The real estate industry is shaking, and it’s not slowing down.

Last week, I read a post from a multifamily owner that stopped me cold. They lost an entire building to a fire, filed a claim with their insurance carrier, and were told:

“Sorry, this isn’t covered.”

They paid for the entire rebuild out of pocket.

Then the carrier non-renewed them.

This isn’t an isolated story anymore. It’s becoming a pattern, and it exposes a fundamental problem with how insurance works for real estate owners today.

The Broken Promise of Property Insurance

Insurance is supposed to exist for catastrophic events.

That’s the deal:

• Owners typically handle small losses through high deductibles

• Premiums are paid year after year

• When something truly major happens, coverage is there

But in reality, many operators are discovering that when the worst happens, their carrier becomes an adversary — not a partner.

Carriers spend years courting clean operators:

• Strong maintenance practices

• Minimal claims

• Excellent loss histories

They gladly collect premiums when nothing goes wrong.

But when a large claim finally occurs?

• Coverage is disputed

• Payouts are delayed or denied

• Policies are non-renewed after payment

At that point, owners are forced to ask a painful question:

What exactly have we been paying for?

Why Multifamily Operators Are at a Breaking Point

The last five years have been brutal for real estate owners:

• Interest rates doubled

• Insurance premiums tripled in many markets

• Operating margins evaporated

Operators adapted. They raised deductibles. They absorbed costs. They kept paying premiums, trusting that insurance would do what it promised when it mattered most.

But now, more owners are discovering that insurance no longer reliably protects against catastrophic loss.

Imagine any other relationship that only exists when times are good — and disappears the moment you actually need support. That’s what many insurance relationships feel like today.

And owners are understandably angry.

Why Carriers Are Losing Trust, And Customers

The insurance industry isn’t confused about what’s happening.

Carriers know that:

• Catastrophic claims are increasing

• Reinsurance is more expensive

• Litigation risk is rising

Their response has been predictable:

• Tighten coverage language

• Increase premiums regardless of loss history

• Reduce exposure by non-renewing after claims

But this behavior has consequences.

More real estate owners are asking:

• Why am I subsidizing other people’s losses?

• Why do I lose coverage the moment I actually use it?

• Why doesn’t my clean portfolio benefit me anymore?

And those questions lead to action.

The Rise of Self-Insurance and Captive Models in Real Estate

This is why self-insurance, captives, and risk retention structures are gaining momentum across the multifamily industry.

These models allow owners to:

• Pool their own premiums

• Pay their own claims

• Retain underwriting profits when losses are low

• Control renewals and coverage terms

Instead of paying a third party to hold their money and fight them during claims, owners regain control over their risk.

From the carrier’s perspective, this trend is alarming.

From the owner’s perspective, it’s logical.

The Hard Truth the Industry Must Face

If insurance no longer reliably protects operators during catastrophic events, then the traditional model is failing its core purpose.

Ignoring that reality doesn’t make portfolios safer, it only ensures more owners get burned before change happens.

That’s why more operators are exploring:

• Captive insurance structures

• Risk retention groups (RRGs)

• Alternative risk transfer models

Not because they want complexity, but because they want real protection and fair economics.

Final Thoughts

Insurance should never feel like a gamble.

Yet today, many real estate owners are paying more than ever for coverage that disappears when it’s needed most.

Until the industry confronts this truth head-on, the shift toward self-insurance and captives will only accelerate.

And frankly, I think it should.