The Surfside Collapse Changed Insurance

Over the last 24 months, I’ve spoken with hundreds of real estate owners and operators who are struggling to keep up with rising insurance premiums. What used to be manageable line items have turned into existential threats to operating margins.

In 2021, many multifamily operators were paying $40–$50 per unit per month for property and liability insurance.
Today, those same operators are seeing premiums of $120–$140 per unit per month in certain markets.

That’s a 150% increase in less than three years.

So what changed?

Everything shifted after the Surfside condo collapse in Miami in 2021, when a residential building catastrophically failed, killing 98 people. The property was not fully insured to rebuild, and the losses sent shockwaves through the insurance industry.

Insurance carriers didn’t just reassess coastal Florida risk — they repriced multifamily risk nationwide.

Older buildings were suddenly seen as far riskier than previously modeled. As a result:

• Premiums surged across all markets

• Increases hit even low-risk cities like Phoenix, Dallas, and Las Vegas

• Loss history stopped mattering

The result? A completely broken insurance incentive structure.

Why Operators Are in Trouble Right Now

1. The Insurance Incentive Structure Is Broken

Before 2021, operators who avoided claims were rewarded with flat or declining renewals.

Today?
Premiums rise 35–45% annually whether you file claims or not.

That means:

• Filing no claims doesn’t help you

• Filing claims only makes things worse

• Insurance has lost its traditional value proposition

2. Budgets Were Built on Assumptions That No Longer Exist

Most real estate models assumed:

• 3–5% annual insurance increases

• Predictable renewals

• Loss control mattered

Those assumptions are now obsolete.

Operators who didn’t adapt their strategy early saw their NOI evaporate almost overnight.

3. Higher Deductibles Made Things Worse

Many operators tried to fight premium hikes by raising deductibles.

Now they’re:

• Self-insuring the first $50,000–$100,000 per claim

• And paying double the premiums

• And still being penalized at renewal

They’re absorbing more risk for less protection — the worst of both worlds.

There Is Zero Margin for Error in Today’s Market

If you’re still operating with 2019 assumptions about insurance pricing and renewals, you’re going to get crushed.

But there is a way forward.

The New Way Forward for Multifamily Insurance

1. Accept That the Traditional Model Is Broken

If your premiums increase regardless of claims, then traditional insurance no longer aligns incentives.

You’re paying for “protection” that punishes you either way.

That’s not risk management — that’s a tax.

2. Stop Subsidizing Everyone Else’s Losses

In pooled insurance models:

• A clean property in Texas subsidizes hurricanes in Florida

• A well-maintained asset pays for wildfire losses in California

Your residents’ premiums are funding other people’s disasters — not your own protection.

3. Build Models That Return Money to You

Instead of treating insurance as a pure expense, leading operators are shifting to models where:

• Premiums are pooled internally

• Claims are paid from that pool

• Unused premiums become profit

This restores incentives:

• You want to avoid small claims

• You directly benefit from loss control

• Insurance becomes a financial asset, not a sunk cost

How This Works in Practice

When we built Amazon’s insurance program, we used these exact principles.

Operators became their own insurer through:

• Risk Retention Groups (RRGs)

• Captive insurance structures

They pooled premiums, paid claims, and kept the underwriting profits instead of handing them to third-party carriers.

Applying These Principles to Real Estate Today

At Insur3Tech, we’ve taken these same proven insurance structures and made them accessible to real estate operators.

Using this model, we’ve helped generate $28M in uncapped insurance profits for multifamily owners and operators — by turning insurance from a cost center into a profit engine.

Final Thoughts

Insurance isn’t complicated.

It’s a contract and a bank account with overhead attached.

Once you understand where the money actually goes, you start asking better questions — and building smarter systems.

And in today’s market, those who don’t rethink insurance strategy won’t survive compressed margins and rising costs.