Compiled by Patrick Comiskey
Thirty-six people attended the Board Meeting held May 28, 2024, including eight Directors, Management representatives, and invited guests. The public portion of the meeting included a presentation from Kimberly Lilley, Director of Advocacy for Berg Insurance Agency, who provided a very informative, detailed analysis of the insurance challenges facing HOAs.
Thirty-six people attended the Board Meeting held May 28, 2024, including eight Directors, Management representatives, and invited guests. The public portion of the meeting included a presentation from Kimberly Lilley, Director of Advocacy for Berg Insurance Agency, who provided a very informative, detailed analysis of the insurance challenges facing HOAs.
INSURANCE RATES, THE NEW REALITY:
A veteran of the HOA insurance industry, Ms. Lilley painted a stark picture of the property insurance landscape for HOAs. Property damage caused by natural disasters, the skyrocketing cost of reconstruction, and state regulations capping the premiums carriers can charge have resulted in huge financial losses for the industry. Admitted carriers are leaving the state or dropping “risky” properties such as those in fire zones and those with significant deferred maintenance. Without admitted carriers in the market, the only insurance available is through non-admitted carriers which are not subject to state regulation and therefore can dramatically raise premiums. As a result, Ms. Lilley says she has seen premiums jump between 150 to 1500 percent.
Director Daniel Millner asked if this meant the HOA should plan on raising assessments. Ms. Lilley responded that until the admitted carriers are coaxed back, rates will most likely continue to rise, as much as 20%, though annual increases will likely be less painful than the one we experienced this year.
Ms. Lilley added that rising costs are not the only thing to be concerned with. Properties like the Village Green are particularly vulnerable because of their age and the more or less constant state of upgrade and repair. “It used to be that if you had an older structure, no one cared,” she says, “Now they’re asking for every permit, every signature and certification.” She urged the Green to be proactive in making structural repairs and improvements not only to offset threats to life and property, but to also ensure that the HOA can still get insurance.
Director Laura Civiello asked what would happen if the HOA reduced the amount of insurance it carries or was uninsured altogether. Ms. Lilley said lenders are taking a closer look at HOA policies and would likely call any loans on properties that weren’t fully insured. In addition, government-backed agencies Fannie Mae and Freddie Mac, which are responsible for backing 70% of all homeowner loans, will not approve loans to properties that are not fully insured, thereby reducing the pool of potential buyers.
In all, it was a stark look at the state of affairs in insurance premiums.
A veteran of the HOA insurance industry, Ms. Lilley painted a stark picture of the property insurance landscape for HOAs. Property damage caused by natural disasters, the skyrocketing cost of reconstruction, and state regulations capping the premiums carriers can charge have resulted in huge financial losses for the industry. Admitted carriers are leaving the state or dropping “risky” properties such as those in fire zones and those with significant deferred maintenance. Without admitted carriers in the market, the only insurance available is through non-admitted carriers which are not subject to state regulation and therefore can dramatically raise premiums. As a result, Ms. Lilley says she has seen premiums jump between 150 to 1500 percent.
Director Daniel Millner asked if this meant the HOA should plan on raising assessments. Ms. Lilley responded that until the admitted carriers are coaxed back, rates will most likely continue to rise, as much as 20%, though annual increases will likely be less painful than the one we experienced this year.
Ms. Lilley added that rising costs are not the only thing to be concerned with. Properties like the Village Green are particularly vulnerable because of their age and the more or less constant state of upgrade and repair. “It used to be that if you had an older structure, no one cared,” she says, “Now they’re asking for every permit, every signature and certification.” She urged the Green to be proactive in making structural repairs and improvements not only to offset threats to life and property, but to also ensure that the HOA can still get insurance.
Director Laura Civiello asked what would happen if the HOA reduced the amount of insurance it carries or was uninsured altogether. Ms. Lilley said lenders are taking a closer look at HOA policies and would likely call any loans on properties that weren’t fully insured. In addition, government-backed agencies Fannie Mae and Freddie Mac, which are responsible for backing 70% of all homeowner loans, will not approve loans to properties that are not fully insured, thereby reducing the pool of potential buyers.
In all, it was a stark look at the state of affairs in insurance premiums.
CLUBHOUSE REFRIGERATOR:
The Board approved a resolution to replace the failing appliance in the clubhouse kitchen at a cost of $790.
The Board approved a resolution to replace the failing appliance in the clubhouse kitchen at a cost of $790.
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