Gulfshore Insurance > Client Alerts & Insurance News > Commercial Risk Management

We recently sat down (over Zoom) with one of Gulfshore Insurance’s greatest assets, Senior Claims Advocate, Cheryl Roberts.  In the video below, we discuss some of the most common claims community associations are facing, and how associations can mitigate and protect themselves when claims arise.

Cheryl has been a licensed claims adjuster for more than 15 years.  For much of that time, she worked for the insurance companies, adjusting claims.  But for the last several years, she has been part of the team at Gulfshore Insurance working closely with our clients, handling hundreds of claims annually.  Her experience and expertise is invaluable during the process of a claim.

Whether you are a board member or an association manager, this video has a lot of great tips.  Enjoy!

Jeff Sanders, works with associations and companies throughout the state of Florida to meet their insurance and risk management service needs. Jeff and his team have a proactive style and hands on approach to providing insurance services to their clients. Not only is Jeff a commercial property and casualty specialist, he also holds a TRIP designation, is a member of the Community Association Institute (CAI), Hospitality Financial & Tech Professionals (HFTP) association, and Community Owners – Managers – Associates (COMA). Jeff is also a certified Continuing Education instructor for the community management and construction industries. Comments and questions are welcome at jsanders@gulfshoreinsurance.com

Gulfshore Insurance is a Naples, Florida based insurance agency specializing in business insurance including liability insurance, property insurance, workers compensation insurance, vehicle insurance, business income interruption insurance, cyber insurance, commercial umbrella insurance, and more. Our insurance and risk management advisors are industry specialists for condominium associations, golf and country clubs, oil and petroleum marketers, construction, landscaping, churches and non-profits, and work comp. Navigating insurance requires an experienced and trusted insurance agent who understands your business risks and exposures. Gulfshore Insurance services Naples, North Naples, Marco Island, Bonita Springs, Fort Myers, Sarasota, Lido Beach, Longboat Key, Bradenton Beach, and Southwest Florida. We have office locations in Naples, Fort Myers, Fort Lauderdale, and Sarasota.

Commercial Lines 2020 Insurance Market Update for AssociationsFor many associations, insurance premiums are the largest overhead cost, so it’s very important to accurately forecast any changes. Each year, we review market conditions and trends that may impact your insurance renewal premiums, providing you with an educated look at how they may impact your association’s budget.

2020 is proving to be the most challenging market our industry has faced in years. Many clients are experiencing difficult renewals where they are encountering rate increases, deductible changes, and/or reduced coverage from carriers. In addition, the magnitude of COVID-related losses and the impact facing the insurance industry is unknown.

As we continue through 2020, you can expect Property rates to continue to climb; social inflation to drive Liability pricing; and the hard market for D&O and Excess Casualty to continue as carrier concerns remain.

We are breaking down what you can anticipate for the remainder of 2020, including current renewals, as you begin the budget planning process for 2021.

Property
Property premiums generally are on the rise and carriers are utilizing more discipline when underwriting new and renewal business. From increasing rates, higher deductibles to fewer enhancements and stricter underwriting, even the best in class properties are feeling some pressure.

Carriers rely on computer modeling to manage their risk and to ensure rates are adequate. They are paying much closer attention to their models, not only across their books, but across each individually written policy. This means that clients with strong risk profiles and good loss history may be impacted.

  • Double digit rate increases can be expected. Non-CAT property with good loss history may see, on average 5% to 20% rate increases. CAT exposed property with good loss history can expect 15% to 30%+ rate increases. Accounts with poor loss history may see 30% to 60%+ rate increases.
  • Carriers may be looking to increase Wind Deductibles and limit or reduce coverage enhancements.

 

Ancillary (General Liability, Crime, D&O, Umbrella, Excess Liability)
Cyber and privacy issues continue to result in significant litigation, both from a regulatory and class action standpoint. Social inflation has created the most impact and disruption on umbrella and excess liability placements. Concerned with a litigious environment that is favorable to plaintiffs and increasing jury verdicts, carriers are pushing rate increases and tighter underwriting guidelines.

We expect primary and umbrella/excess casualty underwriters to maintain this stance throughout 2020.

We are seeing reduced capacity in primary and excess markets. Slip and fall claims combined with high medical costs have served to harden this market, particularly for habitational risks.

  • You can expect to liability rate increases between 2.5% and 15%.
  • Umbrella/Excess Liability rates continue to firm between 10% to 25%.

