Community Development Voice is an initiative of the Community Opportunity Alliance, a national nonprofit that builds the community development field. Local community developers speak out on key issues affecting underserved communities and our field. We share their insights with decision makers and the media.

RISING INSURANCE COSTS

Impact on Nonprofit Community Development Organizations

SUMMARY: Expensive and inaccessible insurance is being felt by community developers in every section of the country, threatening their financial and organizational stability. We surveyed Community Development Voice representatives from across the country and got the following results, including quotes about their experiences. 

Nearly all organizations reported rising property and casualty insurance rates. Annual increases of 15 - 432% in the past two years were cited by organizations whose insurance rates increased. This is compared to the expected 3 - 15% annual increases they reported pre-2022. 

The majority of organizations reported rising organizational insurance rates. Annual increases of 20 - 100% in the past two years were reported by organizations whose insurance rates increased. This is compared to the expected 5-15% annual increases they reported pre-2022.

A few organizations reported that providers dropped their insurance policies. Insurance providers most often cited losses related to natural disasters and increasing costs to replace damaged property as reasons for increasing rates or dropping policies. Some organizations were dropped specifically because of services they provide — affordable housing and food assistance.

Consequence of rising insurance rates and dropped policies are significant. Organizations most commonly reported that they had to raise rents or eliminate programming. A few also had to sell properties or lay off staff. Almost all organizations reported that the insurance issues have caused them to question whether to take on additional development projects. 

INDIVIDUAL RESPONSES

Amber Lynch, Invest DSM — Des Moines, Iowa

Invest DSM experienced an increase of 432% in property and casualty insurance ratesand a 63% in organizational insurance rates. Previously, they had annual increases of 12 - 15% on both types of insurance. Additionally, their insurer declined to renew their coverage. Because of these insurance issues, Invest DSM is questioning whether to take on additional development projects.

Quotes:

• “Our insurer declined to renew our coverage forcing us to go out to the specialty insurance market, particularly for property insurance.”
  

• “For the additional $50,000 - $60,000 we are now paying towards insurance, we could have hired another staff person.”
  

• “If the rate hikes continue, we will need to reduce the number of development projects we take at one time, slowing down our momentum and reducing our impact.”
  

• "Expensive and inaccessible insurance is being felt by community developers in every section of the country, threatening financial and organizational stability."
• “In Iowa, we're seeing insurers leave the market because of the increasing frequency and severity of natural disasters. The policies that are still available are adding expensive riders or excluding coverage for hail, wind or flood damage. This is making housing less affordable across the board, but for homeowners who are already cost-burdened, this will quickly reach a crisis level.”

Mike C. Nguyen, VN Teamwork, Inc. — Houston, Texas

Communities First, Inc. experienced increases in organizational insurance rates from 5 - 10% to 20 - 100% and property and casualty insurance rates from 5 - 12% to 100 - 300%. Additionally, their insurance providers dropped their property and general liability coverage. They were told that these rates and dropped coverage were due to the “presence of rental vouchers.” Because of these insurance issues, the organization has had to raise rents, lay off staff, sell properties, shrink/eliminate other programming, and questioned whether to take on additional development projects.

Quotes:

• “One of our LIHTC multi-family projects (116 units), is in grave danger of defaulting on our loan in 2025. With insurance costs going from 80k to possibly 302k next renewal, our highest DCR month would be 0.50 and our lowest dips into negatives -0.20. We have been in discussions with lender for a year now to see what we can do. We are afraid this may displace many families that need our community.”

• “We may lose our precious affordable housing projects and communities we work.” 

Essence Wilson, Communities First, Inc. — Flint, Michigan

Communities First, Inc. experienced increases in organizational insurance rates and property and casualty insurance rates. They were told that these rates were due to losses related to natural disasters and climate change, crime rates, increasing costs to replace damaged property, and rising construction/material costs/construction losses. Because of these insurance issues, the organization has questioned whether to take on additional development projects.

Quotes:

• “It is becoming increasingly difficult to account for the rises in insurance coverage for commercial, affordable housing and mixed use developments. While we understand the risk involved for insurance companies, their increased costs and aversion to certain deals substantially impacts developers. So far, this cost has not made a deal infeasible, but if the trend continues it will become a significant factor for future acquisitions, new construction and repositioning of deals. Builder's risk insurance is also rising in cost making it difficult to develop in communities that are in dire need of affordable housing. These communities tend to entail hire risk and greater losses during construction. Further, for mixed use developments insurance is quoted and provided by different insurers for the commercial and housing portions. This leads to increased costs and difficulty in ensuring these properties. Doing what's right for the community by investing in housing and mixed use development is coming at an increased cost that is on the brink of being prohibitive for many developers.”
  

• “The long term impact is somewhat unknown but it is clear that climate change and natural disasters are not going away. We must find solutions to this issue because there is an overwhelming need for safe, quality affordable housing. Insurance costs shouldn't become the deciding factor of whether people have a decent place to live.”
  

Chris Casillas, Regenerating Sonora — Superior, Arizona

Regenerating Sonora experienced increases in organizational insurance rates and property and casualty insurance rates and their insurance provider dropped the whole organization for coverage. Because of these insurance issues, the organization has had to shrink/eliminate other programming and questioned whether to take on additional development projects. 

Quotes:

• “We were dropped because we provide meals for community members.”
  

• “It limits what we plan on doing in the future.”

Larry Fisher, ACEnet — Athens, Ohio

ACEnet experienced an increase from 8% yearly increases to 37% in organizational insurance rates, and 5% to 34% in property and casualty insurance rates. They were told that these rates and dropped coverage were due to losses related to natural disasters and the economics of doing business in Ohio. Because of these insurance issues, ACEnet has “increased rental rates by our self-determined max rate of 10% as a result of all increased costs since 2022, including insurance expenses.”

Quotes:

• Since this is mostly a result of situations here in Ohio, we will face increased costs from an extreme season of tornadoes and continue economic issues of overall inflation.
  
• If these rate increases become the new norm for the industry, it will become another increased burden on new and low-income home owners and will keep them out of the market.
  
• Lobby for subsidized housing insurance for certain regions of the country and possibly create buying cooperatives in certain housing markets in an effort to use volume to drive rates.

Quotes From Other Community Developers:

• “If it does not slow down and reverse we will need to sell units.”
  Nick Mitchell-Bennet, cdcb | come dream. come build., Brownsville, Texas
  

• “Ironically, the more operating costs in insurance means less resources available to support residents, which results in unstable properties. 
  Trell Anderson, Northwest Housing Alternatives

• “Higher operating costs will discourage investment in affordable housing.”
  Jesus Esquivel, Arlington Partnership for Affordable Housing

• “It will hinder the ability to provide quality affordable housing.”
  Jesus Esquivel, Arlington Partnership for Affordable Housing (APAH)

About the Community Opportunity Alliance 

The Community Opportunity Alliance is a national nonprofit that builds the community development field. We are committed to creating conditions where residents can shape the destiny of their neighborhoods, securing their long-term stability, health, and prosperity. Local community development organizations work in underserved communities to develop affordable housing and commercial space, support small business development, provide social services, and advocate for their communities. The Alliance strengthens the field of nearly 6,000 local community development organizations and state and regional associations across the country.