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Commercial Lines 2021 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. 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.

  • Everest is in the process of completely exiting the admitted and non-admitted condo marketplace in Florida.
  • Weston is in the midst of non-renewing hundreds of condominium policies.
  • NSM’s (CHAMP) current focus is on condominiums with TIVs less than $25M (seeking limits up to $30 million) through Renaissance Re as Lexington (which had much higher capacity) is non-renewing all policies starting February 1st 2021, where in the past they had also focused on TIVs in excess of $25M. This change is likely to impact hundreds of condominium accounts. Also, rate increases of at least 25% are being quoted.
  • As of March, American Capital Assurance Corp. is no longer followed or rated by Demotech. In early March, AM Best downgraded American Capital Assurance Corp to a C (Weak), and further downgraded the Financial Strength Rating to D (Poor) on March 25, 2021.
  • Effective Immediately (03/22/2021), New Business restrictions are in place for American Platinum Property and Casualty Commercial Residential Program.  No new business will be written until further notice.
  • AM Best Tower Hill Prime Insurance Company from “A-” to “B++” in December.

 

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.

Below we break down what you can anticipate for the remainder of 2021, including current renewals.

PROPERTY

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.

  • 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 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.

  • 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 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.

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.

Solutions in this Challenging Market

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

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 Community Association and Drone LiabilityRecently, 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:

  • Establishment of designated take-off/landing sites
  • Restriction of hours of use, i.e. only daylight hours, etc.
  • Penalties for violations of those rules and regulations
  • Clarifying that the Association is not liable for any property damage caused by the drones
  • Ensuring that if the user of the drone causes property damage, they are held liable.

 

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 contractorsComments and questions are welcome at jthompson@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.

 

Click here to learn more about common workplace injuries in construction

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.

Personal Lines Second Home Risk Management StrategiesWhether it is a beach house, mountain getaway, or snowbird retreat, every second home has its own unique characteristics and usage patterns that need to be understood when designing an insurance policy and risk management plan.

There are four key areas that owners should understand when protecting their second homes:

  • Occupancy Status
  • Property Risk
  • Liability Risk
  • Risk Management

 

Second Home Occupancy Types


The occupancy type of a second home will depend greatly on the intended use of the property by the owner. There are several different uses for second homes, which are listed below along with the risks that are associated with their occupancy types.

  • Family vacation homes. Vacation homes are used solely by the family and friends of the owner of the home. These homes are generally occupied a small percentage of the year for vacations. When a vacation home is unoccupied, even a small loss can turn into a major problem because no one is there to identify it.
  • Investment property. Homes that are purchased as an investment are intended to be sold for a profit. Owners of these homes may spend considerable sums to renovate them prior to selling. These homes are generally unoccupied, under renovation, and for sale during the owner’s involvement with them, leaving them open to significant risks.
  • Long-term rental properties. Long-term rental properties are leased to tenants for months at a time. Leases are typically from 6 to 12 months in duration. When a homeowner rents a property to a tenant, they become a landlord to that tenant with a responsibility to maintain the home to ensure it is safe for the tenant. A dwelling fire policy is an appropriate policy for this type of home.
  • Shortterm rental properties. Short-term rental properties are rented to tenants for a minimum of one night but could be rented for a much longer time frame. The purpose of these properties is to yield a profit for the homeowner by renting the property as often as possible throughout the year. This arrangement is classified as a business, and the insurance policy needs to cover the commercial aspects of this type of property.
  • Homes under major renovation/construction. A second home might be an 1800s farmhouse in need of a major renovation or a custom home built from the ground up. The challenge with insuring these homes is the renovation or construction that will occur prior to the homeowner moving in. The major risks to these homes include active construction risks (e.g., power tools, demolition, etc.), it is an unoccupied home/structure during construction, it is an attractive nuisance for passersby that could lead to vandalism or a liability concern, building materials may be left unattended, etc. These situations need special attention with respect to the insurance program.

Property Damage Risk from Natural Disasters


Many people choose to purchase their second home in an exotic location: near the beach, in the mountains, near rivers and lakes, or in remote locations. In addition to the picturesque views these properties offer, they may also come with a high exposure to natural disaster or catastrophe risk. Oceanfront properties face the risk of flooding and wind damage caused by high winds and hurricanes every year. Homes located in arid climates are exposed to wildfire activity during periodic droughts, and properties near a fault line may be damaged when an earthquake strikes.

The important thing to understand when purchasing a second home that is exposed to natural disaster or catastrophe risk is that special insurance will need to be purchased to cover these risks. For example, a home near the beach may need a separate policy to cover wind and flood damage. A home located near a fault line may need a separate policy to cover earthquake damage. These coverages will add to the cost of the insurance plan but are critical to the home’s protection.

Liability Risk at Second Homes

Liability insurance provides important protection for homeowners. This protection will pay legal defense costs and damages awarded by lawsuits brought on by an injury or property damage caused by negligence. Second homes carry significant liability risks that could relate to swimming pools and spas, outdoor sports courts, and tenants or renters. Whatever the exposures are for a second home, they need to be considered in the policy design process to ensure proper coverage is in place.

