenge for us the last couple of years.

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Thom Amdur: My portfolio within Lincoln includes public policy, but it also includes sustainability, resiliency, and resident impact strategy, and there's just a lot of intersectionality between insurance and all of those areas, and I hope that

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Thom Amdur: this will be kind of helpful for the audience. And I also lead up a number of different insurance policy initiatives. I'm the chair of the insurance committee at the Affordable Housing Tax Credit Coalition, and I've just done a lot of engagement on this.

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Thom Amdur: If we could jump to the next slide. So just to contextualize,

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Thom Amdur: you know, the rising cost of insurance is directly related to the housing affordability crisis that we're all experiencing. Higher operating expenses leads to higher market rents, sort of just by necessity. It is a significant drag on our ability to finance and preserve affordable housing because, again, the higher operating expense of the insurance premium reduces our debt leverage.

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Thom Amdur: The unpredictability in the marketplace today is also really challenging from a financing perspective. Very often, we have transactions that are delayed because we don't know where our insurance costs are going to be. And lastly, it just puts a lot of significant stress on our operations for the existing portfolio.

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Thom Amdur: Which can lead to deferred maintenance, more risk at the property, which, of course, can lead to higher insurance premiums, and then potentially, in a worst-case scenario, potential loss from the affordability restrictions. So, something we absolutely want to avoid. If we could go to the next slide…

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Thom Amdur: So, again, the Curbing the Insurance Spiral, report actually dives into a lot of these, solutions, and so I'm gonna kind of pull out, where I think, some significant discussion should proceed, with the industry.

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Thom Amdur: Starting with the most controversial, backstops. There's a lot of different ways that one can approach a backstop in the market. Not everybody in the insurance industry supports this as a potential resolution, and I want to be kind of transparent about that.

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Thom Amdur: But, from our perspective, the insurance markets really need to function rationally, and they need to do so in both hard markets and soft markets.

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Thom Amdur: And you can make a pretty strong argument that they weren't functioning correctly a few years ago, where we saw that rapid increase in insurance premiums. And while we have seen some declines over the last couple of years, they're still at historic highs for us.

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Thom Amdur: So a backstop is a solution, that can help us access, critically needed insurance during counter-cyclical times.

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Thom Amdur: I think there are other solutions that, if implemented, could obviate the need for them, but I think the conversation… I think it needs to be in the conversation until we address those needs. So that's why it's there. And we have backstops in place, through several federal programs. They exist internationally. There's some really interesting ways.

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Thom Amdur: That we could do this in a public-private, partnership structure.

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Thom Amdur: Maybe in a future webinar we'll be able to talk to that. What I think everybody can agree on is really we have to prevent losses, and where I think government can be most effective, right now is

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Thom Amdur: creating incentives and funding sources, to actually mitigate property loss at the property level, as well as at the community level. So, I'm a big fan of Mike Thompson's Disaster Resiliency and Coverage Act, H.R. 1105.

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Thom Amdur: Which would create, grants and tax credits, to address,

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Thom Amdur: high-risk, properties around the country, but I think community resiliency, investments through BRIC and CDBG-DR and other, grant programs would be really impactful.

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Thom Amdur: On the anti-discrimination front, I'm not sure this is actually the biggest driver in the market today, but I think we in the affordable space can hopefully all agree that there's no place for discrimination in the housing markets, and that includes on the insurance front.

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Thom Amdur: It's our strong belief that our properties should be underwritten based on their actuarial risk and not based on what financing tools or subsidy types that we use. And so, I want to make sure we keep that in the mix as well.

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Thom Amdur: Competition, I think is really important as well, and I think government can, facilitate, broader risk pools and competitions amongst, impacted.

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Thom Amdur: insurance purchasers, like affordable housing owners. This could be through, technical assistance, this could be through, incentivizing through tax, programs or, or otherwise, a deeper, reinsurance market. This could be through, funding,

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Thom Amdur: And backstopping, risk pools,

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Thom Amdur: certainly price supports and budget-based rent increases are another way to address it. And then really the big one, which we'll probably spend the least time talking about, but in some respects might be the most other important issue, is inflation.

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Thom Amdur: The fact of the matter is, is you have risk, and then you have your multiplier of building replacement cost, and things cost a lot more to replace today than they did 5 years ago. And to address this, I mean, it really goes way beyond the insurance sphere, involves our trade policy, our monetary policy, our labor and immigration policy, our foreign policy, but, certainly it would be helpful, to address inflation in a significant way.

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Thom Amdur: If we could go to the last slide here, really, I addressed a lot of the big themes on the previous slide, but at the state and local level, I think there are a lot of the same tools that Congress and the administration could implement that are available as well.

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Thom Amdur: The couple that I really wanted to highlight from this slide are really…

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Thom Amdur: premise liability reform and tort reform, one of the most significant drivers that we're,

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Thom Amdur: experiencing in our casualty policies is the, just increase in the size of claims on the liability side of the front. And we've seen premise liability reform be effective at the state and local level.

