The Florida insurance marketplace is facing some monumental challenges in 2021. We’ve seen property insurance rates increasing at a double and triple digit pace, these increases will soon impact the casualty side at the same rate. The casualty space is seeing pressures from the ramifications of some Association’s lack of planning and funds for proper maintenance, upgrades and precautionary safety measures. There are multiple reasons why we are seeing these rapidly rising premiums, with the weight of any specific reason, dependent upon the impact each market is seeing at any given time. On the wholesale side of insurance, we hear the challenges of re-insurance costs, rapidly rising inflation and its impact on replacement cost values, skyrocketing litigation, market restrictions, non-renewals and complete closures. On the retail side of insurance, we hear about the increase in storms and storm intensity, lack of repair contractors and available materials, an increase water damage claims, repair delays and elevated costs, flood zone re-mapping, deductible increases, coverage limitations and premium pricing shock.
Whatever the angle, it is clear Florida is facing a hardening market, the likes of which have not been seen in decades. The worldwide pandemic clearly exacerbated the overall impact, however the underlying causes have been in place for a while, and it may take a while for the insurance marketplace to turn itself around. Recently, several Legislative changes have been proposed, accepted and placed into law, many beneficial and some not so much. These may slowdown the hardening market, but any additional exposure of risk on the consumer is not a good, nor a long term insurance solution.
Market Changes
Many carriers are leaving the condominium association space altogether. For those who remain, a shift is occurring where what was once desired is now ineligible. Insurance companies who dominated a specific niche, are now shifting to other spaces they feel must perform better. Artificial Intelligence and computer models rule the day with worst case storm paths and one in one hundred year storms now being seen more frequently. It is the proverbial “greener grass” syndrome. Examples of new underwriting restrictions include: 2001 and newer construction, $25M maximum value, 60 or more units only, mid-rise or 3 story maximum only, every type of segmentation you can imagine.
With all this change, it is not likely the Association market will settle down short-term.
Rates / Pricing
Renewal costs vary based on individual characteristics and a multitude of factors. For a million associations there are a million different rates. Buildings get older and risks increase with law changes and rulings every passing year. All conditions being the same, we are seeing renewal increases of 15-30%. Depending on age, construction, features, condition and carrier, rate increases from 30-200% are not out of the realm of possibility.
While we never intend to be the portrayer of bad news, we also want our Association leaders to prepare and take a pro-active approach so they can protect their members weather the potential increases on the horizon.
What can Association Leaders do?
It is worth the time and effort to assess your properties and establish plans. Document details on actions the Association has taken or will take to prevent or mitigate any past or potential losses.
Prepare an action plan on who to contact and who is responsible for addressing specific hazards and losses, notifying affected members & promptly reporting water damage claims. Distribute contact information among members and have the information readily available so damages can be minimized.
Include details of upgrades made recently or plans The Association has to make in the near future.
Prepare and provide a written catastrophic storm plan detailing who is responsible and duties upon the threat of an approaching storm.
Install cameras in all public spaces and a have a retention plan for recordings.
Provide all this information and copies of these plans to your Insurance Agent at least 60 days prior to your renewal for consideration in pricing your renewal or new policy.
Conclusion
Of course, we hope things improve, but hope is a poor strategy. Harris Insurance is committed to the Florida residential insurance marketplace. We represent some of the largest brokerages, insurance companies and insurance syndicates in the United States and World. We have the knowledge and expertise to package competitive programs to address packages large and small according to your needs. And, have been doing so in Florida for more than 55 years. Choosing the right Agency is always important but especially now.We are proud to shop & compare for many Associations across the State and provide the most comprehensive advice and proposals for protecting each individual property. We host private webpages where Associations and Owners have access to their policy documents 24-7. Take a look at “Everything you Need to Know as a Condo Unit Owner” or contact us today to see how we can help you and your Association plan and prepare.
LEGAL DISCLAIMER
Views expressed here do not constitute legal advice. The information contained herein is for general guidance of matter only and not for the purpose of providing legal advice. Discussion of insurance policy language is descriptive only. Every policy has different policy language. Coverage afforded under any insurance policy issued is subject to individual policy terms and conditions. Please refer to your policy for the actual language.
