RAM Professional Management eNews - 08/01/2006 (Plain Text Version)Henry Dubro, Chair View Graphical Version | Subscribe
to NAHB Publications | Email our Editor... In this issue: Implementing Renter’s Insurance Can Save Owners Nearly 80% of Resident-Caused Damage ExpendituresAccording to the findings of a new national survey commissioned by LeasingDesk Insurance Services, multifamily property owners who enforce renter’s insurance as a condition of residency effectively reduce financial expenditures related to resident-caused damage by 79%. This finding translates to a savings of $4.29 per unit for property owners who have successfully reduced the risks and financial implications of resident-caused damage by implementing a renter’s insurance program at the property. The comprehensive survey sought to provide descriptive research among both renter’s insurance users and non-users regarding program utilization, perceptions and related financial information in order to evaluate the impact of such programs in the multifamily industry. Although more than half (55.32%) of all the respondents track the number of resident caused damages that fall below the property’s insurance deductible and nearly half (43%) cite an increase in insurance rates between 2004 and 2005, the prevalence of risk management programs was surprisingly low among multifamily owners and managers. To accurately document the study’s findings, the survey population was broken down into three sub-categories; “Property Owners who Offer Renter’s Insurance,” “Property Owners who Require Renter’s Insurance,” and “Property Owners who Enforce Renter’s Insurance.” Each of these independent subcategories offered insight into the prevalence of risk management solutions at individual owner’s properties and the future plans to implement such a program. For these subcategories, the data indicate:
“The multifamily industry is the only industry that does not require renters to accept liability for damages they may cause. By not protecting themselves against resident caused damages, owners are exposing themselves to unnecessary risk,” said Dirk Wakeham, President and CEO of LeasingDesk Insurance.“ The findings of this survey underscore the importance for owners to implement a renter’s insurance program to effectively reduce their risk and simultaneously increase the property’s profitability by reducing expenses related to resident caused claims.” Perceptions As part of the survey, respondents were also asked about their perceptions regarding renter’s insurance programs and its effects. A five point rating system was used to gauge their responses, with a score of “1” representing “disagree,” and a “5” representing “agree.” According to the findings, the vast majority of respondents agreed (4.31) that the primary reason a renter’s insurance program was instituted was to decrease the company’s exposure/risk. An equal number of respondents agreed and disagreed with the belief that a program of this nature would increase the company’s bottom line. However, even though revenue enhancement was not a uniform driver of the decision making process, half (50%) of respondents whose companies offer renter’s insurance reported the program has had a moderately-to-very positive effect on their bottom line. In fact, the figure is higher for those respondents that offer, require and enforce a program (55%). The data suggests that although generating revenue was not a condition of implementation, this type of risk transfer solution can actually increase a company’s profitability. The study also uncovered the belief among those owners who have not implemented a full participation renter’s insurance program that administering this type of risk management solution would be cumbersome and time consuming. The results however indicate that more than three quarters (77%) of owners who have implemented some form of a renter’s insurance solution reported the program was “easy” or posed “manageable challenges.” Additionally, nearly half (46.5%) of owners who offer renter’s insurance would “absolutely” recommend a renter’s insurance program, and that percentage increases to 82% among owner’s who not only offer, but also require and enforce coverage. Methodology The major national study conducted by SatisFacts Research, LLC in November-December 2005 examined the utilization and perceptions of renter’s insurance programs. The sample included senior-level executives at a variety of small, medium, and large multifamily property management firms that manage a combined total of 888,939 units at 3,532 multifamily properties nationally. Respondents participating in the survey ranged in titles from Operations (65.96%), Risk Management or related function (14.89%), Ancillary Income/Services (6.38%), Financial (4.26%) and other (8.51%). The confidential survey incorporated web survey methodology and recruitment via multiple e-mail solicitations to a pre-selected sample pool. To receive the comprehensive data behind this study, please contact Doug Miller, SatisFacts Research LLC, by e-mailing dmiller@satisfacts.net. About LeasingDesk LeasingDesk Insurance is the leader in resident insurance programs for the multi-housing industry specializing in affordable and easy-to-implement renter’s and liability insurance products. LeasingDesk Insurance provides a valuable risk management tool that increases profitability by eliminating exposure from resident negligence, thus reducing costs affiliated with non-deductible resident claims. For more information about LeasingDesk’s customized insurance programs, visit www.leasingdesk.com or contact 888-484-7132 or sales@leasingdesk.com. About SatisFacts Research LLC SatisFacts Research, LLC is the multifamily industry’s premier resident satisfaction research provider, as well as the industry’s leading authority on resident retention. The company’s Resident Relationship Management Services™ help clients reduce costly, controllable turnover and increase NOI…with a great focus on supporting operations from the property-level and up. For more information, visit www.satisfacts.net. For more information or to contact us directly, please visit www.NAHB.org | ©2006, National Association of Home Builders |