Navigating Rising Property Insurance Costs in Senior Living

Senior living has long been recognized as a specialized and resilient real estate asset class. However, the sector, already contending with high operating expenses, is facing an even greater challenge in 2025: rapidly rising property insurance costs.

These pressures are significantly reshaping operational strategies, risk management approaches, and investment decisions across the industry.

Rising insurance costs and their impact

Over the past few years, insurance rates have increased significantly, and further acceleration could have a profound impact on senior housing owners, operators, and investors. Higher insurance premiums are adding to already elevated operating expenses, which may deter future development and investment in the sector. Heading into the back half of 2025, insurance decisions will become even more critical as owners and operators evaluate how much coverage they can afford while maintaining profitability.

The increasing frequency and severity of natural disasters, such as the wildfires in Southern California and hurricanes in Florida and North Carolina, heightened concerns about the availability and cost of commercial property insurance. Accessible insurance is essential not just for rebuilding after a catastrophe, but also for maintaining ongoing housing affordability for seniors in affected areas.

Challenges specific to senior housing

Senior living facilities serve a vulnerable population, making relocation efforts during disasters a major safety, logistical, and economic challenge. As insurance costs rise and operating margins continue to tighten, owners and operators may be forced to make difficult decisions about staying in the sector.

Proactive strategies for senior living owners and operators

To mitigate the impact of rising insurance costs, senior housing owners and operators should take a more proactive approach in the following areas:

• Regularly evaluate insurance coverage policies and levels to verify they reflect current property values, potential catastrophe risks, and replacement costs.
• Invest in protective measures such as fire-resistant building materials, flood defenses, and disaster preparedness planning to reduce risks and potentially lower insurance premiums.
• Engaging with policymakers is essential to advocate for legislative reform. Without meaningful insurance or reimbursement reform, we could see a contraction in the number of providers willing to operate senior housing communities. Legislative efforts, such as the Senate Banking Committee’s recent focus on comprehensive disaster insurance reform, could help address affordability and availability challenges.
• Joining industry groups and coalitions can provide valuable resources, advocacy support, and shared strategies to address common insurance challenges.

Emerging focus on cybersecurity

Beyond traditional insurance concerns, cybersecurity is becoming an increasingly important area of focus. Senior living facilities' growing reliance on digital systems and electronic health records make them leading targets for cyberattacks. It is crucial for operators to have strong cybersecurity measures in place to protect sensitive data, safeguard residents' well-being, achieve operational continuity, and defend against financial losses, legal liabilities, and reputational damage.

How CLA can help

Insurance considerations will continue to shape the senior living asset class through 2025 and beyond. Owners and operators who take proactive steps with strategic planning, risk mitigation, and actively engaging with industry and government initiatives will be better positioned to succeed.

We know you face distinct hurdles in your effort to serve your residents. Work hand-in-hand with advisors who really understand your business, the senior living field, and the challenges you face now and in the future.

From automation and digital transformation to tax credits and other strategies, CLA can help you find opportunities to better support your organization and the people who depend on it.