OLYMPIA, Wash. — A recent report submitted to the Washington State Legislature highlights the challenges facing the insurance market for housing providers funded by the state’s Housing Trust Fund program. The report, released on Thursday, offers 12 potential policy options aimed at improving insurance costs for these providers.
The Washington Insurance Commissioner, Mike Kreidler, collaborated with Davies Actuarial and Alvarez & Marsal Financial Services to produce the report. This initiative was requested by the Legislature during the 2024 session.
The report addresses the affordability and availability of insurance for housing providers serving extremely low-income households. Kreidler emphasized the urgency of the issue, stating, “The lack of affordable housing is one of the most critical issues facing our state today. The options in this report mark an important first step in addressing one of the barriers those housing providers face.”
The proposed solutions focus on three main areas: reducing the total cost of risk, increasing the availability of insurance, and subsidizing insurance costs. Some of the options include creating a public reinsurer, reimbursing housing providers for deductible expenses, and increasing building inspections.
The report also highlights the challenges faced by housing providers due to rising commercial insurance costs over the past six years. These increases are attributed to extreme weather, wildfire-related losses, and a tight reinsurance market. Housing providers, particularly those with older properties or high-value newer ones, are seen as unattractive risks by insurance companies.
The report identifies specific risks associated with low-income housing, including higher incidences of insured losses due to residents’ behaviors. “When they can find coverage, it’s a pretty substantial hit to their operating budget,” said Aaron VanTuyl, a media representative with the Washington State Office of the Insurance Commissioner (OIC).
The Washington Department of Commerce, which operates the Housing Trust Fund, has invested in nearly 60,000 affordable housing units statewide over the last 40 years. However, the rising insurance costs have become a significant concern. “There are folks who’ve been here for over 30 years, and they have no memory of this sort of loss trend,” OIC Senior Policy Advisor David Forte said earlier this month.
“The goal of the report was really to provide ideas on how to reduce the total cost of the risk involved in this,” VanTuyl said. “Even if you can just reduce the perception of risk, you can make the insurance more available.”
The Washington State Legislature will consider these proposed solutions during its 2025 session, which begins on January 13.
