“15 States Face Imminent Insurance Crisis;” “Rising Home Insurance Rates Transform Communities;” “The Insurance Crisis Hits the Heartland.”
With a constant stream of headlines like these, it’s no secret that skyrocketing insurance rates over the last several years have hit homeowners across the country, from disaster-prone coastal areas to mountain communities and Midwestern plains.
What’s not as well publicized: The insurance crisis is particularly challenging for many of the nation’s affordable housing providers, with high rates and shrinking coverage creating a perfect storm that threatens the stability of the industry and the residents who call those apartments home. In 2023, nearly one in three affordable housing providers saw insurance premiums jump by 25% or more, with some experiencing increases of up to 500%.
A new Enterprise report, “Curbing the Insurance Spiral: Policy and Practitioner Strategies to Help Stabilize Multifamily Affordable Housing,” examines how insurance costs and coverage constraints create significant challenges for affordable housing providers nationwide. With two embedded toolkits, the report provides a menu of strategies and tools to help housing owners and operators reduce risk and potentially lower insurance costs, while offering policymakers and advocates levers to improve the health of the insurance market and stabilize coverage of affordable homes.
“Ultimately, addressing the insurance challenges facing housing providers is about protecting the nation’s investment in affordable homes,” said Ayrianne Parks, Enterprise’s senior director for policy advocacy and one of the report’s authors.
It isn’t a single-factor problem — it really is a perfect storm.
We spoke with Parks about the origins of the insurance crisis, factors driving escalating premiums, and how efforts to restore balance and stability in the insurance market represent a moment of opportunity for the affordable, multifamily housing sector.
How is the insurance crisis playing out for the affordable housing industry?
While insurance costs have become a growing issue across the country for all types of housing, the impact is particularly acute for affordable and multifamily rental housing because providers have far fewer tools they can use to respond or adapt.
In market-rate housing, rising costs can often be passed along through higher rents. Rents are capped by design in publicly financed housing, especially for Low Income Housing Tax Credit properties. Public dollars helped create this housing with the expectation it would remain affordable for decades. If insurance volatility forces properties to deteriorate, exit affordability, or shut down entirely, that public investment is effectively at risk — and rebuilding lost housing is far more expensive than stabilizing what already exists.
How did we get here? What are the major risk factors driving the spike in property insurance costs?
It isn’t a single-factor problem — it really is a perfect storm. Most notably, the frequency and severity of extreme weather events have increased across the country. At the same time, construction and material costs have risen significantly, driving up replacement costs. Insurers are recalculating risk based not only on when a building was constructed, but on what it would cost to rebuild it today, and those numbers are much higher.
While insurance prices have stabilized slightly in some regions this year, they remain far above historical levels. Premiums have not returned to pre-crisis norms, and in some cases they remain 100% to 200% higher than they were just five years ago.
Technology also plays a role. Insurers now can assess risk at a much more granular level down to the exact location of a property. While that can improve accuracy, it can also exacerbate disparities, particularly in mixed-income or historically marginalized neighborhoods. Affordable housing is often treated as inherently riskier, even when data does not support that assumption.
Many people associate insurance risk primarily with coastal disasters. Is that still the case?
One of the more surprising points for many who read the report is that this is not just a coastal issue. Hurricanes in the Gulf Coast and wildfires in California dominate headlines—and are increasingly the costliest events in history. However, as catastrophe models update, more states are seeing carrier exits, higher deductibles, and reduced coverage — including parts of the Midwest and Northeast.
For example, practitioners in states like Nebraska are experiencing rising insurance costs due to extremely damaging wind and hail events. In some cases, the cost of coverage has become prohibitive, or insurance is simply unavailable, making it difficult or impossible for affordable housing projects to move forward.
We are working to identify options to control these costs. Investments in resilience, such as fortified roofs, stronger building materials or protective upgrades, come with a price tag, but can be a significant return on investment. It's important that this information is effectively communicated to insurers and brokers so that mitigation efforts could potentially be reflected in pricing. The report features tools to help housing providers do that effectively while also encourages more transparency and data collection.
