The past few years have been difficult for both the insurance industry and those it insures. Shared-interest communities like condominiums, HOAs, and co-ops have been hit particularly hard. The reasons for this include everything from increasingly frequent, more-intense storms, fires, and other environmental events disrupting the market to the impact of inflation on replacement cost models, to the reverberations from the collapse of Champlain Towers in Surfside, Florida. It’s a lot, to say the least. 

The good news is that while those disruptions have not abated (hurricane season comes every year, after all), and premiums are by no means dropping across the board, they are in many cases increasing at a slower pace, and even plateauing as the insurance industry absorbs those shocks and adjusts its approach. Let’s take a look at some of the factors affecting today’s market and determining the path forward.

The View from the Bridge

“After several brutal years of double-digit rate hikes prior to 2024, the property insurance market continues to do something boards and owners haven’t seen in a long time: work in their favor,” says Michael Brodie, managing director for Howden US, an international insurance carrier with representation across the U.S. “The turnaround comes down to one word: competition. Property insurance carriers that pulled back or priced themselves out of the multifamily space during the hard market are eager for new opportunities. New capital is chasing the same pool of business, and that shift is putting real leverage back in the hands of well-managed properties. Buildings with a strong maintenance program and a clean claims history might even see their premiums come down.” 

While many reports do note insurance premiums decreasing for certain industries and real estate accounts, David Haynes of HUB New England says that “unfortunately, habitational insurance programs continue to face challenges. The major factor that drives rates or contributes to premium stability is claim history. Water-related losses continue to be a major claim in both frequency and severity. Additionally, eligibility guidelines with tightened concerns remain as we commemorate five years since the Surfside tragedy. Reinsurance also remains a major concern for aging structures.”

And “when it comes to co-ops, condos and HOAs, they have a broad package of policies,” cautions Thomas Toffoli, risk manager with AKAM Management located in Coral Springs, Florida. “That package includes property and casualty lines—meaning general liability, umbrella and excess liability, directors and officers (D&O) protection, and in some cases pollution liability. Property premiums may be going down, but casualty and others are going up due to losses, litigation and judgements. Programs for umbrella coverage are nationwide, and are affecting customers nationwide.”

While premiums are still rising overall, Kevin Kehoe, senior VP for sales and commercial lines for Gallagher Insurance in Reading, Massachusetts says, “They’re rising at a much lower percentage than what the market experienced from 2023 through 2025. Standard market rate increases are stabilizing in the 4-8% range, while rates in many surplus accounts are falling. The overall market has been recapitalized over the past three years, providing more capacity. That reestablished capacity has led to rate stabilization in the standard market and has enabled the surplus market to reduce rates.”

Risk Mitigation Audits

In property insurance, a risk mitigation audit is a proactive evaluation of your assets and property to identify potential hazards and verify that your coverage limits match your exposure. The process uncovers gaps in protection and provides actionable steps to prevent claims, often resulting in both safer living conditions and lower premiums. These audits have become a common tool in assessing risk in property insurance.

“One thing many boards don’t realize is that insurance companies aren’t only looking at claims,” says Jodi Miller, senior vice president with Wolfson Insurance Brokerage in New York City. “They’re also looking for signs that claims are more likely to happen.” Something as simple as an outdated electrical panel, aging plumbing, roof issues, cracked sidewalks, missing handrails may not seem like a major concern by itself. But when an insurance company sees several of those issues together, it can become evidence of deferred maintenance, which can change how they view the property’s overall risk profile.  

“I’ve found that it’s always better to identify those types of issues before the insurance company does,” Miller continues. “A proactive risk mitigation audit gives a board the opportunity to correct problems early, document the work that was completed, and show the carrier that the property is being properly maintained.”