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Thom Amdur: And I also just wanted to put in a plug for data transparency. It's really hard for us to advocate for strong policies when we don't really have a look under the hood to see where the losses are and if they're actually aligned with our experience in how we're being underwritten.

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Thom Amdur: And so, to the insurance commissioner offices that are on the panel today, making that data available, doing insurance data calls, and specifically exploring the dynamics in the affordable housing marketplace in those efforts, in addition to the single-family marketplace, I think could be really impactful in focusing our attention.

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Thom Amdur: And I think, that's… that's it. I'm happy to take questions.

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Thom Amdur: Later on?

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Flora Arabo: Thank you so much, Thom. We really appreciate all the work that you've done and Lincoln's perspective on this work. So, I'm gonna invite our panelists, to join me now for a conversation. Everyone's already met Thom.

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Flora Arabo: With us today, we also have Michael Conway, Insurance Commissioner in the Colorado Division of Insurance.

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Flora Arabo: Chris Cerniauskas, Chief of Staff for the Louisiana Department of Insurance. Did I get the last name right, Chris?

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Chris Cerniauskas: You got it.

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Flora Arabo: Great. And Patrick Boyle, Senior Director for Policy and Communications at Enterprises New York Market. So, I'm gonna kick us off with a conversation about what's driving costs around the country, and Chris, let's start with Louisiana.

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Flora Arabo: After the hurricanes that hit the Gulf Coast in 2020 and 2021,

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Flora Arabo: Tell us a little bit about how those catastrophic losses impacted the insurance market in Louisiana, and then what the state did to attract carriers back into the state.

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Chris Cerniauskas: Sure. So, in 2020 and 2021, we had the big hurricanes, Laura.

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Chris Cerniauskas: Delta, Zeta, Ida, that really put a crush on the insurance market in the state of Louisiana. It resulted in 12 companies going insolvent. A lot of those companies were selling cheap insurance.

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Chris Cerniauskas: Not affordable, good insurance, but cheap insurance. And, another 20-something companies left the state. So that decreased the competition. In an open market, you know, with reduced competition, that drives up the prices.

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Chris Cerniauskas: So when Commissioner Temple took over in 2024 as the Insurance Commissioner.

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Chris Cerniauskas: His goal was to make insurance available, affordable, And hold insurance companies accountable.

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Chris Cerniauskas: One of the major components, and in the insurance crisis, too, you know, a lot of… we did not have the fortified home program when Hurricane Ida or Laura or Delta hit. Had we done that, we would have had a lot of roofs replaced to the fortified standard.

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Chris Cerniauskas: So those were proverbial bullets that were shot that we couldn't get back, but when he did take over, the state had just started the Fortified Home Program, and the commissioner really took the ball and ran with it, really growing

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Chris Cerniauskas: The program, which now is… recognizes

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Chris Cerniauskas: getting the attention of the insurance market. The question is, what kind of concentration of these resilient homes do we have to have to really make a significant impact to bring these companies back? So that's…

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Chris Cerniauskas: in a nutshell, where we were, and what the Commissioner's doing to bring back the insurance market.

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Flora Arabo: Right, and have you seen any relief to citizens, which for our audience is the insurer of last resort in the state?

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Chris Cerniauskas: So, in 22, the citizens had 4.2% of the homeowners market in the state of Louisiana.

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Chris Cerniauskas: With the introduction of new companies that have come in, I think we have 14 new homeowners, companies that have been writing homeowners, that percentage is reduced, by half to about 2.4%. Now, the numbers are still

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Chris Cerniauskas: A little bit less, but they're about the same, but it's the introduction of new homeowners and opportunities,

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Chris Cerniauskas: So that… it is showing very promising. The rate increases have reduced, some have taken no increase, and there's a few that have taken decreases. So we're seeing positive trends that are happening.

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Flora Arabo: That's great, thank you.

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Flora Arabo: Commissioner Conway, insurance carriers in Colorado are responding to a slightly different set of climate risks, namely hail and wildfires.

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Flora Arabo: And I know that last year, the legislature passed a bill to impose transparency requirements on carriers that use wildfire or catastrophic risk models, and some of those requirements include sharing more details with your office and taking risk mitigation into consideration when pricing policies.

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Flora Arabo: In that process, that bill was amended to include multifamily residential properties in addition to homeownership. And I'm curious what challenges you saw

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Flora Arabo: to including multifamily, in that effort, and were you surprised that, it was successful? And…

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Flora Arabo: Either way, now that the bill's been in place for a year, are you seeing any benefits to property owners on either the multifamily or single-family side?

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Michael Conway: Well, thank you for having us today. I'm happy to be here for the conversation. I think from the challenges perspective, I mean, the industry was cranky about it. They weren't real excited about the commercial market getting included.

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Michael Conway: into the legislation. But I think they got to a decent place with it, because right at its core, what we were trying to accomplish with the legislation was the ability to answer some pretty basic questions

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Michael Conway: about our homeowners insurance market for homeowners, right? When I would go out and have town halls around the state, I would constantly be asked, if I take these types of mitigation steps, am I going to get a benefit, for that in my insurance premium? And I would candidly have to tell people that I couldn't tell them. I didn't know. I didn't know the answer. And in particular, I didn't know the answer to the question, and I couldn't confirm that they were going to get that benefit.

