Gulfshore Insurance > Gulfshore Blog > Cost Control

For many associations, insurance premiums are the largest overhead cost, so it’s very important to accurately forecast any changes for the coming year. 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 increase or decrease your association’s budget. Below, we are breaking down what you can anticipate for the remainder of 2019, including current renewals, and as you begin the budget planning process for 2020.

Property/Hazard Insurance Rates:
For the past several years, beginning in 2014 and continuing through 2018, we have generally experienced decreasing property premiums and improved coverage terms. This type of environment is known as a “soft” market. By the end of 2018, the property market began to show signs of firming. That continued into the first quarter of 2019. This trend has continued through the second quarter and appears to be accelerating more significantly than initially expected.

Adverse loss development from recent catastrophic events and an increase in the cost of reinsurance have been catalysts for this acceleration. Two consecutive years with combined loss ratios exceeding 100% has heightened the focus of management and underwriters to reduce aggregate exposure and increase rates.

In addition to rate increases, we are witnessing tightened risk selection, reduced capacity, increased deductibles, and policy form revisions. Some carriers are approaching New Business and Renewals differently and might be more aggressive offering a New Business quote vs. a Renewal quote, for essentially the same risk. Insurance carriers are utilizing a level of underwriting discipline we have not seen in a while.

  • At this time, our recommendation would be to budget for an increase of 10% to 30% for rates, and 5% to 10% for appraisal increases.
  • For coastal communities with losses and/or older structures, you should anticipate an increase on the higher end of this range.

Ancillary Coverage: (General Liability, Crime, D&O, Excess Liability)
We continue to expect these lines of coverage to remain relatively “flat” with the exception of General Liability and Umbrella. Due to adverse loss experience (severity and frequency), compounded by water damage subrogation claims from Personal Lines carriers, some carriers are pricing themselves out of this market. Others are adding restrictive endorsements, such as a Weapons/Firearms Exclusion, which basically forces agents to move carriers.

  • We recommend that you budget for a 10% premium increase for General Liability and Umbrella.

Flood Insurance Rates (NFIP):
As of April 1, 2019, there were changes to the NFIP that will affect both new and renewal policies.

  • Base premiums will increase an average of 7.3% after surcharges and fees. (As always we caution not to use this 7.3% to estimate any specific policy increase as this is an average of the NFIP’s many varying rate increases and policy types.)

The Florida Office of Insurance Regulation announced that it has approved a rate decrease for workers’ compensation insurance in Florida. The 1.8% decrease was filed by the National Council on Compensation Insurance (NCCI) in a law-only filing resulting from the effects of the Federal Tax Cuts and Jobs Act. This applies to both new and renewal workers’ compensation insurance policies effective in Florida on or after June 1, 2018.

For more information about the filing, read the official release from the Florida Office of Insurance Regulation.

Now that Hurricane Irma has passed and normalcy has returned to much of our area, it’s time to take stock. Boards of Directors and Managers of Community Associations throughout Florida were confronted with a variety of issues during and after Hurricane Irma. Here are our top 10 lessons learned:

1. Understand Hurricane & Wind Deductibles – Often, one of the most frequently misunderstood policy provisions of the Condominium insurance policy is the wind deductible. Here are five things every condominium association must understand about their hurricane deductible.

2. Know Your Coverage – Some of the most common questions we receive concern coverage, and whether the association or unit owner is responsible. This helpful checklist highlights what’s covered and what’s not.

3. Know Your Exclusions – It is important to understand that insurance policies may have specific exclusions and conditions for each type of coverage. A property insurance policy exclusion is a provision contained within your policy language that explicitly declares that certain types of loss will not be covered by your policy. Essentially, the “exclusions” contained within your policy are the exceptions to the general statement of property insurance coverage. Of course, property insurance policies vary considerably. So, there may be many different types of loss that are excluded within your specific policy. Some examples of losses that are frequently subject to policy exclusions in Florida include:

  • Wind Driven Rain – Most insurance policies contain an exclusion for water damage to the interior of a building unless a windstorm damages the roof or exterior walls of a structure through which water enters. This policy exclusion is known as the wind-driven rain exclusion.
  • Landscaping – The vast majority of policies contain coverage for landscape, however they only provide coverage for fire, lightning, explosion, riot or aircraft.  Windstorm damage is not a covered peril.
  • Debris Removal – Typically, removal of debris from trees blown by a windstorm is not covered unless the blown trees damage other covered property insured against windstorm.
  • Other Property Not Listed – If the exact property in not listed on the policy, then the policy will not provide coverage for the item. It is important to be sure that all property owned by the association is listed on the policy, this includes perimeter walls, fences, trash enclosures etc.