 

Flood
Flood insurance has been steadily increasing over the past several years and 2020 is no exception.  Flood insurance continues to see rate increases which varies by zone (VE, AE, X, etc.), with the percentage depending on the numerous variable risk characteristics of each property. New flood maps are currently being reviewed and associations will need to pay attention as to how any new map changes might affect their premiums.  While the overall map changes maybe anywhere from one to two years away from being adopted, it pays to be aware if these proposed maps will benefit your association or if they might negatively impact rates?  If so, there are steps that can be taken to “Grandfather” into current maps, if they are more favorable than the proposed ones.  We advise discussing this with your agent as each risk is unique.

Other Industry Issues & Considerations
Increased submission volume is allowing underwriters to be more selective. They are focusing on profitability and can be selective in what they underwrite.

If you have any questions, please do not hesitate reach out to your Gulfshore Insurance Client Advisor who can offer assistance. We are here to help.

Gregory Havemeier, CIC, AAI, CIRMS is a Client Advisor and Partner at Gulfshore Insurance specializing in community and condominium associations. Gregory works with a wide range of business clients to deliver strategic risk analysis and guidance. Comments and questions are welcome at ghavemeier@gulfshoreinsurance.com

These conversations are difficult to have with associations, but we are currently in a “Hard” market for Property insurance. On average, property rates decreased from 2004 through 2017; however, approximately 18 months ago, the marketplace began to show the effects of multiple hurricanes in the east, wild fires in the west, and other global catastrophes. Now, amidst a global pandemic, we are entering what is being forecasted to be an extremely active Hurricane Season and the complete unknown of COVID-19.

Over the past 12 months, property insurance renewal rate increases of 25% or more have been typical for properties without claims, and 50% to 100% increases for those with significant claims.

Additionally, while the true effects of COVID-19 are still unknown, many experts are suggesting COVID-19 may be the single most costly event ever for insurance companies.

These “hard” markets are cyclical, so community associations should prepare and budget accordingly. And when the market softens, they should reserve those saved funds for the next hard cycle.

Market Factors:

  • Profitability: 2017 to 2019 was the most costly 3-year period on record for Property insurance companies.
  • COVID-19: Industry experts are suggesting this could be the single worst catastrophe the insurance industry has ever seen.
  • Hurricane Season: Forecasts predict 2020 to be a “hyperactive” hurricane season.
  • Roof Age: 20 years has long been the “magic number” for insurer sensitivity. Hurricane Irma claims data revealed a huge spike in claims for roofs older than 12 years.
  • Litigation: Litigation due to Assignment of Benefits, “social inflation,” and first party lawsuits have inflated losses for insurance companies.

Proactive Steps:

  • Education: Associations should be aware and prepared that the market has less capacity and is becoming increasingly more expensive.
  • Budget: Budget for these expected increases so associations are prepared.
  • Preparation: Contractors should be inspecting your roofs and buildings annually. This allows for better roof condition as your roof ages and shows record keeping of repairs and ongoing maintenance.

There is no magic bullet for these increases, but hardening markets have always been cyclical in the insurance industry. As weather patterns improve and profitability increases, more insurance companies will throw their hats into the ring creating a more competitive marketplace.

Jeff Sanders, works with associations and companies throughout the state of Florida to meet their insurance and risk management service needs. Jeff and his team have a proactive style and hands on approach to providing insurance services to their clients. Not only is Jeff a commercial property and casualty specialist, he also holds a TRIP designation, is a member of the Community Association Institute (CAI), Hospitality Financial & Tech Professionals (HFTP) association, and Community Owners – Managers – Associates (COMA). Jeff is also a certified Continuing Education instructor for the community management and construction industries. Comments and questions are welcome at jsanders@gulfshoreinsurance.com

We have aggregated all Coronavirus resources and updates to one area on our website, available here.

Jeff Sanders, TRIP is Client Advisor at Gulfshore Insurance who works with a wide range of business clients to deliver strategic risk analysis and guidance. Comments and questions are welcome at jsanders@gulfshoreinsurance.com

Amerisure Webinar

Please join us to learn from two of Amerisure’s risk management experts about protecting your workplace from the unique risks posed by COVID-19. We’ll discuss:

  • Your company’s role in responding to the pandemic
  • Initial steps for safely bringing back employees once your facility is open
  • Daily access procedures
  • General employee work practices and controls
  • Protocols for employees while they are traveling

Thursday, May 21 at 2:00 p.m. EDT

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