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Michael Conway: Mostly because we didn't have any ability to force the insurers on both the single-family, but on the multifamily side as well, to force the insurers to actually account for any mitigation steps that folks were taking, and people just didn't know, right, homeowners didn't know what type of mitigation was going to be effective, because their insurance companies really weren't giving them that information.

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Michael Conway: So, that was the core of the legislation, right? We wanted to be able to answer those basic questions and get people some basic information.

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Michael Conway: As far as what the impact has been, so the legislation will be effective, will have the regulations effective that implement the bill as of October of this year. But we are already starting to see benefits flow through, we're starting to see anecdotal information, kind of have anecdotal conversations.

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Michael Conway: with homeowners, with multifamily as well, with HOAs.

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Michael Conway: that they are starting to see insurance companies be more receptive to getting information from them, and actually implementing and seeing some sort of implementation in their insurance premiums as well. So I think we'll continue to see that happen, right? As Chris touched on, and as you touched on as well, Flora, right, competition is the name of the game here. And as soon as insurance companies start to see their competitors get more and more business, because they are

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Michael Conway: are properly accounting for the mitigation steps that people are taking for wildfire in particular, I do think that we'll start to see that grow.

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Flora Arabo: Thank you. I think it's really promising and encouraging to hear that the work in Louisiana and Colorado is starting to move the needle, so I appreciate that.

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Flora Arabo: Patrick, we're gonna pivot a little bit and talk about cost drivers in New York, which I know are quite different than those in other regions.

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Flora Arabo: So you've been leading an insurance working group in New York, and you bring together owner-operators, policy organizations, carriers, and others.

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Flora Arabo: Can you tell us a little bit about what you've learned about the drivers that are pushing up affordable housing premiums in New York specifically, and have any policy recommendations come out of that as a result?

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Patrick Boyle: Sure. As you've said, we have been convening folks in the affordable housing space, in the insurance spaces, risk management specialists that work for housing organizations, brokers that specialize in working with non-profit housing organizations in New York.

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Patrick Boyle: to try to understand what we have seen in our project data for a number of years and been hearing from our partners, which is that insurance costs have been, you know, skyrocketing in New York.

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Patrick Boyle: And we've been trying to kind of deep dive into that data to try to find some of the source of that, and one thing we've found is that in New York City, insurance costs on a per unit basis for affordable housing projects are about double what they are around the rest of the country, and around double what they are even in New York State, outside of New York City.

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Patrick Boyle: And so when we look at the causes behind that, we found that for New York City.

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Patrick Boyle: it's really liability insurance, casualty insurance, that is really the element of insurance that is rising the most rapidly, and that's the most sort of problematic to obtain, that there's the most difficulty in sort of getting that insurance and working with carriers to get quotes on it. So…

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Patrick Boyle: And as we looked at data across enterprise, and this is, you know, data from the projects we finance and invest in, we found that New York City and Los Angeles County were two of the markets that had the highest insurance rates.

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Patrick Boyle: And so those aren't, you know, markets necessarily with, you know, kind of the most concentrated climate issues or other rates of issues, so we know that liability issues are a big, big factor in both those areas, and those happen to be

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Patrick Boyle: the number one and number two, quote-unquote judicial hellholes, according to the American Tort Reform Association. So, we think there's a connection between, you know, those being the number one and number two problem areas

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Patrick Boyle: For liability tort issues, and the number one and number two highest cost regions that we see in our data.

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Patrick Boyle: So in New York City, as we've been talking to folks, including some owners with a lot of claims history they've shared with us.

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Patrick Boyle: We see an increased

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Patrick Boyle: amount of claims. We've seen increased claim volume, and we've seen that sort of rise over time, including, you know, nuclear verdicts, which are, you know, creating a bigger and bigger sort of target, and sort of setting a new standard.

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Patrick Boyle: New York has premises liability and general negligence laws and rules that are a bit more punishing than other states around the country and other neighboring states.

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Patrick Boyle: Just in terms of, you know, what a plaintiff is, entitled to, to the extent they sort of prove the dynamics of their case in terms of a payout.

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Patrick Boyle: And we've also seen, and it was referenced at the top of the call, a real explosion in third-party litigation financing in New York. So, there was a claims administrator called Cedric, which analyzed a few hundred of its claims, and found that 71% of the third-party litigation finance claims were emanating out of New York.

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Patrick Boyle: If folks have not yet had a chance to see the New York Times article from about a week and a half ago on third-party litigation financing, I really encourage people to look at it. It was focused around issues in New York, but I know this is an issue that a lot of legislatures around the country have tried to tackle and look at.

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Patrick Boyle: But it's a very, prevalent and increasing issue in New York without a lot of transparency behind it, in terms of understanding who's funding lawsuits, to what amount.

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Patrick Boyle: what, what amount of control they have over the lawsuit decision-making on the plaintiff's behalf. But it's… it's also an area where there's a lot of predatory activity, and which is really contributing to a lot of fraud.