4. Evaluate the Need for Excess Flood Insurance – Experiencing a flood can be overwhelming for condo associations because they must deal with a wide range of damage—from property to common area to individual units—and multiple owners. All residents that live in special flood hazard areas are typically required to purchase flood insurance as a stipulation of their mortgage. However, sometimes this coverage is not enough. So, what can you do to get excess flood coverage?

5. Evaluate Need to Levy Special Assessment  – There has been some very heavy Hurricane Irma cleanup and repair costs for many condominiums and neighborhoods. Of course, none of these unexpected costs were in the association’s budget for this year. So, how are associations going to pay the Irma damage and repair bills coming due? There are basically three ways to pay these bills: Borrow from the bank, raise the regular assessments in the 2018 budget, or levy special assessments. As most associations don’t want to pay bank interest unless necessary, and they also don’t want to raise regular assessments that much year to year, the most chosen method is levying special assessments. Here’s what you need to know about special assessments.

6. Consider a Line of Credit – We have seen several communities take out a line of credit with a lending institution to obtain the funds necessary to make any repairs suffered from Hurricane damage. The association has the right and duty to manage, maintain, and operate the common areas, and a loan is a proper way to meet this obligation under Florida law. Many banks will consider making a loan or extending a line of credit to your association as it is primarily secured and collateralized by the assessments paid by the unit owners, and thus it is a relatively safe loan for the lender.

7. Review Subcontractor Requirements – Following a disaster, there is typically a need to hire subcontractors to handle repairs. Hiring an unqualified contractor and potentially squandering your insurance proceeds exposes board members to potential personal liability. While accidents and claims cannot always be avoided, to some degree, they can be transferred to reduce the impact on costs associated with claims. It can all be confusing, but it is critical to ensure your association is transferring all third party risk and only retaining what is appropriate. Here is a list of recommendations to include in a subcontractor or vendor agreement that can be used to protect your association from the negligence of others.

8. Get Prepared Before the Next Hurricane – Two critical components to weather safety are to 1) prepare for the risks and 2) to act on those preparations when alerted by emergency officials. Our Hurricane Preparedness Guide is designed to assist Community Association Boards of Directors and Property Managers on how to be best prepared in the event of a serious storm or other disaster.

9. Ensure Adequate Reserves – What happens when an association encounters large or unexpected expenses as a result of a hurricane? Where does the association get the money to repair or replace these? At those times, the association’s reserve fund comes into play. Adding money to your Association’s reserves is a tough sell to members. However, the reality is that many associations (upward of 70%) are woefully undercapitalized. They can pay the day-to-day bills as long as nothing unexpected happens, but something always comes up. Continue reading…

10. Handling Claims in the Aftermath of a Disaster – It is critical to work with agents who have experienced Claims Advocates on their team in the event of a hurricane. Gulfshore Insurance’s disaster recovery team, satellite office space, and backup equipment allow us to immediately resume operations after a storm/disaster. Learn more.

The Office of Insurance Regulation has received the 2018 Florida workers’ compensation rate filing by the National Council on Compensation Insurance (NCCI), which proposes a statewide average premium decrease of 9.6%. This includes a statewide average rate decrease of 9.3% and a reduction of the fixed expense cost applicable to every workers’ compensation policy in Florida from $200 to $160. The new rates would become effective January 1, 2018.

As always, the Office will review the filing to ensure the proposed changes are not excessive, inadequate, or unfairly discriminatory and evaluate its potential effects on the insurance marketplace and employers, who are required by law to carry this insurance on their employees. A public rate hearing will be conducted in October.

NCCI is a licensed rating organization authorized to make rate filings on behalf of workers’ compensation insurance companies in Florida. For more information about the filing, read the NCCI press statement.

Gulfshore Insurance is pleased to bring you this eye-opening series that explores the rise in commercial auto insurance costs; factors impacting the rise in claims; and solutions you can implement to help combat the situation. If you have any questions or concerns, don’t hesitate to contact one of our trusted advisors. Click below to read previous articles in this series:


With commercial auto insurance rates continuing to rise and no end to this trend in the near future, it is important that companies understand the solutions and best practices available to help alleviate the bumpy road auto insurance has become. These four best practices can help you keep your commercial auto insurance expenses under control.

  1. Focus on Fleet Safety
    • The drivers and the fleet you put on the road are key considerations when an insurer assesses your commercial auto risk. Implementing a proactive Fleet Safety Program will create a strong foundation for controlling your risks and exposures from potential fleet auto accidents. A Fleet Safety Program will help establish standard safe driving procedures and expectations, thereby reducing your risk of liability, and will also communicate management’s commitment to the safety of your drivers and other motorists.

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