The senior living sector, recognized as a specialized and resilient real estate asset class, is facing unprecedented challenges in 2025 due to skyrocketing property insurance costs. This surge in insurance expenses is significantly impacting operational strategies, risk management approaches, and investment decisions across the industry.
Rising Insurance Costs and Their Impact
Over recent years, insurance rates have seen a substantial increase, and this trend is expected to continue, profoundly affecting senior housing owners, operators, and investors. Higher insurance premiums are exacerbating already elevated operating expenses, potentially deterring future development and investment in the sector. As we move into the latter half of 2025, insurance decisions will become increasingly 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 wildfires in Southern California and hurricanes in Florida and North Carolina, have heightened concerns about the availability and cost of commercial property insurance. Accessible insurance is crucial not only 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 adopt 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, there could be a contraction in the number of providers willing to operate senior housing communities.
- 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 prime targets for cyberattacks. It is crucial for operators to have robust 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. CLA can help senior living organizations find opportunities to better support their operations and the people who depend on them, from automation and digital transformation to tax credits and other strategies.
