Milford Street Captive Highlights Litigation Strain in NYC Housing

Milford Street Captive Insurance Company is positioning new litigation data as further evidence of the pressures driving demand for alternative insurance solutions in New York City's (NYC's) affordable housing market. 

The Vermont-domiciled, member-owned insurer was established in 2024 by affordable housing developers, landlords, and other stakeholders to provide stable, cost-effective liability coverage amid rising premiums and reduced market capacity. The captive was designed to address challenges that have intensified in recent years, including inflation, climate-related risks, reduced reinsurance capacity, and fewer insurers willing to underwrite multifamily affordable housing. 

New analysis released by Milford Street points to a litigation environment that disproportionately affects the sector it was formed to serve. Drawing on data from New York University's Furman Center, the city's Primary Land Use Tax Lot Output (PLUTO), and court records analyzed by LegalClaims.AI, the report identifies approximately 199,000 multifamily residential buildings across New York City. Of these, about 41,000 (20 percent) are rent-regulated or subsidized, while roughly 158,000 (79 percent) are market rate. 

Across those properties, there are about 27,000 active lawsuits involving premises liability, slip-and-fall, and negligence claims. Affordable and rent-stabilized buildings account for 15,000 of those cases, or 56 percent, compared to 12,000, or 44 percent, involving market-rate properties. The data shows that regulated housing is 2.9 times more likely to face a claim. 

"These claims, when aggregated, add up to billions of dollars each year that get sucked out of the market, and much of it ends up in the pockets of plaintiff attorneys and litigation finance lenders. The Legal Litigation Industrial Complex files claims at an unrelenting pace, and upwards of 90 percent get settled with payouts averaging close to six figures," said John A. Crotty of Milford Street. 

The findings build on earlier industry concerns that led to the formation of the Milford Street captive, including sharp increases in insurance costs. Industry data shows the average cost to insure an affordable apartment in New York City has increased by 103 percent since 2019, with premiums projected to continue rising. Limited insurer participation and documented instances of underwriting restrictions tied to affordable housing characteristics have further constrained coverage options. 

The findings add to the conditions that prompted the captive's formation, particularly the combination of escalating claims activity and constrained insurance capacity in the affordable housing segment. For members, the structure is intended to stabilize liability costs and provide access to coverage that has become increasingly difficult to secure in the traditional market. 

"This money is diverted from keeping our affordable housing stock in a state of good repair, keeping rents low and from having the government invest in the development of new affordable housing," Mr. Crotty said. "With thousands of distressed buildings, a shortage of new housing, and housing quality declining, we have a stark decision to make." 

"It is a privilege to work with Milford Street to bring transparency to New York's courts and legal system," said Keith Minella, CEO of LegalClaims.AI. "We have connected the dots and can paint a vivid picture of New York's claims environment." 

"Rising insurance costs are a growing threat to affordable housing," said Rachel Fee of the New York Housing Conference. "We commend Milford Street for conducting this analysis and expect this new data to help inform urgently needed policy solutions."