Renters insurance has long been written by commercial carriers, but multi-unit property owners are increasingly retaining the risk themselves. Giles Hobday, account manager at USA Risk Group, and Matt Baldwin, chief underwriting officer at Swain & Baldwin Insurance, discuss the growing interest in renters insurance captives, the profitability these programmes can generate, and the practical solutions now available to help owners enter the captive market.
Renters insurance programmes are becoming an increasingly attractive captive opportunity for multi-unit property owners seeking greater control over risk, improved claims responsiveness, and a more direct share of underwriting profits.
Renters insurance typically responds to tenant-related losses such as theft of property, water damage from overflows, or fire damage caused by cooking or smoking.
Traditionally, these policies have been written by commercial insurers in the conventional market.
However, a growing number of property owners are recognizing that a captive structure can allow them to retain a portion of this risk, participate in the economics of the programe, and align insurance outcomes more closely with the quality of their own properties and risk management practices.
For landlords with well-managed properties, disciplined maintenance practices, and strong safety and risk controls, the captive model can be especially compelling. Rather than paying premiums that reflect broad market averages, these owners may be able to benefit directly from their own favorableourable loss experience.
“Some of our renters' captives are seeing consistently low average loss ratios of around 20 per cent, which shows how much opportunity there is to benefit from setting up your own renters programme when you have a strong risk control environment,” says Hobday.
Interest in renters' insurance captives continues to build as more property owners become familiar with the broader benefits of captive insurance and as demand for rental housing remains strong.
Many of the captive programmes formed in this space have performed well, supported by low loss ratios, the ability to earn investment income on retained premiums, and a claims process that can be managed more efficiently and responsively.
In addition, successful renters' programmes may create a platform for expansion into complementary lines such as security deposit alternatives, pet insurance, property, general liability, and other tenant or property-related coverages.
For some prospective captive owners, the perceived barriers to entry, such as initial capital requirements, governance obligations, and recurring administrative costs, can make a standalone captive seem out of reach.
Hobday notes that alternative structures are helping to address those concerns: “We are fortunate enough here at USA Risk Group to manage a protected cell structure set up by Swain & Baldwin which is offering different levels of exposure to introduce would-be owners to various captive solutions, including rental cells which make access to a captive solution much easier administratively and less capital intensive.”
“We’re continuing to grow our solutions offerings for our clients, whether it is through our rental cells, our reinsurance facilities or our fronting programme,” says Baldwin. “We’ve been helping multi-family property owners capitalize on the underwriting profit that, for decades, has been realized by
third-party carriers. By shifting these profits back to property owners through captive structures, Swain & Baldwin are providing owners with the ability to enhance asset performance, increase long-term value, and reduce reliance on traditional carriers who historically extracted the majority of
economic benefit.”
For multi-unit property owners with strong operations and a long-term view of risk, renters'nters insurance captives offer more than an insurance solution: they can provide a strategic way to improve programme control, retain underwriting value, and build a scalable platform for future coverage innovation.
“We look forward to seeing the continued success of these programmes going into the future and what innovative solutions we can develop next for our shared clients,”
Baldwin concludes.