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Patrick Boyle: and a lot of incentivizing, essentially, of lawsuits around the state. So, you know, we see a lot of very aggressive advertising in New York by plaintiff's attorneys, a lot of advertising that's along the lines of, you know, get cash today for your claim.

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Patrick Boyle: Get cash in 24 hours, and then the idea is that the, you know, the third-party litigation financer sort of takes the claim from there, which can take years and years to, to work its way through the system.

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Patrick Boyle: Plaintiffs end up paying huge…

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Patrick Boyle: Fees, interest rates on those… on those claims, so…

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Patrick Boyle: As Enterprise New York, as we think about a legislative agenda to help address some of these underlying liability issues, we're looking a lot at third-party litigation financing, we're looking at ways to try to reduce claims, and try to reduce claim

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Patrick Boyle: claim volume. And one additional data point I'll cite is that we got a large amount of claim data from a big owner-operator, not Lincoln, but a big owner-operator that works a lot in New York and a lot outside New York.

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Patrick Boyle: And they, said that average claim value for New York, meaning New York City, is about $100,000 per claim, about $20,000 per claim for all of its projects outside New York City. So, that's all of that underlying, liability landscape and legal landscape.

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Patrick Boyle: showing up in the data, and that's really what's contributing to a lot of costs we see, particularly in the City of New York.

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Flora Arabo: Thanks so much, Patrick. I really appreciate all these different perspectives on what's driving, costs, because they're all driving costs, and, it's… there's just so many layers to this.

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Flora Arabo: Thom, I want to ask you, with all the different kinds of cost pressures states are facing, you have a national lens.

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Flora Arabo: Can you talk a little bit about where you've seen states, addressing some of the multifamily, implications of the housing crisis in addition to homeownership, and

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Flora Arabo: really what I want to get at is, like, what is the economic consequence of not addressing affordable housing for multifamily owner-operators?

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Thom Amdur: Yeah, I think that's a great question, Flora.

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Thom Amdur: I wanted to just… one sentence on what Patrick was just saying. I just want to also observe, there's an AI overlay, to the litigation funding industry, and it's becoming a lot easier to identify and research and pursue these claims because of just the evolving technology world that we're in, and so I think the

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Thom Amdur: Challenge is gonna get.

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Thom Amdur: Worse, simply because of that.

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Thom Amdur: When I think about state interventions and consequences, start with the consequences first, and then sort of the interventions. So…

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Thom Amdur: if I don't have…

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Thom Amdur: my mandated insurance coverage, which is dictated by the state housing finance agency, my lenders, my investors, that's a technical default.

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Thom Amdur: So I can actually, if there's not adequate, coverage available, I can actually lose control of my property, or it can be foreclosed on. So the consequences of not having…

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Thom Amdur: Access to affordable, attainable insurance, are really severe from a business owner perspective, notwithstanding, like, the value of risk mitigation as well.

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Thom Amdur: And I'll just point out, in the affordable world, at least in the LIHTC world, low-income housing tax credit world, if you have a foreclosure on your property, that actually erases

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Thom Amdur: the income, restrictions, the low-income use restriction. So, like, the consequences of a catastrophic failure there could actually mean the loss of affordable housing.

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Thom Amdur: And the restrictions that we've, put on them. It also, on sort of a more

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Thom Amdur: kind of localized level. I require special coverages for things that we do at properties that are really meaningful. So, for example, we run, various resident service programming, across our portfolio. After-school programs, services for seniors, etc.

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Thom Amdur: If I'm not able to obtain sexual assault coverage, which is something that in a lot of markets, is really challenging, then I can't actually operate those, those services at the program, which has, you know, other,

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Thom Amdur: cascading effects on the community. Assault and battery coverage is really hard to come by in a lot of places as well. We're large and have buying power, but for the smaller nonprofits, the mom-and-pop shops, the folks that don't have our scale, this is really significant.

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Thom Amdur: So, when I think about, state interventions, and there's lots of things states can do, there are insurers of last resorts in most states, not all, but the fare plan, obviously, is one of them, and I think, actually, Colorado, you know, recently, like, in the last few years, actually created a fare plan and didn't have one before. But those are, generally speaking, not accessible

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Thom Amdur: to commercial property owners, for a couple of different reasons. They may be, like, explicitly, excluded.

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Thom Amdur: But, the replacement costs, that are included, in the coverages there are oftentimes

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Thom Amdur: so low that they really can't be used in anything more than a single-family home or a duplex. So, credit to Commissioner Conway and the folks in Colorado. They actually have, I think, a $5 million limit on their fare plan, which means that you could actually, in a pinch, if you weren't able to get coverage, be able to get a small multifamily building into the fare plan, which is great.

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Thom Amdur: So I think that that's, a model that…

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Thom Amdur: other states could look at. I think, frankly, moving away from a per-building limit to a per unit limit would make it a lot more accessible across the board to affordable housing.

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Thom Amdur: And then I think, and I haven't seen any states do this yet, so this is more a wish than an example, but those niche coverages, particularly on the casualty side for, you know, the liability coverages that I mentioned, assault and battery and sexual assault in particular.

