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For 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. The Florida condominium marketplace has tightened substantially over the past few months and may tighten further in the near future as a result of several developments happening simultaneously. These developments include but are not limited to the following.
In response to these notable changes and sudden shift in demand for replacement or supplemental Florida condominium capacity, many of the carriers that remain active and viable in the Florida condominium space have upwardly adjusted their pricing, deductible requirements and/or underwriting guidelines, while sometimes simultaneously limiting the line size they are comfortable dedicating to any single placement.
While each upcoming Florida condo renewal result will stand on its own based on the individual characteristics of the account, rate increases in the 15% to 25%+ range are now commonplace in situations where the expiring program structure remains consistent. Older condo construction accounts, those that are being non-renewed, and those placed ground-up last year with no available ground-up solution this year are examples of accounts which may see rate increases well in excess of 25%, with 50% to 75%+ rate increases sometimes in play in such situations for a variety of reasons.
2021 is proving to be a more challenging market than 2020. Many clients are continuing to experience difficult renewals where they are encountering rate increases, deductible changes, and/or reduced coverage from carriers. As we continue into 2021, 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.
Property premiums 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.
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 2021. 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.
Flood insurance has been steadily increasing over the past several years and 2021 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.
Increased submission volume is allowing underwriters to be more selective. They are focusing on profitability and can be selective in what they underwrite.
Even amidst challenging market conditions, opportunities still exist. Gulfshore Insurance’s association specialists have been successfully insuring and protecting community and condo associations throughout Florida for more nearly 50 years. Our full arsenal of insurance carriers are well-equipped to manage the changing tide of Florida condominium coverage, and we are 100% committed to identifying the very best available combination of pricing, terms, and conditions for your condominium accounts.
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
Recently, the Federal Aviation Administration (FAA) released its long-awaited rules on drone operations over people and moving vehicles and night operations. These rules represent almost two years of work in which the FAA considered tens of thousands of comments. Questions regarding safety, property damage, and privacy are forcing community associations to establish clear parameters for their use by unit owners.
As for flying legally, drones need to 1) be registered with the FAA, to the extent required, 2) be operated by an individual duly licensed by the FAA, to the extent required and 3) be flown and utilized only in accordance with the FAA and other applicable governmental requirements. In addition, the FAA now requires that drones must be properly registered and labeled with the registration number. They must only be flown below 400 feet and always within sight of the operator.
As for not disturbing the residents, drones need to 1) be flown within the community in a manner not to interfere with an owner’s reasonable expectation of privacy, 2) not utilized in any fashion to spy or otherwise peer or take pictures into the residence of another owner’s property, 3) not utilized to harass any person with respect to private property or to the Association’s common property and 4) not utilized in a manner to cause injury to person or property.
Currently, commercial use of drones (for example related to real estate agents, roofers, and disaster restoration companies, among others) requires FAA approval. It is critical to make sure that your vendors are in compliance with federal laws and guidelines.
Adoption of Rules and Regulations for drones in your community could go a long way in addressing concerns and questions. Things to consider are:
Federal Aviation Administration (FAA) Rules for Unmanned Aircraft Systems (UAS)/Drones
Keep in mind, the use of drones comes with additional risk. Before implementing any drone usage, the association should consult with its insurance advisor to ensure the association is covered for hazards that can result from the use of drones. Like everything else flying around the sky, drones can crash. Imagine a drone crashing into someone’s house, or a car, or even into a person walking his or her dog. Lawsuits will inevitably follow. The association needs adequate insurance protection against potential liability. Typically, drones are not covered by the General Liability insurance policy, and there is a standard aviation exclusion in most policies. Some policies go as far to have specific “unmanned aircraft” exclusions. There are, however, markets available for Drone Liability policies. You should consult with your insurance advisor to confirm that the association is adequately insured with regard to the risks that may arise as a result of the use of drones.
Joe Thompson is a Client Advisor and Partner at Gulfshore Insurance who specializes in managing risk for community associations and various contractors. Comments and questions are welcome at jthompson@gulfshoreinsurance.com
Did you know slips, trips, and falls are one of the greatest personal injury hazards facing your association? In fact, according to the National Floor Safety Institute, falls are the leading cause of emergency room visits. Any slip, trip, or fall incident brings the potential for your association to be held responsible for that person’s injury. To protect people from painful and potentially deadly injuries and to protect your association from liability and unnecessary claim costs, take action to prevent accidents from occurring in the first place.
If a slip, trip, or fall occurs:
Responding to the incident:
Document the incident:
Other action plan steps include:
Download the Slip and Fall Prevention Checklist
Below are areas of heightened concern for Community Associations that you should pay particular attention to:
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
Choosing the appropriate insurance products for an association often involves a lengthy review process with many facets that require your attention. One overlooked detail can adversely impact the association both legally and financially.
All property insurance policies contain exclusions. An exclusion is a policy provision that eliminates coverage for some type of risk. Exclusions narrow the scope of coverage provided by the insuring agreement.
Insurance policies have exclusions for several reasons, including:
Boards should look carefully at the exclusions for each insurance policy and consider additional coverage to mitigate any gaps or deficiencies. In doing so, it is critical to work with an insurance agency that specializes in condominium association insurance and can offer the necessary resources and expertise.
Boards and managers should periodically initiate an outside review of their association’s insurance program. The review should include an exclusions analysis to identify exposures that are not covered. Although it is impossible to mitigate all risk, being educated and understanding potential exposures is key to making informed decisions on coverage.
If you are interested in a review of your association’s insurance program, please contact a trusted client advisor at Gulfshore Insurance. We insure over 700 associations throughout Florida, offering professional service from experienced and knowledgeable personnel who specialize in associations and understand their unique exposures.
Joe Thompson is a Client Advisor and Partner at Gulfshore Insurance who specializes in managing risk for community associations and various contractors. Comments and questions are welcome at jthompson@gulfshoreinsurance.com
For 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.
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.
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