Property owners and managers expect operating expenses to rise over time for labor, utilities, and materials. Unfortunately, insurance has become a different kind of concern for property ROI. Premiums are climbing at a pace that outstrips rent growth, capital improvements, and even inflation. What many owners underestimate is how directly those increases reduce both short-term cash flow and long-term investment performance.
When insurance premiums rise, the first hit is obvious: You have less cash available each year. That affects distributions, reserves, and your ability to meet return expectations. But there’s a deeper impact: Buyers place value on the income your property produces. If rising insurance costs reduce that income, the property becomes less attractive in the market.
At its core, this isn’t an insurance issue. It’s a return-on-investment issue; managers and ownerswho ignore it can be caught off guard.
Many owners respond the same way every year:
But today’s insurance economy isn’t built for quick wins. Carriers have fundamentally repriced risk, especially in weather-exposed regions. Shopping alone rarely solves the problem and often leads to compromises that create risk elsewhere.
To help protect returns, owners need a system that focuses on the parts they can influence.
That’s where the Three Controls Framework comes in.
The Three Controls That Protect ROI
Every property owner and manager has three levers that can influence insurance costs over time. These are strategic, actionable controls that can affect how insurers view your assets and how stable your premiums remain.
Control #1: The Losses
Insurance pricing follows a simple rule: Accounts with fewer losses get better long-term results.
Owners and managers who protect ROI put a structure around claims:
A clean loss record can give you negotiating power year after year. It can be an effective long-term tool for stabilizing insurance costs.
Control #2: The Risk (and Document It)
Carriers price insurance based on actual risk and perceived risk. The difference is documentation.
Owners and managers who consistently treat risk improvements like value-add projects may find themselves outperforming their competition.
Examples include:
Doing the work is key, but documenting the work and presenting the changes and plans during underwriting can make the difference. The right insurance professional will help you with this process. Photos, invoices, inspection reports, and contractor notes can help reduce the insurer’s perception of risk.
When risk looks better on paper, better premiums follow.
Control #3: the Structure
Most owners and managers assume policies are one size fits all. They aren’t. The structure of your insurance program can significantly influence cost and performance.
Smart owners and managers evaluate:
Program design matters. The right structure often produces savings without reducing protection.