What a 0.9% Loss Ratio Looks Like in a Resident Insurance Captive Program

A 0.9% loss ratio sounds almost too good to be real. In one of the programs we’ve built, a resident insurance captive covering a 3,364-unit portfolio paid claims equal to 0.9% of premium over 31 months. One claim was filed. It was for $4,000. This post explains what produced that number, why low loss ratios are achievable in professionally managed portfolios, and what it means for the money that comes back to owners.

What actually happened

Over 31 months, enrollment grew from 4 to 2,515 residents. The coverage was tenant liability: resident-caused accidental damage to other units and common areas, and third-party bodily injury.

One resident accidentally caused water damage to a neighboring unit. The $4,000 claim was paid promptly through the captive’s claims process, the damage was repaired and the resident kept their coverage. Total claims over 31 months: $4,000. Total net profit to ownership: $483,668. Read the full case study for the month by month numbers.

Why low loss ratios are achievable

A 0.9% loss ratio is extraordinary, even for professional multifamily. It isn’t what every operator should expect. But understanding what drives it helps you estimate your own loss ratio.

Professional screening

The biggest driver is the resident population. Residents who clear income verification, credit and background checks are less likely to cause liability incidents.

Maintained properties

Well maintained properties see fewer slip and fall incidents, fewer injuries from neglected conditions and less water damage from deferred maintenance.

Clear lease terms and enforced opt-outs

Opt-outs require a certificate of insurance with specific terms. Residents who arrange their own qualifying coverage tend to be lower risk by profile.

Small claims filtering

When residents know damage goes through a formal process with adjusters and documentation, many handle minor incidents themselves, which keeps formal claims frequency low.

The other side of the account

Under the prior third-party program, the same residents paid similar premiums and the same $4,000 claim would have been paid. The margin would have gone to the program and its carriers, and the operator would not have seen the loss data. Most third-party programs don’t share loss experience with operators. The captive created that visibility and returned the results to ownership.

What to expect from your own loss ratio

Not every operator will hit 0.9%. The 13% loss ratio in our 10,141-unit case is more representative of a large professionally managed portfolio. But any loss ratio well below the 40% to 50% market average produces meaningful returns.

Illustrative examples on $100,000 in annual resident premium:

• 15% loss ratio: about $55,000 a year available for distribution

• 25% loss ratio: about $45,000

• 35% loss ratio: about $35,000

These are illustrative figures, not a quote. Our programs have consistently averaged 75% to 93% resident enrollment over time, which is what turns figures like these into a growing annual return. Compare with industry data on the average loss ratio for residential property.

How Insur3Tech fits

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. What isn’t spent on claims comes back to you. We insure 100,000+ doors.

Curious what your loss ratio would be? 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.