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Thom Amdur: To have an insurer of last resort, that was offering those, at least in the affordable housing space.

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Thom Amdur: So that we could ensure, operations and coverage,

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Thom Amdur: and I do hear from my peers across the industry that they are not able to obtain them, particularly if they've had a claim. And many of these claims are legitimate claims, and many of them are spurious, but it takes a long time for you to get those through the court system and through

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Thom Amdur: Through settlement, and then they kind of stay on your record for a long time. So, I think those are a couple of areas, particularly around state fair plans, that potentially insurance commissioners or at least state legislatures could make more, available.

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Flora Arabo: Thanks, Thom. I'm really glad you raised that, because we have heard a lot of providers telling us that they cannot get any assault and battery coverage whatsoever, and it's definitely been a big challenge.

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Thom Amdur: Oh, and I should also just add that, you know, a lot of times those requirements are embedded in our low-income use restriction agreement, so we are required and mandated, and we want to provide them, and it's a potential tax credit recapture event if we're not providing the services.

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Thom Amdur: And we can't provide the services without the coverage, so we're kind of in between the rock and the hard place.

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Flora Arabo: Absolutely.

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Flora Arabo: Commissioner Conway and Chris, I want to give you both an opportunity to chime in on what Patrick was talking about earlier around, third-party litigation. Are you seeing any of that playing out locally in Colorado or in Louisiana?

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Flora Arabo: Commissioner Conway, maybe we can start with the Colorado perspective.

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Michael Conway: It's a conversation here, like, it's a conversation everywhere. I think when we've dived into the issues, the piece that we've constantly asked the industry to really be able to provide data on.

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Michael Conway: Is what kind of premium impact they're seeing, from these nuclear verdicts, or just litigation costs in general.

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Michael Conway: That's been a struggle over the years. Now, with that said, when Florida in particular, when Florida was putting their litigation reform through a few years ago, I had a lot of folks come to me and say, hey, keep in mind that as these attorneys, as these trial attorneys in Florida, as their business dries up there, they're going to start to look for other places.

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Michael Conway: And Colorado very well may be one of those places. And just recently, the local trial attorneys have started to run advertisements against the out-of-state trial attorneys.

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Michael Conway: that have come to Colorado, encouraging people to stay local when they're suing, when they're suing folks. So, I think there is… there are real issues there that I think we need to focus on, and I think Thom is absolutely correct that the AI world is going to come for third-party litigation in a very big way.

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Michael Conway: I mean, it's going to exacerbate the challenges that are… that are out there, so I think we have to have a candid and frank conversation about what we can… what we can accomplish in order to, try and keep premiums as affordable as possible.

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Flora Arabo: Chris?

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Chris Cerniauskas: Yeah, like Commissioner Conway said, it's conversations happening everywhere, it's happening in Louisiana. I would like to take exception to a good friend Patrick, talking about legal hellhole Louisiana. We'll arm wrestle you for that title. I think we're well-versed, we have billboards to prove it, and they're not heading here, they're here, right? So, but I would like to also emphasize the fact that fraud

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Chris Cerniauskas: is a major, Patrick mentioned it, is a major cost driver that needs to be incorporated into the conversation, because it drives from everything else we're talking about, whether it's AI, third-party litigation, financing. So, it's an issue that's being talked about here in Louisiana, where we're wrestling with

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Chris Cerniauskas: How people are trying to game the system and take advantage of it, so…

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Flora Arabo: Right, thank you.

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Flora Arabo: Patrick, can you talk about some of the, laws that are on the books in New York that might be contributing to some of what you're seeing that's going on, and in particular, I'm wondering if you'd be, willing to talk about, what I know is

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Flora Arabo: third rail of politics in New York around the scaffolding law, how it came to be, how it's impacting multifamily insurance in New York.

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Patrick Boyle: Sure, yeah, that's, scaffold Law is the white whale for many, looking to sort of tackle some of New York's underlying and unique

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Patrick Boyle: laws on the books that are contributing to the liability landscape here and to high insurance costs, and, you know, Scaffold Law really is

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Patrick Boyle: Something that's unique to New York and has a huge impact

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Patrick Boyle: It refers to a part of New York's labor law, which provides an absolute liability standard for basically any gravity-related incident, so basically a fall from height.

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Patrick Boyle: So in any case where there's a fall from height, if the plaintiff can prove any degree, any percent of negligence on the owner or construction company side, then that's an absolute 100% liability on the owner. And this is, you know, obviously contrasted with

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Patrick Boyle: Most parts of liability or negligence laws, which is some kind of modified standard, and if there's some degree of fault on the worker side.

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Patrick Boyle: they were drinking, they hadn't followed the safety procedures, you know, other unsafe behavior, that there would be some consideration of that in the lawsuit and in the payout. So, the scaffold law is unique to New York.

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Patrick Boyle: It's contributed to very high construction insurance rates, but it also has an impact on ongoing property insurance rates, because contractors you have doing work, or even your property staff, sort of applies to all of them.

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Patrick Boyle: There was an affordable housing owner, operator, and builder in New York, which took a project that it did with our New York City's housing department here in New York City, 290-unit project.