Risk Management for Second Homes

Once a policy is designed, the final step is to incorporate intelligent risk management strategies and technologies to help predict, prevent, and mitigate potential future losses. Here is a quick overview of some of the strategies and technologies that are being used to protect second homes.

  • Hire a property management company to monitor and preserve the property.
  • Turn off the main shutoff valve for the water when the home is not in use.
  • Be wary of social media posts that indicate a property is unoccupied.
  • Ensure all doors and windows are closed and locked when the home is not in use.

Insuring secondary homes can be a complex process. It takes a clear understanding of the property characteristics and insurance company guidelines to deliver a well-crafted insurance program. Working with an insurance agent who specializes in insuring second homes is the best way to ensure the second home is properly protected.

Kevin Havemeier is an Associate Client Advisor at Gulfshore Insurance specializing in Private Risk Services. Kevin works with successful individuals and families with complex insurance needs. He analyzes his clients’ risks and collaborates with them to design customized solutions with the goal of ultimately delivering peace of mind. Comments and questions are welcome at khavemeier@gulfshoreinsurance.com

Gulfshore Insurance is a Naples, Florida based insurance agency specializing in home and homeowners insurance, car and auto insurance, boat and yacht insurance, property insurance, umbrella insurance, valuables insurance for fine art, jewelry, wine, and more. Navigating insurance requires an experienced and trusted insurance agent who understands your high net worth risks and exposures. Gulfshore Insurance services Naples, North Naples, Port Royal, Park Shore, Pelican Bay, The Moorings, Naples Beach, Marco Island, Bonita Springs, Sanibel Island, Captiva, Fort Myers, Sarasota, and Southwest Florida. We have office locations in Naples, Fort Myers, Fort Lauderdale, and Sarasota.

Employee Benefits New Relief Package Grants Free COBRA Coverage for Qualifying EmployeesOne of the many lifelines for workers in the American Rescue Plan Act of 2021 (ARPA) is a new COBRA subsidy that completely covers the cost of continuation coverage for qualifying individuals from April 2021 through September 2021. Here’s what you need to know about this important health insurance assistance.

What is the COBRA Subsidy that Just Became Law?
The new Biden administration hopes to make it easier for people to access this essential healthcare. With the March 2021 passage of ARPA, the administration stepped in to subsidize the full cost of COBRA coverage through the end of September 2021.

But, why pass this subsidy now?
When a person is employed, a portion of their health insurance premium is often paid for by the employer. But, if someone is laid off or has their hours cut—as many millions of Americans experienced during the course of coronavirus pandemic—and they decide to opt to continue coverage under COBRA, they’re typically responsible for the full cost of the health insurance premium.

The amount charged for COBRA coverage can’t exceed 102% of the cost of the plan, but temporary health insurance is often more difficult to buy without a steady income—and costs can reach nearly $500 per person, per month. These complications are what make the new COBRA subsidy so important, as it’s designed to provide key assistance for struggling workers.

COBRA Subsidy 2021 Eligibility
Every employee who involuntarily loses their health insurance beginning in April 2021 is eligible for the entire sixth-month subsidy—including if they experienced a reduction in hours. Employers and employees alike should note that the subsidy only covers the cost of the health insurance premiums, not copays, deductibles, or co-insurance.

How Will the 2021 COBRA Subsidy Help Employees and Employers?
The 2021 COBRA subsidy is likely to impact both employees and employers in the following ways:

  • For employees, this provision can help qualifying individuals maintain health plan coverage—especially important during a dangerous pandemic.
  • For employers, laid-off employees would still have access to the organization’s health plan at no cost to the employer or the worker. However, there may be some administrative difficulties for employers administering the subsidy.

Experts are still working through the details of the bill and its many provisions. In an article published by SHRM, the publication notes that the subsidy will be delivered to employers first using a payroll tax credit, who will then pass it on to employees (or former employees) who are enrolled in COBRA.

What Else Should Employers Know About Free COBRA Coverage?
The ink on ARPA is still fresh, meaning that employers can expect more guidance from federal agencies as it becomes available.

With this in mind, the coverage period for this subsidy begins on April 1, 2021, and ends on Sept. 30, 2021. Employers must notify their employees about this subsidy beginning April 1, and can expect the Department of Labor (DOL) to provide sample notification letters for employers to use when communicating these options to their employees.

 

Ryan Laude is a Client Advisor at Gulfshore Insurance specializing in employee benefits. Ryan works with a wide range of businesses to create the best funding options that fit their needs. Comments and questions are welcome at rlaude@gulfshoreinsurance.com

Gulfshore Insurance is a Naples, Florida based insurance agency specializing in employee benefits insurance including group medical, dental, vision, life insurance, short and long term disability, voluntary life, employee assistance programs, wellness programs, individual life insurance, and more. Our insurance and risk management advisors are experts can provide valuable services including benefits plan design and administration, human resources support, funding options, compliance assistance, benefit administration, and enrollment services. Gulfshore Insurance services Naples, North Naples, Marco Island, Bonita Springs, Fort Myers, and Southwest Florida. We have office locations in Naples, Fort Myers, Fort Lauderdale, and Sarasota.