Expert advice for better insurance rates: these 12 tips can help apartment companies to secure better rates under the not-so-best circumstances.Catastrophic exposure regions--the Carolinas, Georgia, Florida, Mississippi, Louisiana and Texas, and earthquake-prone California--are undergoing an insurance crisis. Prices there are shooting up by 50 percent to 400 percent, the National Multi Housing Council (NMHC NMHC National Multi Housing Council NMHC Non-Methane Hydrocarbons NMHC National Modular Housing Council ) reported during its second quarter insurance conference call in July. Because the 2005 hurricane season Hurricane season refers to a period in a year when hurricanes usually form. For more information see: Tropical cyclone#Times of formation. For a lists of past seasons, see:
Though prices increased significantly at the beginning of this year, no additional changes are expected for the remainder of 2006, analysts said during the call. Also, the Midwest is seeing little or no increase in rates and better renewals than in the vulnerable regions. There is a possibility that little to no change will occur in 2007, particularly if the 2006 hurricane season is mild with no catastrophic events, they said. In the meantime Adv. 1. in the meantime - during the intervening time; "meanwhile I will not think about the problem"; "meantime he was attentive to his other interests"; "in the meantime the police were notified" meantime, meanwhile , however, how can an apartment company secure the best rates under the not-so-best circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or ? 1. Plan a Strategy Meet with the apartment company's acquisition and risk managers, development managers, operations staff and others who would be affected by an insurance policy and its related costs to bring them into the process. Become fully versed Versed® Midazolam Pharmacology A preoperative sedative in future needs for budget purposes and educate others on the budget implications. Learn about community improvements that could help to decrease insurance rates and to make a community attractive to insurance underwriters. When an apartment company meets with the underwriters, it should present the most complete package of information possible. 2. Know the Lender Learn the lender's tolerances regarding limits of coverage, deductibles, carrier quality and self-insurance. Lenders are paying attention Noun 1. paying attention - paying particular notice (as to children or helpless people); "his attentiveness to her wishes"; "he spends without heed to the consequences" attentiveness, heed, regard to windstorm wind·storm n. A storm with high winds or violent gusts but little or no rain. windstorm A storm with high winds or violent gusts but little or no rain. and flood limits. Determine what must be purchased and what is not absolutely necessary to buy. Lenders are increasing efforts to provide insurance information to loan originators and service providers who are providing the coverage, capacity level, relative cost and contact information. Some lenders contemplate exceptions, but in those cases they require additional documentation. However, most lenders are not changing their criteria at this time. 3. Market Early Market the apartment company to insurers early, well before renewal time. Four or six months out from insurance renewal is not too early. Even with a long lead time, a company may find itself up against its renewal date without a firmed-up policy or without all details ironed out. 4. Get Help From Brokers Insurance brokers should be able to help market a company to underwriters and find the best rate possible with the best coverage available for the portfolio. Brokers should also be able to assist with the multiple factors of an insurance policy. With a broker, evaluate the right markets, such as flood insurance Flood insurance denotes the specific insurance coverage against property loss from flooding. To determine risk factors for specific properties, insurers will often refer to topographical maps that denote lowlands and floodplains that are susceptible to flooding. carriers and windstorm insurance carriers. 5. Meet With Underwriters Meet personally with an underwriter underwriter n. a company or person which/who underwrites an insurance policy, issue of corporate securities, business, or project. (See: underwrite) UNDERWRITER, insurances. One who signs a policy of insurance, by which he becomes an insurer. when possible. This meeting will help to build a relationship and offer an opportunity to clarify any aspects of the policy for the buyer and the underwriter. Prepare accurate and detailed information for this meeting, including engineering information, improvements, retrofits, condition of framed communities and replacement costs. Underwriters also am more concerned than they have been in the past with property age and other property information, such as loss history, construction type and management. Take this opportunity to demonstrate a community's soundness and improvements to a community, such as a new roof. Take note that many underwriters are skeptical of wood-frame construction and shy away from Verb 1. shy away from - avoid having to deal with some unpleasant task; "I shy away from this task" avoid - stay clear from; keep away from; keep out of the way of someone or something; "Her former friends now avoid her" covering it. Bring a third-party appraisal, if available. 6. Negotiate When Possible Determine if there are elements of the contract that are negotiable NEGOTIABLE. That which is capable of being transferred by assignment; a thing, the title to which may be transferred by a sale and indorsement or delivery. 2. . One company participating in the call was able to negotiate for a better deductible That which may be taken away or subtracted. In taxation, an item that may be subtracted from gross income or adjusted gross income in determining taxable income (e.g., interest expenses, charitable contributions, certain taxes). by defining parts of Harris County, Texas Harris County is a county located in the U.S. state of Texas within the Houston–Sugar Land–Baytown metropolitan area. As of 2000 U.S. Census, the county had a population of 3.4 million (though a 2006 estimate placed the population at nearly 3. , as outside of the Tier 1, or most hazardous, zone, even though the whole county has been designated as being inside the zone. 7. Consider Self-Insurance Some apartment companies have started to self-insure. This means that they establish reserves against potential future losses instead of purchasing insurance from a third party. Lenders may allow self-insurance in cases in which apartment companies are considered financially strong enough and they are granted exceptions from life insurance company lenders. When considering exceptions to a program, provide necessary documentation. 