New York has long been known for its vulnerability to climate disasters, as it faces challenges with its aging infrastructure. However, property owners in the area now have a new headache on top of potential disaster — skyrocketing insurance rates.
In fact, a recent survey conducted by non-profit SPONY found that premiums on some buildings more than doubled in 2025 from the previous year. While New York isn't subject to big storms like hurricanes as seen in the Southeast, it is prone to fires and flooding, according to Danielle Lombardo, vice chair at insurance giant Howden.
And there's another layer of insurance that property owners need to worry about. That's claims for accidents such as those that fall under Workers Compensation, she noted. Lombardo calls New York an "unfavorable environment" for landlords because they are on the hook for Workers' Compensation, as opposed to the general contractor.
Rising Premiums Could Lead to Fewer Key Property Investments
For just a simple slip or fall now or liability claims, insurance costs could come out to between $5 million and $10 million now, versus maybe $1 million about five years ago, according to Lombardo.
Rising premiums come with consequences, especially for those who have strict budgets. Not only does it affect their ability to pay for insurance — but it could take away from important property investments.
"If insurance costs are going upward, double digits year over year, and landlords aren't able to increase rent, that continues to suck the cash flow out of deals, and it affects NOI and an operator's ability to not only pay for insurance; it really takes a lot of the money away from life safety, deferred maintenance and activities," she said.
Areas that Lombardo sees landlords doing away with investing in are fire suppression systems and loss control efforts.
However, another thing to keep in mind: While landlords might be willing to take on more risk and go uninsured or under-invested in certain areas — some lenders won't allow them to do that, according to Lombardo.
Assets Vulnerable to Rising Premiums
According to Lombardo, the housing sector, particularly in the affordable area, is subject to the highest increases in the commercial space. Following that are other segments such as senior living, student housing and even market-rate multifamily in general.
Also, she refers to data centers as an "emerging asset class," for insurance. "It's at the forefront of how we're addressing the risks related to data centers," Lombardo noted.
The other aspect is the resiliency of the building and not just the asset class itself. For example, how the structure's materials affect both catastrophe and/or insurance modeling.
"We help to walk [the client through] their CAPEX strategy, [whether] it's a value-add deal," Lombardo explained.
"So there's, there's a lot you can do on the front end, as it relates to the construction of the building where you're putting the equipment and CAPEX strategy and how that affects insurance long term."
Snow Storms to Have Little Impact on Premiums
With how insurance rates have skyrocketed over the past year, at the forefront of everyone's mind might be the impact of the recent massive snowstorms that hit NYC. The latest brought on average about two feet to the region.
However, Lombardo noted that it would take at least $100 billion in economic losses nationally caused by weather damage to result in a meaningful change, which she doesn't see being the case from the recent snowstorms alone.
"I don't anticipate it's going to be a needle mover at all within the property insurance market," Lombardo predicted.
However, rates will at least continue to increase to some degree due to inflation and rising block costs.
The biggest question Lombardo has is how hedges can be made against future major weather-disrupting events? That's something that has no simple answer and may involve taking on more risk.
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