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Rising Demand for Apartment Rentals Will Define Habitational Insurance Sector

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The U.S. is faced with an apartment shortage that is expected to get worse before it gets better. This is placing significant stress on the Habitational Insurance market with high demand for rental housing.

According to the National Multifamily Housing Council and the National Apartment Association, the U.S. will need an additional 4.3 million apartments between now and 2035 to support this growing demand.

Key Takeaways:
  • Hard market conditions remain for the Habitational sector, with some signs of moderation.
  • Rising demand for apartment rentals will help define the sector in the coming years.
  • Rates continue to rise, and deteriorating terms and conditions make assault and battery, sexual abuse, and firearms exposures especially difficult to place.
  • The increasing number of CAT events limits the availability of capacity, especially in high-risk areas.
  • Solutions can be found. Utilizing E&S for difficult-to-place risks will prove prudent, as will strong relationships with wholesalers like Burns & Wilcox to improve submission success.


Why is demand so high? There are three main reasons:

  1. The overheated housing market and inflation are delaying homeownership for young adults either by choice or necessity.
  2. Apartment living is a more convenient option for many Americans.
  3. High demand exists for apartments from a continued influx of immigrants.

While inflation and interest rates have stabilized, there is an expectation that the economy will operate in a higher interest rate environment in the short term. According to the National Association of Realtors, median home prices rose to a record high of $389,800 in 2023, further emphasizing the housing market’s affordability issues.

The convenience of apartment living is appealing for many, highlighted by such trends as smart technology, flexible design and the rising cost of home improvement projects. Finally, U.S. population rose by an estimated 1.6 million in 2023, with two-thirds of that growth driven by immigration, according to the U.S. Census Bureau. These trends have impacted the sector’s Casualty, Property and Binding areas in various ways.


The Habitational sector remains in a hard market for Casualty, continuing a trend that began more than five years ago. Year-over-year rate increases are occurring, but have fallen from double-digits to low single-digits for most insureds.

With rate increases, terms and conditions have deteriorated making it difficult to find affordable options that would cover assault and battery, sexual abuse, and anything with firearms exposure within the sector. This is especially true in such Southeastern U.S. states as Alabama, Florida, Georgia, and Mississippi. Many carriers in the Excess space have little to no capacity.

Other states like California, New York, and Texas continue to experience rising rates based on CAT and crime exposure, with underwriters increasingly reviewing local crime scores. Carriers in those high-crime areas are often faced with capacity limitations and exclusions for weapons and firearms.

Simply put, it is difficult to find carriers who are willing to offer one of the more problematic exclusionary areas, especially if they have a recent history of poor loss experience.


Like Casualty, the Property sector in Habitational Insurance has been in a hard market with rising rates and more deductibles. Capacity has fallen in both the U.S. and London marketplaces. A handful of domestic Excess market leaders are offering competitive terms even as signs of moderation appear.

Certain property categories are particularly challenging. Among them are student housing, senior living, and lower-income renters that qualify for Section 8 vouchers. Various construction types will also receive more scrutiny from underwriters, especially inferior structures and frames, and buildings constructed before 1995.

Additionally, building updates are being carefully considered in the underwriting process. Carriers are looking for information on such features as sprinklers, home security systems, and pools. Geography matters as well. Areas with higher risk for convective windstorms and hail, wildfires, and flooding will be harder to place. Historical registries are a challenge even outside of traditional CAT areas.


The state of the Binding market is largely tied to the unprecedented number of named storms that have impacted the Gulf Coast over the last decade. From Key West to Houston, eight fast-moving, named storms have battered the region since 2014, causing significant claims. The U.S. was hit with more billion-dollar disasters in 2023 than any other year on record, despite comparatively few examples of hurricane landfall, according to the National Oceanic and Atmospheric Administration’s National Centers for Environmental Information. That has caused a “generational” hard market to form. For this and other reasons, such carriers have either pulled out of the market or increased rates to an unsustainable level for insureds.

London syndicates remain available, but capacity has fallen dramatically. Poorly performing properties have often been underinsured in the past, but given the claims pressures caused by convective storms, underwriters are more committed to resolving that issue.

Some carriers are reporting that they would need a minimum of five years without CAT events in the Gulf Coast to recoup profits. As a result, many of the rising insurance costs are being passed down to renters and association fees for condominiums.

Tips for Brokers & Agents

Finding options for insureds takes complete submissions, transparency, and availability.

Tips for brokers and agents include:

  • Ensuring full context and inclusion of critical data points with all submissions
  • Including photos of property improvements, structural upgrades, and more
  • Using the Excess & Surplus (E&S) marketplace for hard-to-place items
  • Developing wholesaler relationships that improve submission success
  • Keeping insureds informed and managing their expectations
  • Being forthright with known challenges, like aluminum wiring. Solutions can be found.

Considering the demand for coverage, underwriters cannot spend too much time reviewing submissions. It is a high-frequency process so brokers and agents are advised to anticipate likely questions. You have done your job if a client submission moves into the “considered” pile.

There is some level of optimism in the Habitational Insurance market for the first time in a few years. With hard work, strong carrier relationships, and attention to client service, the opportunities in 2024 are significant despite lingering headwinds.


Contributors: Barry Whitton, Managing Director, Broker, Property, Burns & Wilcox Brokerage; Nicholas Freeman, Associate Managing Director, Broker, Casualty, Burns & Wilcox Brokerage; Kevin Cuyler, Manager, Commercial Insurance, Burns & Wilcox; Jake Miller, Broker. Property, Burns & Wilcox Brokerage

This commentary is intended to provide a general overview of the issues contained herein and is not intended, nor should it be construed, to provide legal or regulatory advice or guidance. If you have questions or issues of a specific nature, you should consult with your own risk, legal, and compliance teams.

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