How does this crisis affect long-term affordability, particularly for LIHTC properties?
Affordable housing is structured to prioritize long-term stability and affordability, not profit margin expansion. The Low-Income Housing Tax Credit program, our nation’s number one tool for financing affordable housing, requires affordability to be maintained for 30 years or more.
Owners are facing inflation and rising costs across the board — especially labor, materials, maintenance, and resident services — and insurance is a part of that cost equation that is putting the viability of these properties at risk. Because rents are capped, providers are often forced into impossible choices: cutting resident services, deferring maintenance, or selling properties altogether.
None of these outcomes is good for residents, owners, or the broader goal of expanding the affordable housing supply.
Insurance costs are shaping whether affordable housing can exist in some communities at all. If we ignore that, we risk losing homes that were built to last for generations — not because they failed, but because the system around them did.
Insurance is regulated largely at the state level. Which states are most affected?
Florida and California have received the most attention, largely because some insurers are withdrawing from those markets or pricing coverage out of reach. But this challenge extends far beyond those states.
Illinois, Nebraska, Iowa, Minnesota, Colorado, and others are all experiencing increased insurance pressure. Each region faces different risks and drivers, which means solutions must be tailored and developed in collaboration with state and local policymakers.
Policy responses should aim to encourage a robust insurance marketplace while ensuring that risk data reflects real-world conditions. In the Gulf Coast and parts of the Southeast, many developers have invested in reinforced foundations and high-quality windows to mitigate flood and wind damage. Those investments should be recognized in insurance pricing, and we should find ways to finance it for affordable housing to protect residents and the public investment.
What promising solutions are emerging at the state level? Can they be replicated?
This is not an unsolvable problem, but it will take coordinated action — more competition in insurance markets, incentives for risk reduction, and smart public backstops to ensure coverage remains available.
State legislatures can play a role by creating incentives for insurers to participate in pilot programs that reward proven mitigation strategies. At the same time, nonprofit affordable housing providers need resources to make upgrades to existing properties and to incorporate resilience measures into new construction.
What role can the federal government play?
The federal role is more complicated, since insurance regulation largely occurs at the state level. But there still are potential opportunities to work with reinsurers — insurance companies that provide final protection to other insurance companies. We also see the potential to create a federal backstop for catastrophic risk.
Much of the discussion has centered on models like the Terrorism Risk Insurance Act (TRIA), but we believe a different approach — something closer to an FDIC-style backstop that sits between insurers and reinsurers — may be effective.
That said, there’s still a fair amount of education and collaboration needed at the national level. For now, the best opportunity to make progress is likely at the state level, where action can help ensure properties stay insured and viable over the long term, rather than being pushed off the market.
One of the key takeaways from this report is that there is no single cause of the insurance crisis, and therefore no single solution. What works in California might not necessarily work in Florida, and what works in Florida may not apply in Nebraska.
Progress will require a range of approaches, creativity, and the ability to adapt successful strategies across states. Even incremental wins can be valuable if they can be transferred and scaled.
Was there anything in the report that surprised you?
Most people are familiar with the impact of more frequent natural disasters and the implications for insurance premiums and risk overall. In addition to that, affordable housing faces unique obstacles, including what is essentially redlining. There have been reports of discrimination against providers subsidized by Section 8 vouchers for example, or even the types of sports that are played outside of the buildings.
How do you hope the report will be used?
Our goal is to meet stakeholders where they are. Practitioners can start with the executive summary, then move directly to the sections most relevant to their work — whether that’s the practitioner toolkit, federal or state policy options, or recommendations on reducing risk.
We want owners and operators to understand what insurers see as risky, what improvements are worth making, and how those investments can pay off over time — not just financially, but in reduced displacement, improved safety, and long-term stability.
At the same time, policymakers can use practitioner insights to inform better policy solutions. Ideally, this report allows readers to move back and forth between sections depending on their role and responsibilities. Ultimately, we designed the report to empower stakeholders across the affordable housing ecosystem to take meaningful action.
