Captive Insurance for Affordable Housing: A Way Through the Coverage Crisis

Affordable housing owners are being squeezed from three sides. Premiums are up. Fewer carriers want the business. And the rents can’t rise to cover it. Captive insurance for affordable housing won’t fix the whole market, but it can change who benefits from the premium you are already paying.

Here is what the data shows and where a captive fits.

What affordable owners are facing

Premiums that doubled

The Federal Reserve Bank of Minneapolis surveyed multifamily owners operating nearly 45,000 units, and nearly two-thirds of them provide housing affordable to lower-income households. Their premiums rose an average of 45% from 2023 to 2024, and 2024 premiums were double 2021’s. Several said carriers told them outright that they no longer want to insure affordable housing.

Nationally, insurance went from 2.74% of apartment revenue in 2019 to 4.78% in 2024, according to a Federal Reserve analysis of Trepp data.

Rents that can’t follow

Publicly funded affordable housing can’t raise rents beyond what its funding sources allow. The Minneapolis Fed found these owners also have less freedom to cut coverage, because investors and lenders set the requirements. So increases come straight out of NOI and reserves.

A crime score you never see

Many carriers use third-party crime scores to price general liability. The National Apartment Association has told Congress this hits affordable communities hard, because scores reflect the area rather than how a property is run. We covered it in the CARES Act, crime scores and affordable housing insurance costs.

Slower evictions

The CARES Act 30-day notice still applies to much of the federally assisted and federally backed housing stock. See how the CARES Act 30-day notice affects insurance costs.

How a captive changes the equation

In a captive, the premium you pay goes into an insurance company you co-own. Claims are paid from it. What isn’t spent on claims comes back to you. That means your own results, not the market’s assumptions about your neighborhood, decide what returns to the property.

Start with the resident layer

The easiest place to begin is the resident liability program, the coverage residents carry for damage they cause. It doesn’t touch the property policy your lender or investors require, so it is usually the quickest to set up. Our programs have consistently averaged 75% to 93% resident enrollment over time.

Add the owner and operator layers when it fits

Property, liability and your management company’s workers’ compensation can follow. On the property side, check your lender, agency and investor requirements first. They often set minimum carrier ratings and coverage terms.

Your results become evidence

A captive gives you a clean record of your own loss history. That record helps when you talk to lenders, investors and carriers, and it is the kind of data housing advocates need when they argue that well-run affordable properties are not the risk their zip code suggests.

How Insur3Tech works with affordable owners

Insur3Tech’s captive has no minimum premium and no unit minimum; portfolios as small as 4 doors can join. There are no holdout periods. The entire program is reinsured, so you carry no downside risk. We insure 100,000+ doors.

If your portfolio is already hard to place, read the hidden crisis of uninsurable portfolios.

Want to see what your affordable portfolio could get back? Book a free discovery call. We’ll audit your portfolio for free and tell you how much you can expect to get back every year.