Insurance brokers are working to lessen the sting of premium increases by getting proactive about renewals, looking for value rather than the lowest premium, and delivering the news early to allow boards to adjust their budgets accordingly. (Print: INSURANCE STICKER SHOCK)
In the last few years, there have been huge hikes in insurance premiums. It’s tempting to point the finger at insurance brokers for not providing renewal information as far enough in advance as boards would like, But oftentimes, carriers aren’t providing quotes until the last minute — sometimes just days before the renewal date. While premium increases may be unavoidable, there are ways to lessen the sting.
Get proactive about renewals. Jason Schichiano, president of the insurance company Levitt-Fuirst, had several boards within the same condo community with the same carrier and simultaneous renewal dates coming up. “Their collective premiums ran well into the hundreds of thousands of dollars, and we anticipated they would all find themselves in the same situation when it came to premium increases,” he says. To ease the sticker shock, “we thought it would be prudent to get them the news early, even though it would be negative, to give them the time to digest it and to adjust their budgets accordingly.”
Two months before the renewal date, he reached out to the condos’ carrier. “I told them, ‘Look, we know we are not going to get quotes from you until maybe a few weeks before the renewal, but we need an idea of what the increase will be so we can pass the information along,” Schiciano says. Still, he ”
We were in fact a little surprised when the carrier told us the premiums were going to be going up by approximately 30%. I don’t want to say that’s on the higher end, because there are condos and co-ops out there that have had 50% or even 100% increases when there are extenuating circumstances involved. Still, it was significant.
Look for value, not the lowest premium. Whenever you renew a policy, you want to look at whether the client’s insurance program presents the most value overall. It's easy to go out and get a cheaper policy by stripping down coverage. We went out and got feedback from other carriers, which confirmed what we expected — that the condos’ incumbent carrier was in fact going to be the best option despite the increase. These buildings have a very comprehensive program, properly insured to full replacement costs — liability coverage, general liability and umbrella liability. But there were ancillary coverages, including flood, earthquake, underground water, even sewer and drain backup coverage. We wanted to maintain all of that.
Delivering the news. We met with the board about 60 days before the renewal date and conveyed the information, which was tough to hear. The risk of dropping information like this so far in advance is that boards are going to run to their property managers and say, “Call up other insurance brokers right away. Let's get some other quotes in here.” But we were careful to explain all of the market forces driving the increases. We actually had breakfast meetings where there was a real conversation and we could answer people’s questions. There were a lot of them.
The boards decided to stick with the carrier. These renewals happened to come up in November, so had we waited until late October to relay the information, they would already have put their next year budgets to bed. But they had plenty of time to adjust them.