Addressing Insurance Challenges for Low-Income Housing Providers in Washington State

Providers of affordable housing play a vital role in supporting extremely low-income households, including individuals experiencing chronic homelessness who require permanent supportive housing (PSH). Yet, many of these providers face challenges in securing property and liability insurance, threatening their ability to continue their essential work. Regulators are in a difficult position – they wish to encourage insurance availability and affordability for this important group of insureds but do not wish to disrupt the greater insurance market. 

Key Challenges 

A recent study conducted by the Actuarial team at Davies for the Washington State Office of the Insurance Commissioner (OIC) uncovered several key issues affecting insurance availability and affordability for the housing providers.  

In a broad sense, key issues include: 

• The challenging overall market conditions for property and casualty (P&C) insurance.  Note that reinsurance costs are a key issue for P&C property insurers generally, and are compounded for this market; 

• The types of properties owned by the housing providers.  These providers may have homes with older roofs, electrical systems, etc, or may have buildings with values greater than $10 million – both situations are difficult to insure; and, 

• The perceived risk profile of the housing providers’ residents. 

Policy Options  

Davies recommended consideration of twelve separate policy options which encompassed three overarching categories: 

• Reduce the total cost of risk by physically improving properties, increasing property inspections, and/or mitigating behavioral risks 

• Increase the availability of insurance by establishing a new insurance or reinsurance mechanism capitalized with public funds 

• Subsidize the cost of insurance 

Assistance to Regulators with Challenging Market Conditions 

Insurance regulators encounter difficult market challenges. Davies can help regulators sort through the data and develop actionable policy options. If you’d like to explore how Davies can assist, please reach out to Rebecca Freitag. 

Read a summary of our report: Housing Providers Study