Many property owners and managers carefully monitor rent collections, occupancy rates, and maintenance costs. But the metrics that predict insurance claims and premium increases? Those may not get tracked until there's a problem.
By the time you know there’s a problem, you may have entered reactive mode. Yet, the strength of your insurance solutions is to be in proactive mode more often. Insurance claims happen, but having better data on meaningful metrics can help keep you in proactive mode longer.
Here are the eight metrics that can help give you control over your insurance costs before they become problems.
1. Loss Ratio Trending
What It Is: Total claims paid divided by total premiums paid, expressed as a percentage.
Why It Matters: This is exactly how insurance carriers evaluate your account. A higher loss ratio can trigger premium increases or coverage restrictions or, even worse, non-renewal.
How to Track It: Calculate this quarterly for each property and your overall portfolio. Look at rolling 12-month, 24-month, and 36-month periods since carriers evaluate different time frames. The right insurance professional will help you monitor this metric regularly.
What Good Looks Like: A loss ratio below 40% gives you leverage at renewal. Between 40-60%is sustainable. Above 60% means you need to evaluate and improve claims management immediately where possible.
2. Claim Frequency Rate
What It Is: Number of claims per property per year.
Why It Matters: Frequent small claims are often worse than occasional large claims. They signal poor maintenance, inadequate tenant screening, or operational issues. Carriers price frequency heavily because it indicates future claims are likely.
How to Track It: Count every claim filed, regardless of size. Track by property, by claim type(water damage, liability, theft), and by severity.
What Good Looks Like: Less than 0.5 claims per property per year is excellent. Between 0.5-1.0is manageable. Above 1.0 claim per property annually means you may have systematic issues to evaluate and address.
3. Near-Hits Incident Reports
What It Is: Events that could have become claims but didn't – for example, slip hazards identified and fixed, minor water leaks caught early, tenant complaints about potential safety issues.
Why It Matters: Near-hits can be indicators of future claims. A property with frequent near-hits reports but few actual claims can show proactive management. A property with no near-hits reports but frequent claims may show reactive management.
How to Track It: Require property staff to document every potential risk they identify and remediate. Create a simple reporting system where anyone can flag concerns.
What Good Looks Like: You want to see lots of near-hits reports with corresponding remediation actions. This proves you're catching issues before they become claims.
4. Days to Close Maintenance Requests
What It Is: Average time between when a maintenance issue is reported and when it's fully resolved.
Why It Matters: Delayed maintenance can be a significant driver of preventable claims. That slow roof leak can become a more expensive claim with added water damage if left unaddressed. That loose handrail may become a slip-and-fall lawsuit if left unaddressed.
How to Track It: Calculate average resolution time by request type (emergency, urgent, routine).Track outliers where resolution took significantly longer than average.
What Good Looks Like: Maintenance requests, regardless of the urgency, should be handled as soon as possible. Same day is often best. Any requests still open month to month should be escalated.
5. Property Inspection Deficiency Rate
What It Is: Number of issues identified during regular property inspections divided by total inspection items checked.
Why It Matters: Regular inspections can help catch problems early. Properties with increasing deficiency rates may be headed toward claims. Properties with decreasing deficiency rates maybe improving their risk profile.
How to Track It: Conduct standardized inspections quarterly using a consistent checklist. Track deficiencies by category (roof, electrical, plumbing, grounds, life safety). Monitor whether repeat deficiencies appear in the same areas.
What Good Looks Like: A deficiency rate that trends downward over time. Repeat deficiencies in the same category can signal systematic neglect that needs immediate attention.
6. Tenant Turnover Rate
What It Is: Percentage of units that turn over annually.
Why It Matters: High turnover creates claims exposure in multiple ways: move-in/move-out damage, security deposit disputes that may become liability claims, and gaps in occupancy that can lead to vacancy-related losses like frozen pipes or vandalism.
How to Track It: Calculate annual turnover rate by property. This can help you dig into the reasons for turnover, helping to narrow down how to reduce this rate, if needed.
What Good Looks Like: While turnover is natural and normal, the lower the annual rate, the better it can be for a business. Understanding the benchmark for the region of the business can help address whether the turnover rate is too high.
7. Capital Improvement Tracking
What It Is: Schedule of major building systems with installation dates, expected useful life, and replacement timeline.
Why It Matters: Insurance carriers care deeply about the age and condition of roofs, HVAC, electrical, and plumbing systems. More recent upgrades may reduce premiums, and deferred maintenance can increase them.
How to Track It: Maintain a detailed asset register for each property showing when major systems were installed or upgraded. Note any improvements that reduce insurance risk (wind-resistant roofing, fire suppression, security systems).
What Good Looks Like: No major building system beyond its expected useful life. Documentation of improvements shared with your insurance broker annually before renewal.
8. Severe Weather Event Preparedness
What It Is: Number of days between severe weather warnings and completion of property preparation protocols.
Why It Matters: Hurricane, winter storm, and flood preparation may significantly reduce claim severity. Properties that implement preparation protocols can experience fewer losses and faster recovery.
How to Track It: Document when severe weather warnings are issued and when preparation checklists are completed (securing outdoor items, clearing drains, shutting off water to vacant units, deploying flood barriers).
What Good Looks Like: Preparation protocols completed within 48 hours of warnings. After-action reviews following each event to identify improvement opportunities.
Turning Data Into Action
Tracking these metrics only matters if you act on what they reveal. Set up a monthly review where you analyze trends and implement improvements:
- Red flags: Any metric trending in the wrong direction for two consecutive months requires immediate intervention.
- Patterns: Look for correlations in the data. Do certain properties consistently show up across multiple problem metrics?
- Benchmarking: Compare your metrics against your own historical performance and industry standards.
The property owners and managers with the most stable insurance costs track the right data and respond to early warning signs before they become expensive claims.
Start Simple, Build Momentum
It would be tough to implement all eight metrics simultaneously without a large team. For the biggest impact on your risk management strategies, consider starting with loss ratio and claim frequency. These two metrics alone will help give you visibility into your biggest risk exposures. Then you can add additional metrics quarterly as your tracking systems mature.
The goal is progress, not perfection. Every metric you track can help give you more control over your insurance costs and better data to negotiate favorable renewal terms.
