Reinsurance Markets Continue to Improve: What It Means for HOA Insurance Costs

By Devon Schad, President of Schad Agency

Over the past several years, community associations have experienced what I previously referred to as "Capital Whiplash." Following years of catastrophic losses, inflation, rising construction costs, and reduced reinsurance capacity, insurance carriers were forced to dramatically increase rates, reduce coverage options, and increase deductibles.

The good news is that the market continues to move in a more favorable direction.

Recent June 1 reinsurance renewals showed continued softening in the property reinsurance market, with increased competition and additional capital entering the marketplace. Industry experts are reporting abundant reinsurance capacity and continued decreases in property catastrophe pricing as reinsurers compete for business.

Why does this matter to your association?

Insurance companies purchase reinsurance to protect themselves from large catastrophic losses such as hail, wildfire, hurricanes, and major fires. Reinsurance is essentially insurance for insurance companies. When reinsurance costs increase, those costs are ultimately passed down to policyholders. When reinsurance costs decrease, it creates opportunities for insurance carriers to offer more competitive pricing and broader coverage.

While we are not expecting a return to the insurance market of 2018 or 2019, we are seeing encouraging signs that the extreme hard market conditions of the past several years are easing. Property catastrophe reinsurance rates have experienced significant reductions, and most analysts expect the trend to continue through the remainder of 2026, assuming there are no major catastrophe events that disrupt the market.

For HOA boards, however, this is not the time to become complacent.

One of the key themes from my Capital Whiplash article was that insurance markets move in cycles. Today's favorable conditions will not last forever. Associations that use this period wisely will place themselves in a much stronger position when the next hard market inevitably arrives.

Rather than viewing insurance savings as extra money to spend elsewhere, boards should consider investing those funds back into the community's risk profile.

Some examples include:

• Removing highly combustible vegetation such as juniper bushes and other wildfire fuel sources.

• Creating and maintaining defensible space around buildings.

• Replacing aging roofs, siding, and other building components before they become underwriting concerns.

• Repairing deteriorated sidewalks, stairways, handrails, and trip hazards that can lead to liability claims.

• Addressing drainage issues that contribute to water intrusion and foundation concerns.

• Repairing private roads and pavement that may create safety exposures.

• Updating electrical, plumbing, and mechanical systems that are reaching the end of their useful life.

These improvements not only reduce the likelihood of future claims, but they also make your community more attractive to insurance underwriters. In today's market, carriers are increasingly looking beyond loss history and evaluating the overall quality and condition of the property when determining pricing and eligibility.

The associations that will benefit most from the improving insurance environment are those that continue investing in maintenance, risk reduction, and long-term capital planning. Communities that simply defer maintenance because premiums have stabilized may find themselves at a disadvantage when market conditions tighten again.

The reinsurance market is providing some much-needed relief, but the best insurance strategy remains the same as it has always been: maintain the property, reduce risk where possible, and think long term.

Capital Whiplash taught us how quickly insurance markets can change. The boards that remember those lessons and use today's opportunities wisely will be in the strongest position for whatever comes next.