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Patrick Boyle: And said… took all the actual details from it, so this is a completed project without a pro forma and all the details, and they gave it to a broker in New Jersey, and said, just out of curiosity, what would this look like in New Jersey, in Jersey City, right across the river there?

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Patrick Boyle: And they found that insurance costs would go from $13 million on the New York City project altogether to about $4.5 million they quoted on the New Jersey side.

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Patrick Boyle: For this 290-unit project, that represented about $31,000 per unit in increased subsidy that you would need in New York to make the project viable versus New Jersey. So, this is a housing preservation issue, but it's also, you know, a supply of housing issue.

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Patrick Boyle: Illinois had a version of this law, essentially their version of an absolute liability standard.

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Patrick Boyle: that they got rid of in the mid-1990s. They saw increased construction hiring, increased construction activity, and reduction of cost. So, hopefully we're gonna be taking a look at that law at the state level this year. There's been a lot of discussion around it.

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Patrick Boyle: Given all the insurance issues, and of course, given New York State's big, you know, housing goals and the amount it wants to do on the production side, there's been a lot more focus on scaffold law and whether we need to take a look at that.

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Flora Arabo: Thanks, Patrick. I think on the heels of the passage of 21st Century Road to Housing, as states are looking at the ply side dynamics, this is going to be really important.

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Flora Arabo: Commissioner Conway, I know that you've had a lot of conversations with affordable housing owners and advocates on some of the cost pressures they're facing.

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Flora Arabo: Do you see any opportunities for them to build on recent successes you've had in the home ownership market to address some of their unique challenges with access to coverage and cost challenges? What would you tell the affordable housing advocate community in Colorado

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Flora Arabo: That… where would you direct them Towards, you know, big opportunities.

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Michael Conway: Well, I mean, I think that there's a growing appetite within Colorado, and really, I think, probably everywhere, to find solutions to the problems, right? The legislature is very eager to jump into the fray, and

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Michael Conway: And have conversations about how we can bring more affordable housing

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Michael Conway: to the forefront, the state is investing a ton of money into affordable housing as well. So, I think the appetite is there for the conversations, where the solutions are going to come.

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Michael Conway: I think that's the more challenging part of those conversations, obviously. If there was an easy button, somebody would have already pushed it. I do think that there are going to be a number of conversations across the country about reinsurance programs, high-risk programs.

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Michael Conway: that do cover both the multifamily space, but then the single-family home space as well. I'm not a fan of the federal reinsurance program ideas that have been put out there. I think that they are troublesome for a whole bunch of reasons.

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Michael Conway: I do think that there can be very good ideas, and there have been very good conversations about different types of programs at state levels that can really start to address

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Michael Conway: A lot of these issues.

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Michael Conway: But at the end of the day, right, I think we're… we are going to have to find ways, if we want to… if we truly want to get to afford… back to some semblance of affordability, I think we're going to have to find ways as states to at least potentially share risk with insurance companies to get them to be more competitive, in particular in some parts of the states, like in Colorado, where they're just not writing business currently.

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Michael Conway: So I think that has to be a practical part of the conversation. The difficult piece will be where to get the funding to do that in the tight budget eras that we are in currently.

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Flora Arabo: Thank you for that.

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Flora Arabo: So, Chris, I'm going to jump over to you. You mentioned earlier the Fortify Homes program in Louisiana. We didn't get to get

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Flora Arabo: a little deeper into it. Can you tell us a little bit more about what the program is, and specifically, why it matters? How are carriers responding? Is it impacting premiums and coverage?

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Chris Cerniauskas: Sure. So…

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Chris Cerniauskas: IBHS, runs the Fortified Program, and Louisiana, back in 22, established, through legislation, the Louisiana Fortified Home Program, where we would give out $10,000 grants, to Louisiana applicants. It was on a one-year basis with a sunset.

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Chris Cerniauskas: in one month, we handed out, 3,000 grants, but when we… that was on, Commissioner Donlon's tail end of his administration, and he did it on a first-come, first-served basis.

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Chris Cerniauskas: when Commissioner Temple took over, he wanted to sustain that, but really improve on the program, and I think that's the key in where we've been since 24, is just a constant programmatic improvement.

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Chris Cerniauskas: Instead of doing on a first-come, first-serve, where it would stop people applying once the grant numbers ran out, it allowed a set period of time, so if you were working multi-shifts, if you were working offshore in Louisiana,

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Chris Cerniauskas: You… it would allow you to… to apply

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Chris Cerniauskas: at any, any given time. He also removed his sunset, so we sustained the program funding, continually. And finally, we're, this past year, we were able to secure regular, about $30 million a year, annual funding through, premium taxes.

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Chris Cerniauskas: And through fees, licensing fees through the department.

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Chris Cerniauskas: The reason it's important is the state of Louisiana is a working coast, as the Commissioner likes to say, from the Pearl River in Mississippi to the Sabine in Texas, south of Interstate 10.

