Why Insurance Costs Keep Rising With Nicholas Lares, Ep. 793

Nicholas Lares is the founder of Insur3Tech, a syndicated insurance group built for real estate owners and operators. Before entering real estate insurance, Nicholas was one of the largest brokers for Amazon’s logistics network. When carrier exits threatened his clients’ ability to operate, he helped them build a collective, self-insured alternative rather than accept the market’s terms. That same model now powers Insurer Tech, which enables property owners, operators, and investors to retain the profits traditional insurers keep, averaging $28 million in annual distributions per 100,000 units.

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Key Takeaways

• The traditional insurance market is a negative feedback loop: rising premiums drive more claims, which drive premiums higher

• Every premium you pay includes broker commissions, administrative overhead, and margin that never comes back to you

• Good-risk operators are pooled with bad-risk ones and effectively subsidize the market’s worst performers

• Captive insurance gives participants a co-ownership stake and returns annual profits when the pool performs well

• Residents can be enrolled in the same captive, turning renters insurance into a separate profit center

• Getting into a captive earlier compounds the financial benefit significantly over 5 to 10 years

Topics

Why Insurance Costs Keep Rising

• Pre-2020, insurance was a manageable expense; post-Covid, premiums surged to the point where operators began questioning the ROI

• Policyholders started filing more claims to justify rising costs, which accelerated the cycle further

• Carriers facing unsustainable losses began exiting markets entirely, most visibly in Florida, California, and Texas

How Traditional Insurance Actually Works

• Premiums are priced on pooled risk across millions of policies, not based on your individual property’s claims history

• Every premium includes roughly 30% in administrative costs, 10-15% in broker commissions, projected claims, and a margin buffer on top

• When the pool outperforms projections, the surplus flows to carrier shareholders, not policyholders

The Captive Insurance Model

• Captive programs have existed for decades, originally built for Fortune 500 companies and large industrial operators

• A captive functions like a controlled bank account, backed by a reinsurance program, where unused premium returns to the owner

• Insurer Tech builds group cell captives, making co-ownership accessible to operators who cannot support a standalone captive independently

How Insurer Tech Works

• Unnecessary margin layers, including excess broker commissions and profit buffers, are removed and redirected to members

• Year-end surplus is distributed to participants; there are no external shareholders

• Members choose their risk level: with or without reinsurance backing, depending on portfolio size and claims history

The Leverage Problem in Traditional Insurance

• Clean-record operators have almost no meaningful leverage to negotiate premiums because pricing is determined by pooled market behavior

• Captives realign incentives: when participants think like owners, they manage risk more carefully and file fewer claims

• Moving good-risk operators out of the traditional pool separates them from the bad actors they were subsidizing

Who Qualifies

• Insurer Tech works across all real estate types, including multifamily, single-family, self-storage, and commercial, as long as a lease agreement is in place

• The resident piece (renters insurance) typically targets 50+ units to generate a net surplus for the captive

• Operators with fewer units can pool with other investors in their market to meet the threshold

A Real-World Example

• An 80-unit multifamily property in Georgia: total property insurance cost was $14,000 per year

• After captive returns, the net cost dropped to approximately $11,500 per year

• Resident renters insurance through the same captive generated roughly $20,000 in annual profit

• The result: the owner’s insurance cost is fully offset, with a net surplus of approximately $9,000 per year

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Round of Insights

Failure that set Nicholas up for success: Nicholas does not point to one defining failure. He credits baseball with training him early to reframe failure as iteration rather than a verdict. In a sport where failing seven times out of ten still makes you elite, he built a mindset where setbacks are adjustments in the process, not signals to stop.

Digital or mobile resource: Claude

Book recommendation: Love Does by Bob Goff; The 7 Habits of Highly Effective People by Stephen Covey; Atomic Habits by James Clear

Daily habit: Morning Bible reading, followed by a workout (cardio or HIIT). Nicholas says days that include both are dramatically better than days that don’t.

#1 insight for reducing insurance costs: Get into a captive program as soon as possible. The compounding effect over 5 to 10 years can materially change the size and profitability of your portfolio. Reach out to Insurer Tech or ask your broker to find a captive structure that fits your portfolio.

Favorite restaurant in Chicago, IL: Tre Dita.

Next Steps

• Learn more about Insur3Tech at insur3tech.com and follow Nicholas Lares on LinkedIn for daily insurance insights and case studies

• Evaluate whether your current premiums are returning any value or simply subsidizing pooled risk

• Assess whether your portfolio qualifies for a captive (50+ units is a solid baseline for the resident piece)

• Request a captive analysis from Insurer Tech or ask your current broker to explore available structures

• If you have residents, explore enrolling them in the same program to create an additional annual profit center

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