Parag Parekh, a partner with NYC-based law firm Moritt Hock Hamroff, concurs, noting that an audit “can demonstrate to the carrier that the board is taking proactive steps to diminish the chance of significant damage, rather than being reactive.” In other words, intention and behavior are important factors in today’s still-unstable insurance market

Beware Being Overly Optimistic

While optimism and hoping for the best is generally a good attitude to have, that’s not really the case when it comes to insurance. When there’s a loss, the last thing you and your community want is to be underinsured, or dependent on an old appraisal that underestimates the value of your property. That’s where an ‘it probably won’t happen to us’ attitude will come back to bite you.

According to Brodie, “The biggest consequence of being underinsured is discovering after a major loss that your policy won’t fully cover the cost to rebuild. That’s a situation no board wants to face, which is why it’s so important to periodically review your building’s replacement value and make sure your coverage still reflects today’s construction costs. 

“This was a major concern a few years ago,” he continues. “Construction costs were climbing rapidly, and insurers were placing much greater scrutiny on building valuations. Many boards found themselves commissioning updated appraisals simply to satisfy underwriting requirements and avoid coinsurance penalties if a claim occurred.  Fortunately, the market has changed, and today it’s much easier to negotiate policies that include blanket coverage and waive coinsurance requirements. But even with those terms in place, valuations are still important. An outdated appraisal can leave a building insured for less than it would actually cost to rebuild.”

In some cases appraisals are mandated by law. Toffoli notes that under current regulations in Florida, “Properties must have an appraisal every three years to determine current replacement costs. In the event a property is underinsured [and suffers a catastrophic loss], the owner is responsible for the cost difference to rebuild the building. That’s in the case of a total loss. In a partial loss, if you haven’t insured to 100% of value, you will be penalized for the percentage not covered.”

A Case in Point

Miller recalls a case that illustrates how important vigilance is for controlling insurance costs. 

He says, “I worked with one condominium association that had several relatively small water claims over a two-year period. None of the claims were particularly large, but together they raised concerns with the insurance company. Before renewal, the carrier required the association to replace aging supply lines and correct several plumbing issues. Because the board addressed the recommendations quickly, the policy was renewed instead of being non-renewed.”

On the other hand, Miller continues, “I’ve also worked with associations that chose to increase their property deductible after reviewing their reserve funds. The higher deductible reduced the annual premium, and because the association had planned ahead, it was well prepared when a covered loss occurred. The decision worked because it was based on the association’s financial position—not simply on reducing their premium.”

Seeking Stability

With sharp increases of the last few years still in mind, and the circumstances that caused those jumps still very much in play, how should boards seek longer-term stability for their premiums?  

“The action plan to protect an association’s future insurability should include the following,” says Kehoe. “Trustees should embrace larger deductibles, including an all perils per unit deductible to maximize the unique risk transfer opportunity by and between their master policy and the unit owners’ HO-6 policies. They should establish a long-term relationship with an insurer who specializes in the condominium segment, because associations who have built that relationship tend to experience more flexibility at renewal time, particularly if losses are incurred. They must also conduct a risk management audit, and be sure the association requires effective contractual risk transfer with all vendors who service the association.  

“Finally,” he adds, “embracing higher deductibles, including an all perils per unit deductible is a key tool to protecting an association’s future insurability. For most claims, the association’s deductible can be funded by a properly coordinated unit owner’s HO-6 policy. The recently updated Fannie Mae Seller’s guide now permits higher deductible structures, up to $50,000.”

Ultimately, the boards that tend to have the best outcomes are the ones that don’t think about insurance only at renewal. They stay on top of maintenance, review their coverage regularly, and address issues before they become bigger problems. That approach not only helps control insurance costs over time, but also puts the association in a much stronger position when it’s time to renew coverage. Proper diligence and a calm, proactive approach is the tip of the spear in insuring both stability and insurability in today’s still reactive property insurance marketplace. 

A.J. Sidransky is a staff writer/reporter for New England Condominium, and a published novelist. He may be reached at alan@yrinc.com.