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Chris Cerniauskas: very, disaster-prone area, but it's not an area where people have a choice to, live. They work there, whether it's offshore, oil and gas, seafood, industry, in New Orleans with the hospitality industry, these are, these are, you know, so we start talking about affordable housing, that's this workforce right here, too.

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Chris Cerniauskas: And so, when… with the storms that came through in 20 and 21, and the exodus of insurance companies, or the insolvency of insurance companies, we had a real insurance crisis. And that was the… the big genesis of bringing in, the Fortified program. It's been wildly successful,

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Chris Cerniauskas: It's bipartisan, whether it's a return on investment, or if it's a hope and name, a face, a dream. It's like, when we have a round, a lottery round, we have over 10,000 people apply each round for several thousand grants, so the demand is absolutely there.

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Chris Cerniauskas: So much so that, when you get a lottery, we've had, local governments putting their own skin in the game. For example, Jefferson Parish with Councilwoman Jennifer Van Ranken.

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Chris Cerniauskas: When you get chosen in a lottery, and say 100 people from Jefferson Parish were selected, some of them will get sticker shock, and some of them will drop the grant, and then it will be picked up by the next person on the list, who may be from a different parish. So that parish lost a potentially resilient roof.

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Chris Cerniauskas: And so what she decided was, hey, let me coordinate with the Department of Insurance. If we put $5,000… $500,000 into the program and gave $5,000 grants on top of the state's money.

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Chris Cerniauskas: How would that uptake increase? What would be the change? It went from a 53% uptake to an 86% uptake. It is now a best practice. The City of New Orleans has done GAAP funding.

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Chris Cerniauskas: They had $683,000 they did through a bond. They're focusing on LMI. We just had a meeting with the Parish Presidents Association, and there's extreme…

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Chris Cerniauskas: interest in other parishes doing the same. Now, people see the value. The immediate benefit is a discount on your insurance on the wind and hail portion.

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Chris Cerniauskas: Starting effective January 1st, we are going… we have a benchmark discount, and we work with the National Association of Insurance Commissioners and modeled what that benchmark would be. It's going to be 29%, unless a company can actuary justify a different discount rate.

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Chris Cerniauskas: But it's more so than that, too. If a person returns to their home after a disaster, which a fortified home gives them an exponential chance to do that.

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Chris Cerniauskas: Not only do they get that regular discount, they don't have to pay that name storm deductible that could be in the tens of thousands of dollars.

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Chris Cerniauskas: Which is life-changing if they have to pay that. They return to their home, they start, instead of living two parishes or counties over, spending their money there, they're back in their home spending money in their own community, and that is a true definition of community resilience.

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Chris Cerniauskas: So, we've just seen a lot of very positive aspects of it.

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Chris Cerniauskas: our partners from the Office of Community Development Disaster Recovery Unit, working with Louisiana Housing Corporation, use all their CDBG-DR grant dollars to do multifamily repairs, and use the fortified standard.

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Chris Cerniauskas: So, we're doing it across the board, and we've embraced it in the state of Louisiana. Hopefully that answers some of your questions.

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Flora Arabo: Yeah, thank you. If, as the saying goes, imitation is the sincerest form of flattery. I think other states are singing your praises, because we've seen fortified home programs just exploding around the country.

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Michael Conway: Archip, can I…

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Flora Arabo: You ever…

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Michael Conway: Can I jump in just really quick? So, Chris is absolutely right, and to your point about, flattery, we are… we are copying… copying the Fortified Home program here in Colorado as well. I think one thing that… that…

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Michael Conway: Gets… that doesn't get talked about, really, enough.

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Michael Conway: is gonna… one of… what I think will be one of the bigger indirect impacts from all of these fortified homes, right? So, Louisiana, it's got… gonna be investing $30 million a year. Colorado, we're gonna be investing $20 million a year. And we're just two of the many states out there that have these programs. California's, standing one up.

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Michael Conway: All of that means that we're gonna have…

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Michael Conway: at some point, relatively quickly, hundreds of millions of dollars flowing into fortified programs by states. That is going to drive, I think, the industry to improve the fortified standard, in particular the building materials themselves.

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Michael Conway: That will have that indirect impact that I think you're looking for for the multifamily space, right? For us in Colorado, it's all about hail, right? For Chris, it's obviously a bit of a different animal. But at the end of the day, as we improve the building technology, and hopefully make it more affordable because states are investing all this money, it will start to flow through the multifamily space as well.

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Chris Cerniauskas: And Commissioner, if I could, just to your point, you know, I say the, the fortified standard, the resilient standard, I like to think about the end state in mind.

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Chris Cerniauskas: Right? Like, it's not a nice-to-have anymore. It's a must-have. It's kind of like air conditioning, automatic windows, and seatbelts in a car, right? It's no longer, oh, yeah, add that on. It's just the way we're doing business. And, with some of the highest building codes in the nation in Louisiana, we've just brought them in line with

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Chris Cerniauskas: the fortified standard. The difference is.

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Chris Cerniauskas: in Louisiana, our permitting and inspection process is not the most widely trusted. What is trusted is the fortified standard, which is a quasi-permitting inspection process. And so, you know, decades from now, hopefully, it's, it just… it is… we've got a good permitting inspection process, it is the standard, and…

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Chris Cerniauskas: Joe.

