Buyers’ Market Reversing
NMHC conducted a survey which is based on data covering 750,000 units operated by 57 apartment firms. The results show the average (nonweighted) Total Cost of Risk (TCR) rising 1% between 2010 and 2011. By comparison, last year’s report show a 6% decline in the TCR. (Total Cost of Risk reflects the cost of the three principal components of insurance premiums: property, general liability and workers’ compensation.)
A 25% increase in workers’ compensation rates was one of the main factors behind 2011’s higher TCR, although higher premiums were also recorded for general liability coverage.
“Our results indicate that the buyers’ market enjoyed by apartment firms in recent years is reversing,” said Jeanne McGlynn Delgado, NMHC’s Vice President of Business and Risk Management Policy. “Although this year’s increases were small and limited to a couple of lines of insurance, we expect to see moderate price increases in 2012 as a result of both the current investment market and the impact of severe weather in 2011.”
Other key findings of NMHC’s survey include:
The mean average property cost of risk, which accounts for 70% of the average apartment firm’s insurance budget, decreased by 1% in 2011.
Premiums for workers’ compensation increased from $833 per full-time employee in 2010 to $1,040.
62% of apartment firms require residents to have renters’ insurance with the most common limit required at $100,000.
NMHC members who wish to share the survey results can download an executive summary and a PowerPoint summarizing the results at www.nmhc.org/goto/6419
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