How Much Profit Does Your Insurance Carrier Make on Your Multifamily Portfolio?

Your insurance carrier knows exactly how profitable your account is. They have your premium history, your loss runs, and your combined ratio calculated to the decimal point. This information shapes how they price your renewal, whether they renew you at all, and how much latitude your broker has to negotiate on your behalf.

You almost certainly do not have the same information. This post closes that gap.

What carriers see when they look at your account

When your carrier or underwriter reviews your account at renewal, they are running a specific calculation: how much premium have we collected from this account over the past 3–5 years, and how much have we paid in claims? The ratio of those two numbers (your account-level loss ratio) determines whether you are a profitable, marginal, or loss-making account for them.

A profitable account is one where the carrier has collected significantly more in premiums than it has paid in claims. A loss-making account is the reverse. Most professionally managed multifamily accounts are profitable for carriers (often very profitable) because professional management reduces claim frequency relative to what carriers price for in the market average.

Running the calculation on your account

You can estimate your account's profitability for your carrier using data you should be able to obtain from your broker:

• Total premiums paid over the past 3–5 years: from your invoices or your broker's account summary

• Total claims paid over the same period: from a loss run request to your carriers

The carrier's gross profit on your account, before their operating expenses: total premiums minus total claims.

Example: $300,000 in annual premiums × 4 years = $1,200,000 in total premiums paid. $95,000 in total claims paid over 4 years. Carrier gross profit before expenses: $1,105,000. After a 30% expense ratio ($360,000): carrier net profit on your account over 4 years: $745,000.

That is $745,000 in profit your carrier generated from your account over four years. You received $95,000 in claims service. They kept the rest.

Why loss ratio is the number carriers protect most carefully

Loss runs (the report that shows your claims history) are technically available to you as the named insured. However, brokers sometimes present these as information that does not belong to clients or that requires special authorization. This is incorrect. You have the right to request your own loss runs directly from your carriers.

Some brokers are reluctant to provide loss runs proactively because the calculation above (what the carrier is making on your account) makes it obvious that a better structure exists. A broker whose compensation is tied to premium volume has no financial incentive to help you see that your account is highly profitable and that you could be capturing that profitability yourself.

Request your loss runs directly from each carrier. Frame it as standard renewal preparation. Get 5 years if possible. Run the calculation. Know what you are worth.

The line-by-line profit picture

Resident liability: typically the most profitable line on your account

On a well-managed portfolio with professional screening, resident liability generates loss ratios of 5–20%. At a 12% loss ratio and $36,000 in annual premium: the carrier's annual profit on this line alone, after expenses, is approximately $21,000. On your account. From one line.

Workers' compensation: a consistently profitable line for carriers

The workers' comp industry has been profitable for 10 consecutive years. For a property management company with a $120,000 annual workers' comp premium and a loss ratio of 30%: annual carrier net profit after expenses is approximately $48,000. Per year. On one account.

General liability: significant profit in good years, volatile in bad ones

GL profitability depends heavily on whether your portfolio has significant liability claims. For operators without major claims history, GL loss ratios are frequently 15–35%. On $80,000 in annual GL premium at a 20% loss ratio: carrier net profit after expenses of approximately $40,000 annually.

What happens to this information

Once you know what your account generates for your carrier, the captive conversation changes entirely. You are not asking your carrier for a favor at renewal. You are evaluating whether to continue providing a profitable account to an entity that has no ownership interest in your portfolio, or to redirect that profitability to a structure you co-own.

The premium does not change. The coverage does not change. What changes is the answer to the question: who keeps the profit your account generates?

The carrier knows this number. Now you do too. The question is what you do with it.