Insurance Premiums Soften
Insurance Premiums Soften
-
Insurance is migrating out of a "hard" market. That means lower rates for those who negotiate. Let's dive in.
August 15th, 2024
Read Time: 2 minutes
For years, we faced a "hard" insurance market, but the tide has turned, and premiums are finally coming down. Multifamily owners now have an opportunity to benefit from this shift.
Today, we'll break down why this change is happening and how you can take advantage of it.
Let’s dive in!
(Did someone forward you this email? Sign up [here](http://www.onmultifamily.com)).
Note our team currently has 9 separate deals under contract in markets across Ontario. We're on a roll! Below are a few property types we've been getting a lot of requests for from buyers. Call us if you have an idea 647-915-3193.
Insurance Market Softens
A friend of mine, responsible for managing costs across a 4,000-unit portfolio, recently mentioned that he’s been able to negotiate better premiums on several of his buildings. Intrigued, our team investigated further, and here’s what we discovered.
The Hard Market (2019-2021)
A hard insurance market occurs when insurers raise premiums, reduce coverage options, and enforce stricter underwriting. This typically follows significant losses or low investment returns, as was the case between 2019 and 2021. During this period, insurers were hit by substantial claims from natural disasters and faced lower returns due to declining interest rates. These factors led to some of the steepest insurance premium increases in North America over the past decade.
Impact on Multifamily Owners in Ontario
Increased Costs: Multifamily property owners in Ontario saw insurance premiums skyrocket, severely impacting their operational budgets.
Stricter Underwriting: Insurance providers became more selective, making it harder for owners to secure comprehensive coverage. Many were left with less favourable policies or were forced to accept higher deductibles.
Fast Forward to Today
In 2024, old insurance companies have re-entered the market, and competition has driven better pricing. For many, insurance premiums are no longer on the rise.
To put this into perspective:
In Q4 2020, the median change in insurance costs was a staggering 21.6% increase year-over-year. Today, that number has dropped to just a 7.2% increase, with 25% of policyholders seeing no rate increase at all.
Clients are reporting more competitive insurance bids and, in some cases, a reduction in premiums. At scale, these savings can be significant.
For reference, here are the largest insurance providers for multifamily properties in Ontario. See who can give you the best rate!
Intact
TL;DR
More competitors have re-entered the insurance market. If you're willing to shop around for competitive quotes, your new rate will likely be the same as last year—or even lower.
Thank you to Mason Webster at Gallagher for helping us gain a deeper understanding of insurance for this newsletter.
👋 P.S. I helped my clients sell $263M in 2023 ([see recent deals](https://www.collierscanada.com/en-ca/experts/dayma-itamunoala)).
Get analysis like this delivered every week.
Join 16,000+ multifamily professionals staying ahead of Ontario market trends.
