HIGH-RISE CONDOS
HARDENING MARKET FOR
MID- TO HIGH-RISE CONDOS
After more than a decade of
stability in the insurance
market, we are now entering
a hardening market, and it
is causing major changes
worldwide. Of all the coverages, property
coverage is most affected, resulting in
tough renewals for many commercial
policyholders. For Condo Associations,
insurance carriers were previously
reviewing non-sprinklered, high-rise
buildings more cautiously due to the risk
of a large fire loss. However, more recently,
the focus has shifted toward mid- to highrise
condominiums, both sprinklered and
non-sprinklered, primarily older buildings
but also some new, due to the risk of water
damage claims.
WHAT IS A HARD MARKET AND HOW
COULD THIS AFFECT YOUR CONDO
ASSOCIATION?
A hard market is characterized by a high
demand for insurance and a reduced supply.
The effects of the hardening market are
higher premiums, changes in underwriting
guidelines (more stringent criteria), and
changes to terms being offered.
Condo Associations are experiencing
drastic changes due to the hardening
insurance market. Regardless of loss
history, carriers are increasing premiums
significantly and are also increasing
deductible amounts. Some carriers are
adding on a separate higher water damage
deductible to help manage the risk. We have
seen deductibles go as high as $50,000.
If your Condo Association has an
unfavorable loss history, carriers are more
likely to non-renew your account. If you
are non-renewed, you could potentially
be kicked out of the standard market as
carriers decline to quote due to changing
underwriting guidelines. In these cases,
Condo Associations end up in the Excess
and Surplus marketplace with nonadmitted
carriers where premiums are
substantially higher and can be multiples
of the expiring premiums. In addition to
higher rates, the terms and conditions are
generally less favorable in the Excess and
Surplus marketplace.
WHAT CAN YOUR ASSOCIATION DO?
When faced with a tough renewal, you may
have limited options and be faced with
skyrocketing premiums and/or a huge
deductible increase. Here are ways you
could address this situation:
• EXPLORE OPTIONS - Depending
on your loss history and preventive
measures in place, there may be other
options available for your Condo
Association. Utilizing your current
Agent is a great option; however,
there are instances where it may be
beneficial to consult with others.
You may want to consider some of
the following: 1) agency resources,
such as risk management and loss
control service; 2) agency size and
relationships with carriers; or 3)
market assignments, as not all agents
have access to the same insurance
carriers.
• IMPLEMENT PREVENTIVE
MEASURES – Associations should
review their losses. Are you able
to explain your losses and what is
being done to prevent future losses?
Associations need to be proactive
and stay up
to date with
building updates,
including roofing,
plumbing,
electrical, and fire protection/life
safety. Associations should also
consider performing mandatory
high-risk component inspections and
repairs to mitigate future damages.
• COMMUNICATE WITH YOUR
AGENT - It is imperative that you
keep your Agent up to date on what
the Condo Association is doing to help
the Agent highlight your account to
underwriters and negotiate on your
behalf.
Unfortunately, in the hardened insurance
market, shopping your insurance alone
may not be enough to help your Condo
Association manage insurance costs. As
the market continues to harden, Condo
Associations should consider effective risk
management and loss control strategies
to help navigate through the market.
Unfortunately, it is hard to say how long the
hardened insurance market will last. One
thing for sure is that Associations should
be prepared and budget accordingly, as
we expect premiums and deductibles to
continue to rise. +
BY: ELAINE GASCON
ATLAS INSURANCE AGENCY
Elaine Gascon is an Account Executive
at Atlas Insurance Agency in the AOAO
Specialty Unit handling the insurance
program for over 75 Condominium
Associations. She holds the Certified
Insurance Services Representative
and Associate in General Insurance
professional designations.
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