Budget Talks Hang Over Affordable Housing Owners Desperate For Insurance Relief

As the New York State Legislature approaches crunch time for budget negotiations, lawmakers are taking aim at skyrocketing insurance costs that are weighing heavily on housing owners' bottom lines.

Gov. Kathy Hochul has proposed four measures in her executive budget aimed at curbing insurance costs, which have more than doubled in recent years for affordable housing owners. The proposals include both long- and short-term measures that aim to create more transparency and opportunity for discounts in exchange for upgrades.

“When the price of eggs goes up, you see it at the checkout. You don't really see how insurance is affecting you in that way,” said Carlina Rivera, president and CEO of the New York State Association for Affordable Housing. “Finally, we're starting to talk about how untenable it is.”

Hochul and Senate and Assembly leaders are negotiating the budget ahead of the April 1 deadline for its passage — although talks have dragged on weeks past the deadline in recent years. 

The proposed fixes show that Hochul is focused on an issue that has rapidly become a chief concern among the state's operators of affordable housing: spiraling insurance costs. But industry advocates say they don't go far enough.

Affordable housing landlords' insurance costs jumped by 110% between 2017 and 2024, according to a study by the National Equity Fund and Enterprise Community Providers. Another Enterprise study found that nearly one-third of affordable housing providers experienced insurance increases of 25% or more in a single year.

“How the governor approached auto [insurance] is much more aggressive than how she approached housing in this session,” New York Housing Conference Executive Director Rachel Fee said. “We think we need more action along those lines.”

Hochul is proposing requiring insurers to provide information on premiums collected, claims paid and other information to the state’s Department of Financial Services and its Homes and Community Renewal housing agency. Another measure requires insurers to explain premium increases of more than 10%, allow policyholders to request written explanations, and require insurers to respond within 20 days of receiving a request.

The Senate included those measures in its own budget proposal, while the Assembly didn't. Landlords have struggled to challenge the insurance premiums they are offered because of the dearth of public information showing what factors are driving up insurance costs, industry leaders said.

“One of the biggest things is, No. 1, the transparency,” said Valerie White, executive director of nonprofit development association Local Initiatives Support Corp. NY. “You have to detail it and talk about what the elements are in the cost.”

Hochul said in this year's State of the State speech that she plans to bring together experts and stakeholders from the affordable housing, real estate and insurance industries to propose both long- and short-term ways to reduce insurance costs.

That task force would be a good first step, Fee said, but obtaining and compiling information to find solutions could be trickier in practice.

“We've been working on this issue for several years, and we still haven't landed on a clear agenda that is really going to break down costs in a meaningful way,” she said. “More work has to be done to get there, but we also need the political will for that to happen.”

Another proposal being debated would require insurers to offer discounts on premiums for items on a list of basic risk mitigation measures that are largely already mandatory, such as installing smoke detectors or ensuring roofs are water-resistant. That is also included in the Senate's proposal but not in the Assembly's.

“If you have a sprinkler, if you have roof protection, why is it that the price is going up?” White said. “This is one of a few things that would be immediate relief in the net income, because you have to pay less for the insurance.”

Housing groups say several commonsense solutions not on the legislative menu this year would have more of an impact on the surging cost of insurance. NYHC would like to see changes to the scaffold law, which Fee said could reduce construction insurance costs, included in the conversation. 

NYSAFAH, NYHC, Enterprise, the Supportive Housing Network of New York and the Community Preservation Corp. are pitching lawmakers on a state-administered reinsurance trust that would help prevent cost spikes in case of a catastrophe.

Reinsurance, which insurers buy to protect themselves against unexpected losses, is seen as a key driver of premium increases because reinsurers have reduced their real estate exposure in recent years in regions frequently experiencing natural catastrophes.

That means insurers are asked to swallow bigger losses before their reinsurance policies kick in.

The reinsurance trust would share catastrophic losses at a set level between the state, insurers and owner-operators, stabilizing the insurance market, attracting more insurers and lowering premiums for affordable housing providers, the housing groups argue. 

While the groups are also advocating for the creation of a federal reinsurance trust, Rivera said the state shouldn't wait on federal relief to take action to make its insurance market more attractive.

“You're at the mercy of who is available to insure your properties,” she said. “We’ve brought up some of these measures to the state, saying, ‘Hey, let's try to think outside the box on this.’ Let's try to create new programs, create a safe housing and insurance incentive program.’”