8. Investigate Co Insurance Options Co-insurance is an insurance policy provision under which the insurer An individual or company who, through a contractual agreement, undertakes to compensate specified losses, liability, or damages incurred by another individual. An insurer is frequently an insurance company and is also known as an underwriter. and the insured, an apartment firm, share costs incurred after the deductible is met, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. a specific formula. Some lenders are beginning to accept such arrangements for windstorm coverage; however, most loan documents disallow To exclude; reject; deny the force or validity of. The term disallow is applied to such things as an insurance company's refusal to pay a claim. co-insurance. 9. De Look for Separate Windstorm Coverage Commercial insurance carriers have started to exclude coverage for damages caused by windstorms, especially in the catastrophic exposure regions and in Harris County, Texas. Look for separate coverage for windstorms. The experts postulated pos·tu·late tr.v. pos·tu·lat·ed, pos·tu·lat·ing, pos·tu·lates 1. To make claim for; demand. 2. To assume or assert the truth, reality, or necessity of, especially as a basis of an argument. 3. that if the coming season is mild, the windstorm exclusion may change for next year. 10. Know Your Civil Authority Coverages Some lenders are requiring civil authority coverage for a 60- to 90-day period. This covers loss for business interruption INTERRUPTION. The effect of some act or circumstance which stops the course of a prescription or act of limitation's. 2. Interruption of the use of a thing is natural or civil. when the business itself has not been damaged but civil authorities require the business to close. Some lenders are waiving law and ordinance A law, statute, or regulation enacted by a Municipal Corporation. An ordinance is a law passed by a municipal government. A municipality, such as a city, town, village, or borough, is a political subdivision of a state within which a municipal corporation has been coverage in structures built in 1995 or after. 11. Evaluate Size of Firm Generally, larger companies are having less trouble finding more reasonably priced insurance policies than mid-size or smaller companies. However, as mentioned earlier, communities outside of catastrophic exposure areas are receiving the best rates. If growth is in a company's plan, take note that some insurance carriers are starting to mandate that acquisitions be underwritten, instead of adding them to an existing portfolio at the same rate, as the practice has been. 12. Renegotiate re·ne·go·ti·ate tr.v. re·ne·go·ti·at·ed, re·ne·go·ti·at·ing, re·ne·go·ti·ates 1. To negotiate anew. 2. To revise the terms of (a contract) so as to limit or regain excess profits gained by the contractor. Pricing Changes One challenge has been insurance carriers' demands for best terms in filling out layers, resulting in less coverage at higher costs. The biggest increases have been noted in the excess layers in the $2 million, $2.5 million, $5 million and $10 million layers. But, analysts said, if pricing improves as the year progresses, apartment companies should re-evaluate their current insurance policies. Sometimes, policies can be renegotiated and rewritten for a better price. Related Article: Why use a broker? With hurricane season under way, apartment owners may be wondering if their insurance coverage is adequate to cover significant loss if disaster strikes. Some of the larger apartment companies may have risk managers who evaluate their companies' needs and find the appropriate insurance policies. Others, however, from independent rental owners (IROs) to large companies without risk managers, may look to insurance brokers for guidance on buying insurance. "Using a broker or agent is about advocacy, the ability to shop around and information about policies the buyer may not be aware of," such as flood insurance, terrorism insurance Terrorism insurance is insurance purchased by property owners to cover their potential losses and liabilities that might occur due to terrorist activities. It is considered to be a difficult product for insurance companies, as the odds of terrorist attacks are very or specific property limits, said Madelyn Flannagan, Vice President of Education and Research for the Independent Insurance Agents and Brokers Association. For those who opt to use a broker, Flannagan, who was an insurance agent for 20 years, offered tips for finding the right one. Where to Find a Broker * Ask personal agents. If they cannot help, they may be able to recommend a broker. * Ask for recommendations at a professional association, such as a local or state apartment association. * Use trade publications as a source for broker listings. What to Ask a Potential Broker * Do you insure Insure can mean:
* Do you have expertise in my business? * Do you specialize spe·cial·ize v. 1. To limit one's profession to a particular specialty or subject area for study, research, or treatment. 2. To adapt to a particular function or environment. in my business? * Can I see your references? What to Expect When Using a Broker * Once a broker is selected, ask about the process of buying insurance--what the buyer will have to provide and what the broker's responsibility is. A broker should supply a one- or two-page list of the responsibilities of both parties. The purchaser may be asked to produce information about previous losses. This is common practice because a national list of commercial claims does not exist, unlike for personal claims. * A broker should take some of the burden off the purchaser by performing a risk analysis and presenting a proposal to the buyer. * A broker should explain all products available. * A local broker in the city where a building is located should know the local insurance laws. * If a local broker cannot help, he or she can contact a national network of brokers to find someone who can. * A broker should be able to make sure a lease is structured properly for insurance purposes. Source: Madelyn Flannagan, Vice President of Education and Research, Independent Insurance Agents and Brokers Association. Rachel F. Goldberg is a freelance writer who lives in Alexandria, Va. |
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion