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Exorbitant year-over-year insurance premium increases have been difficult to bear for many Florida condominium communities and their unit owners. Past hurricanes and the horrific tragedy of the collapse in Surfside have been cited as some of the causes that have led to skyrocketing premiums for condo communities, and many unit owners are having difficulty keeping up with the resulting increases in association budgets and monthly dues.
Advice for Associations on Insurance Cost Increases
A recent article in the Community Associations Institute’s Ungated blog includes practical advice for associations facing insurance sticker shock. The insights and recommendations were garnered from several association insurance experts at CAI’s Community Association Law Seminar in Las Vegas in February.
Their first recommendation is to understand the roles of the different types of insurance professionals who are able to assist associations. Insurance agents represent a single insurance carrier, and insurance brokers serve as intermediaries who are licensed to sell, solicit and negotiate policies on behalf of associations with multiple underwriters. Instead of trying to work with multiple brokers, they suggest working with one who is designated by CAI as a Community Insurance and Risk Management Specialist (CIRMS) and having them compile accurate data from multiple carriers.
If an association’s options are extremely limited with very few insurers willing to take their policy, as is often the case in Florida, the experts recommend doing their research. Each carrier may have their own underwriting guidelines, so their rates and responses will vary. They may also require different underwriting information, with most needing to receive at least three years of loss performance history from associations.
They also suggest starting the bidding process at least three months prior to policy expirations, as associations will need to allocate ample time to interviewing brokers, gathering underwriting information, scheduling pre-inspections, and investigating mitigation actions.
In conclusion, the experts highly encourage board members and property managers to become familiar with their association’s construction, occupancy, protection, and exposure. They note that underwriters are scrutinizing these factors, and associations that understand them may be able to anticipate any potential cancellations and premium increases.
The Florida insurance market for condominium communities is not expected to see much improvement for quite some time, and boards of directors and property managers will need to devote sufficient attention and resources to obtain the best possible policy. By making use of these recommendations and working closely with highly qualified and experienced insurance professionals, they will be able to make the right coverage decisions for their community and its unit owners.
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