Fed up with rising rates and dwindling options, affordable housing owners are branching out and starting an insurance collective.
Wavecrest Management and Workforce Housing Group are the firms behind the new collective, Gothamist reported. The two companies together control roughly 32,000 units across the five boroughs, many of which are rent-stabilized.
The collective is estimating the insurance rate will be $500 per unit, less than half of what affordable landlords often pay insurers to cover personal liability claims. Members of the collective will be required to meet strict safety requirements.
Richard Ravitch was instrumental in bringing the companies together in the collective, also known as a “captive.” The former lieutenant governor died in June.
“Market forces have significantly weakened affordable housing and the ‘captive’ is a way to work against the market forces and push back,” said Workforce Housing founder John Crotty on behalf of the collective. Other board members include Wavecrest chief financial officer Susan Camerata and former Bronx Borough President Ruben Diaz Jr.
The collective plans to register with the state’s insurance regulator, which will provide technical support.
The state’s Department of Financial Services and the Division of Homes and Community Renewal last year found insurance premiums for rent-regulated housing jumped by an average of 43 percent from 2019 to 2021.
The rise in insurance premiums has forced some landlords to forgo maintenance. The firms involved in the collective plan to take advantage of savings to reinvest in their properties.
An ongoing issue is how insurers in the state often ask building owners about the use of housing vouchers at their properties. They sometimes reject coverage based on the answers, subjecting landlords to find different — and more expensive — coverage. No law explicitly forbids insurance carriers from rejecting landlords that accept vouchers.
Insurance premiums are also on the rise due to regulations in the state and growing climate risk.
— Holden Walter-Warner
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