Forw ard
Thinking: What to Expect in 2025
& How to Plan for the Future of Your Insurance Program
David Velasco, EBP The Baldwin Group MidAtlantic, LLC
The past few years have been challenging to say the least. Community associations across the country have faced what is now openly described as an insurance crisis. More than ever, association boards of directors feel they are forced to play a fixed card game in which the house always wins.
When, how, and why the crisis originated has been the subject of countless articles in numerous industry publications, so rehashing the how and why is not the purpose of this article. Rather, let’s focus on practical ways that we (brokers and boards) can collaboratively tackle the things that we can.
You can’t control everything… The big weather events, inflation, and the lack of foresight by insurance carriers and brokers in addressing proper valuation of buildings and association exposures and calculating adequate rate during better times is out of the control of your board. The re-insurance crisis impacting carriers globally, the low carrier appetite for common interest communities at the regional and national levels, driven by factors such as the collapse of Champlain Towers in Surfside, FL, or the
astronomically large settlements awarded by juries in liability claim cases are also out of your control. All these factors, however, are contributing to supply and demand problems that are directly affecting you and your community. Fewer and fewer carriers are interested in the habitational market segment (condominium, cooperative, and homeowners’ associations) while more and more communities are being built every single year. In 2023, some 800,000 single-family were under construction. In contrast, multifamily construction (primarily condominiums and apartment buildings) increased, with around 893,000 units under construction in buildings with five or more units. More multifamily communities are planned to address a countrywide housing shortage.
One thing is for sure: We did not get here overnight. The current hard insurance market is moving into its seventh year, according to the Council for Insurance Agents and Brokers, but based on current market outlook, 2025 appears to be a pivotal year where a slowdown in large increases could be coming. A slowdown in the rate of inflation, the positive returns of the stricter
underwriting guidelines followed by carriers in recent years combined with the yields from a continued bull stock market are all contributing to an anticipated stabilization of rates – and yet, double-digit increases may still be part of many communities’ reality for the next couple of years.
What can you do about it? Because most insurance contracts are written on a one-year term, we are conditioned to also think about insurance on a 12-month basis – it is all too common (barring any claims activity) that the only interaction a board has with its broker or agent is when it comes time to renew the policy. Using that approach, however, is much like trying to win the Super Bowl by showing up for the first game of the season without having practiced or knowing the players and their capabilities.
To have a winning team, a coach and management work together for months if not years to put the right players and plays in place. Only then does the team have a fighting chance to win the title. Similarly, a community association has a fighting chance
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