Monday, December 27, 2010
Facts for Important Decisions
In the past couple of weeks, it has become painfully apparent that there is a great deal of misinformation provided to Associations by parties with questionable intentions. We are well aware that all Associations and Board Members are concerned about making the right decision for their Unit Owners. It is very important that these decision are based solely on facts and not on assumptions, or distortions.
Below are a few items that have been brought to our attention, so we feel it is important to examine them one at a time:
1. In the past few weeks, there have been several adjustments made on the quotes presented by one of the other Agents. The premiums that were hand-written on the sheets they distributed were observed to be lowered from the renewal Proposal supplied to UCO during the well supervised bidding process. Then once again, they seem to have been adjusted from what was secondarily represented in curiously round premium amounts. These quote sheets also lacked coverage description as to the Name of the Insurance Company, the applicable coverage limit, and applicable deductibles.
Associations should verify with the Agent if all applicable Taxes and Surcharges are included in these quotes as it is not customary to see round number premium figures on quotes. A premium indication of $740 for General Liability coverage should raise a flag that surcharges and taxes which are calculated as percentages applied to premium may be missing from the indication.
Secondly, we have inquired with specific Insurance Companies from which Associations were led to believe they were receiving these quotes. It was interesting to learn that several specific examples we shared with them did not match the Insurer's records as the quote that was released to the specific Agent. It is imperative that all Associations retain a copy of the indication provided to them by an Agent along with the names of the Insurance Company and coverage limits. Once coverage is bound, it will be crucial to verify the actual premium and coverage against what is mentioned on these sheets.
2. Many of the Association we spoke with were unaware that the premiums for their policies had been Financed through a Premium Finance Company and was applied a finance charge to be able to utilize an installment pay plan. A copy of the current finance contract as was procured by the incumbent Agent, at an interest rate more than double of what's being offered this year, is available in the UCO office for review. It is also important to point out the negative impact this high interest rate had last year considering the significantly higher premiums that were financed. We have been able to deliver much more competitive financing terms for substantially lower premiums for the coming renewal which your incumbent Agent has offered to match. This is yet another item that raises the question, where was this improvement last year when there was no competition?
3. Law and Ordinance coverage is an important policy which the Century Village West Palm Beach Associations benefit from. This policy in basic terms provides additional funds in the event of property damage to cover for the elevated replacement costs which may be imposed as part of Construction Code Compliance to specifically address increased cost of construction, demolition to undamaged portion of the building, debris removal, etc. There is already a policy in force for the Associations which will expire on May 31, 2011. The premiums for this policy are still collected on a monthly basis. Even though a much less expensive option with the same coverage terms is available at this moment from our Agency, it would duplicate the cost of this coverage for the associations if this policy was issued prior to May 31, 2011. If the existing high priced policy was to be cancelled prior to the expiration date, the return premium would be penalized for short term cancellation. Replacing this policy at the said expiration date will be more economical for the Associations.
4. It has also been brought to our attention that the Associations are being advised against purchasing a lower wind deductible option this year by the SAME parties which NEGOTIATED and PURCHASED a set of very high priced policies for this very same purpose. It is important to note that last year, about $2,000,000 (TWO MILLION Dollars) of premium was charged to the Associations for this very same coverage alone. Brown & Brown is able to deliver wind buy down coverage for the Associations at HALF of the premium that was charged last year. Also, under our program this coverage is optional. So, each Association can decide whether or how much of this coverage they would like to purchase. This was not the case last year.
5. We have noted that the coverage limits shared on these hand-written quotes being circulated make no mention of the shared elements for specific Associations that commonly own a pool, pool cabana, etc. It's very important to ask the people providing these quotes, where these items will be covered, how much this coverage will cost, and how will this cost be distributed to these Associations. This raises questions for Associations such as the Golf's Edge, Greenbrier, Oxford, Plymouth, Wellington and their common elements. Our quotes included an equitable distribution of these common elements, among those specific Associations. It is something that should be provided from other Agents as well for comparison purposes.
There is a long list of items that must be reviewed in terms of: Insurance Company, Coverage Limit, Exclusions, Deductibles, and Price when considering which insurance program is the best for each Association. Unfortunately, it seems that the discussion and review is being guided towards a simple comparison of premiums alone. And of course, the premiums provided by the same Agent year over year are substantially improved in the light of competition from other Agents.
Let's examine how the insurance proposal from the Incumbent Agent drastically changed from just last year, where the Associations were charged Millions of Dollars more. In addition to the new Insurance Companies brought to the table, the coverage terms, the premiums, finance rates, and even the way the insurance coverage is offered to individual Associations changed dramatically from the prior years. These big changes all come at the same time when our Agency was elected following a very thorough interview, coverage discussion, and premium negotiation process. Sometimes an answer is as clear as it really seems. As all the facts are considered, we welcome any questions; including those from Associations that may have been leaning a different direction in light of the limited facts they may have been presented. We will have representatives in the UCO office from 9AM to 1PM daily until Thursday to address any questions or concerns in person.
Ty Beba, CPCU, CIC, ARM, AIC
Executive Vice President
Brown & Brown of FL, Inc.