New York City Mayor Zohran Kwame Mamdani is seeking to lower the cost of property and liability insurance for affordable and rent-stabilized housing through a new city-run insurance program.
Mamdani plans to hire independent actuarial experts to design and launch the insurance program with the goal of offering coverage in 2027. By 2027, the city hopes to lower the cost of insurance policies for 20,000 homes and, by 2030, for as many as 100,000 homes.
The city plans to this week issue a Request for Proposals (RFP) for an actuary or risk consultant that will provide expertise to design the program.
This summer, the city plans to issue a Request for Expression of Interest (RFEI) to solicit proposals for how best to structure and operate this insurance program.
According to the city, the cost of insurance has hit affordable and rent-stabilized housing particularly hard. The city believes the new proposal will also drive down city spending per home in its affordable housing programs because every $100 increase in insurance costs requires $1,200 more in city capital in new transactions.
“We cannot take on the housing crisis without confronting one of the fastest-growing costs facing New Yorkers: insurance. That’s why we’re creating the first city-backed insurance program — to help New Yorkers stay in their homes, give building owners the support they need to make repairs, and build a city that New Yorkers can actually afford,” said Mayor Mamdani.
“The skyrocketing cost of insurance is putting affordable, rent-stabilized housing at risk and risks setting back our efforts to build a more affordable city. This groundbreaking effort will use the City’s purchasing power to lower insurance premiums, helping our own investments in affordable housing go farther and reducing operating costs for owners of rent stabilized housing. This is just one step in how we’re working to bring down housing costs across the board,” said Leila Bozorg, deputy mayor for Housing and Planning.
According to the Association for Neighborhood and Housing Development (ANHD), rising insurance premiums have become one of the most destabilizing forces facing nonprofit community development corporations that have to operate affordable buildings on razor-thin margins. The group told state lawmakers last year that insurance costs have more than doubled in just four years, from roughly $869 to $1,770 per unit. For portfolios where most units rent below $1,000 per month, these increases now consume as much as a quarter of total rent revenue.
Fairview Housing Partners, a New York City-based non-profit affordable housing owner and financial intermediary, told lawmakers that the rise in insurance premiums has been the most significant increase in the cost of owning and operating affordable rental housing.
“High insurance costs also severely constrain our ability to develop and finance new affordable housing at a time when there is a desperate need to add to the nation’s housing supply. Although the property markets have shown some improvement over the past year, it is still challenging to place insurance policies at rates that affordable developments can support and it is only a matter of time before a major natural disaster erodes affordability further,” the group testified. “Furthermore, over the past two years casualty markets for affordable rental housing have experienced a rapid runup in both premiums at prohibitive rates as well as policy exclusions that dilute the value of the coverage.”
An interagency working group comprised of the New York City Economic Development Corporation (NYCEDC), Housing Development Corporation (NYCHDC), and Housing Preservation and Development (HPD) will manage the selection and partnership of the insurance program, according to the announcement.
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