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Commercial property owners in Florida are no strangers to the unique challenges posed by the state’s unpredictable weather patterns and natural disasters. To safeguard their investments, property owners often rely on insurance coverage. However, what many may not realize is that insurance premiums for commercial properties in Florida can be significantly influenced by another factor – interest rates. In this article, we will explore how interest rates affect insurance premiums for commercial properties in the Sunshine State.

The Link between Interest Rates and Insurance Premiums

Interest rates play a crucial role in shaping insurance premiums. These rates, set by central banks, impact the overall financial climate. When interest rates rise, insurance companies will incur higher costs for re-insurance and investment returns and maintaining reserves. Consequently, they may adjust their premium rates to compensate for these increased expenses.

In Florida, where hurricanes, floods, and other natural disasters (World Wide) are a constant threat, insurance premiums can already be substantial. When interest rates rise, insurance companies may increase premiums further to mitigate financial risks, as they may need to pay out larger claims due to more frequent and severe weather events.

Mitigating the Impact

While property owners may not have control over interest rate fluctuations, they can take steps to mitigate the impact of rising interest rates on insurance premiums:

  1. Risk Mitigation: Implementing risk management strategies such as building upgrades, hurricane-resistant materials, and flood mitigation measures can help reduce insurance costs.
  2. Insurance Shopping: Periodically reviewing insurance policies and shopping around for competitive rates can help property owners find the best deals, even in a changing interest rate environment.


Interest rates are a hidden variable that can significantly influence insurance premiums for commercial properties in Florida. As property owners brace themselves for the unpredictable weather patterns of the region, they should also keep an eye on interest rate trends and consider strategies to manage the impact on their insurance costs. By staying informed and taking proactive measures, property owners can better protect their investments and ensure their businesses thrive, come rain or shine.


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First came supply-chain-fueled higher construction costs. Then came inflation and interest-rate hikes imposed by the Federal Reserve.

Multifamily property operators are seeing their property insurance premiums rise at a time when the cost to build and finance a commercial real estate project remains elevated, even though most material prices have stabilized.

The recent spike in insurance costs arguably could have the most significant ripple effects within the multifamily industry, as higher rates will likely prompt multifamily landlords to pass those additional costs to tenants. But for income-restricted housing or rent-controlled apartment markets, according to those in the industry, the options to offset those higher costs are more limited.

A recent survey by the National Multifamily Housing Council, a trade group representing rental-housing owners and developers, found property insurance costs have risen 26% on average among respondents during the past year. Hurricane Ian had a tremendous impact on rising premiums, but internal insurance dynamics, industry consolidation, carriers departing some markets and climate change are also to blame for the higher costs.

Beyond the cost of operating an apartment property or portfolio, higher insurance premiums are starting to affect property valuations and disrupt transactions.

Michael Power, a chartered property casualty underwriter at New York-based FHS Risk Management, said during an NMHC webinar that in years past, adequate insurable replacement values weren’t necessarily enforced by the insurance industry. There’s been a monumental change on that front this year, he said, with everyone now required to directly report adequate insurable rebuilding costs for all buildings.

“That is having a huge impact on premiums because it’s driving up the total insurable value of your assets. … It creates a compound effect on premiums,” Power said.


Source:  The Business Journals