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Flora Arabo: Well, thank you so much. I have actually so many more questions for all of you. I didn't get to all of my questions, but, I do want the audience to have their questions answered, so Elizabeth, if I could just ask

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Flora Arabo: What questions we've received from the audience, and maybe we could, squeeze in a couple of those.

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Elizabeth Richards: Sure, and we've got… we've got a couple of minutes here. Everyone, thank you to the panel. The first question has to do with what may or seems to be happening, perhaps in Florida after tort reform, which perhaps seems to have let some insurance companies off the hook.

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Elizabeth Richards: The question is, how can tort reform be crafted in a way that doesn't unfairly restrict

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Elizabeth Richards: The ability of policyholders to fight denial claims or underfunding claims in the legal arena.

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Patrick Boyle: I can give an example of that, I think, as we've looked into this in New York.

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Patrick Boyle: I think court reform is a wide spectrum of possible solutions and reforms.

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Patrick Boyle: And I think, you know, enterprise as an affordable housing organization trying to reduce costs in affordable housing is definitely not interested in cutting anyone's access to the legal system or the

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Patrick Boyle: or to sort of fair play in the system. So, you know, one example of something that maybe could be considered tort reform that I don't think would unfairly hurt people is that we hear a lot from owners that they are served with notices of claims

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Patrick Boyle: Sometimes a year, more than a year after the incident occurred, and it's very difficult for an affordable housing owner to mount any real defense against that, to preserve their security camera footage, to interview their staff.

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Patrick Boyle: Their staff is turned over, they don't recall the incident.

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Patrick Boyle: So, you know, we have said it might make sense to have a notice of claim time period of, you know, some months, 3 months, 4 months, where you have to notify the owner of the incident so that they could sort of mount a defense or be able to look at, you know, the particulars of what occurred.

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Patrick Boyle: This mirrors what's already the case for municipalities in New York, so if you fall in a New York City-owned building, you have to notify the city within 3 months of the details for that very reason, so they can sort of mount a defense and preserve evidence. So, that's just a way to sort of, I think, level the playing field between, you know, the plaintiff

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Patrick Boyle: And the owner, and saying, let's get all the facts out there, and then be able to assess what happened.

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Patrick Boyle: without cutting off anyone's access to, you know, ultimately getting their day in court. So that's just kind of one example, and I'm sure there are others, but I think there's a whole range of things that could be looked at on tort reform, which are not, you know, overly punishing to the person seeking some kind of justice.

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Thom Amdur: Yeah, I'd love to chime in on there as well, on our Florida experience. So, we own more than 40 rental communities in Florida, providing homes for 9,000-plus households.

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Thom Amdur: The legislation that was enacted there a few years ago had a lot of different pieces to it, but I'm going to highlight a portion of the premise liability reform piece.

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Thom Amdur: It created a rubric where if you can demonstrate, that you have been a responsible building owner, your liability on a claim is limited. And it's, it basically, you know, we have to…

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Thom Amdur: Demonstrate secured access, fencing around pools, appropriate lighting, you know, common sense things that reduce

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Thom Amdur: Claims and reduce risk.

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Thom Amdur: And,

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Thom Amdur: when we do all of those things and get them certified, then we have a limit on the potential claims that can be brought. So it doesn't deny the availability of a plaintiff to bring a claim, but it does limit the potential impact for a nuclear verdict. And if we're not responsible building owners, then we don't have that protection.

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Thom Amdur: So I think, you know, if you put responsible…

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Thom Amdur: You know, guidelines in place where everybody can kind of understand, you know.

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Thom Amdur: what risks are and where the potential limits are, I think that kind of constrains the environment and, you know, hopefully that'll also result in people not bringing spurious claims and jamming up the legal system as well, but I think that that is a fair and responsible approach that other states could take as well.

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Flora Arabo: Okay, thank you all so much. I hope the, audience will join me in thanking our panelists for their time and their expertise. Elizabeth, in our last minute, maybe I can turn it over to you to wrap us up.

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Elizabeth Richards: Wonderful. Thank you, Flora, and thank you, everyone, for a really fantastic conversation. Three things to wrap up here.

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Elizabeth Richards: For everyone in the room, please reach out. This conversation continues. We are working with many of you around the country at conferences, other like panel sessions. We'd love to hear from you and continue the conversation and continue to work together, so please reach out.

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Elizabeth Richards: These slides and all recordings will be shared late next week, and will be re-shared on various enterprise platforms, so look out for more material to come. And lastly, just want to mention, for those of you who did join us in the second session.

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Elizabeth Richards: You can grab a quick, screenshot here. Our partner, HPN, is surveying affordable housing.

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Elizabeth Richards: owners and operators around the country on their insurance needs. Feel free to look into that survey if you have not already. But with that, again, thank you everyone for being with us. Really appreciate your time and attention and all of your work.

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Elizabeth Richards: On this critically important issue.

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Elizabeth Richards: Thank you, Flora, and thank you, team.

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Elizabeth Richards: Have a great day.