multifamily insurance

How to Combat Rising Insurance Costs in Multifamily

In a recent episode of the Apartment Academy podcast, host Daniel Cunningham was joined by industry expert Mark Gardella. The pair delved into the pressing issue of rising insurance costs that continue to cast a shadow over the multifamily real estate sector. The conversation unveiled the stark challenges faced by property owners and managers and explored potential avenues to alleviate the financial strain caused by escalating insurance premiums.

The Looming Crisis: Escalating Multifamily Insurance Costs

As the multifamily real estate industry grapples with mounting insurance expenses, property owners and managers find themselves caught in the crosshairs of an escalating crisis. Traditional insurance acquisition processes often leave stakeholders with last-minute quotes that pack unwelcome surprises, disrupting financial planning and casting a cloud of uncertainty over the industry’s future. 

Navigating Multifamily Insurance Acquisition

Mark, the Co-Founder, and CEO of Sertis Insurance, shed light on the multifaceted challenge of acquiring insurance in an ever-evolving market landscape. The three primary factors contributing to this insurance crisis:

  • Catastrophic Losses: The frequency and severity of natural disasters such as hurricanes, floods, wildfires, and hailstorms have increased dramatically, straining the insurance industry’s capacity to absorb the losses.
  • Inflation: The ever-growing costs of labor and construction materials have driven up the expense of repairs and replacements after catastrophic events.
  • Social Inflation: Large judgments stemming from personal injury lawsuits have inflated settlement amounts, leading to higher claims and payouts. This trend is exacerbated by the involvement of law firms and hedge funds that finance these lawsuits.

The complex interplay of factors has turned insurance procurement into a treacherous voyage for property owners and managers. Traditional carriers are retreating from the market due to the complexity of risk assessment, leaving a void. As the storm of rising costs rages on, innovative strategies are essential to chart a safer course.

A Shift in Multifamily Insurance Procurement

One of the most notable facets of Sertis’ revolutionary approach is its departure from the industry’s prevailing practices. Rather than waiting until the eleventh hour to receive quotes, property owners and managers are encouraged to engage in a proactive dialogue with insurance providers well in advance of their renewal periods. This shift in timing aims to offer a clearer indication of the suitability of coverage, allowing stakeholders to plan strategically and eradicate the anxiety induced by last-minute surprises.

Telling the Good Operators from the Bad

How do you tell the difference between a good operator and a bad one? When renewing or purchasing insurance, it’s common for the insurance provider to ask, “Do you have a risk management plan in place?” 

However, as Mark points out, everyone is going to say “yes” sometimes without really having a proper plan. The decisions made based on this information might not be accurate.

To change this, Mark suggests a new approach. Partnering with property owners who understand insurance is important for their expenses and profits. These owners are proactive and care about things like property maintenance because it affects not only the cost replace something when it breaks down, but also the long-term profitability of their properties. The goal is to work together with these owners, share best practices, and track progress throughout the year to ensure better risk management and overall success.

Adopting Industry-Wide Best Practices

In an alliance that augments the potential for positive change, Gardella revealed the synergy between Sertis Insurance and Leonardo247. While it’s not mandatory to be a Leonardo247 user to benefit from Sertis Insurance’s services, the harmonious integration of both platforms is welcomed. This partnership extends beyond individual advantages, contributing to the elevation of industry-wide best practices that can redefine the multifamily landscape.

In a multifamily world fraught with insurance uncertainties, the emergence of proactive, transparent, and collaborative solutions signals a glimmer of hope. By focusing on transforming insurance acquisition norms, this forward-thinking approach has the potential to mitigate the financial tempest and usher in a new era of stability for the multifamily industry.

Episode Links:

Follow Mark Gardella on LinkedIn:  

Follow Daniel Cunningham on LinkedIn:

Check out Sertis on LinkedIn: 

For even more operations & maintenance tips…


0:00:00 Introduction to the episode and guest, Mark Gardella, from Sertis Insurance

0:03:15 The state of insurance in multifamily

0:14:22 What Sertis is doing differently

0:17:32 The difference between good operators and bad operators 

0:22:37 A FICO-like credit score for property management?


To request the entire episode transcript, visit us here:

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