Creating a Condo Owners Insurance Group

[David A Levins]

I live in a very large community with10,000 condos, located in a low risk area in Florida (Ocala) that has never been hit hard by a hurricane. The community is called On Top of the World, it has sturdy cement block built homes and a great flood management system. People in our community are paying high condo insurance because of the damage suffered in other parts of Florida. How would one go about creating a condo insurance organization that serves just the condos in just our community? Do you know of any examples where something like this was done?

 

[Markthebroker]

You condo insurance is high (per your opinion) because it is part of a high risk pool that has been paying out claims, and that money has to come from somewhere. Theoretically, if a carrier or carriers agrees with your assessment that the community is low risk, they will price accordingly to compete in the open market and gain the business. Apparently, as of yet, these for profit businesses have not.

Can you form a condo insurance organization that servers just your community? Sure.

To do that at a final cost of less than what you folks are paying? Very remote.

To do that in a way that the HOA and mortgage contracts will accept and saves money? Near zero.

I know, it sucks. I exercise, eat healthy, and keep a close eye on my health. My health insurance premiums still take into consideration the hundreds of millions of Americans that are eating themselves to death. No way around it but to go without insurance.

 

[David A Levins]

I appreciate your thoughts. I would like to respond to following part of your reply:

“Theoretically, if a carrier or carriers agrees with your assessment that the community is low risk, they will price accordingly to compete in the open market and gain the business. Apparently, as of yet, these for profit businesses have not.”

I believe there is currently an unrecognized opportunity and to capitalize on it some different thinking needs to be applied.

I’d like to move forward on the premise that my above statement is potentially correct. To do this it would be helpful to have a conversation with someone with knowledge on how to seize this opportunity. Either by working with an existing insurance company or creating a new one.

Do you (or anyone else) have any thoughts on some next steps to facilitate such a conversation?

Thank you.

 

[Markthebroker]

I believe there is currently an unrecognized opportunity and to capitalize on it some different thinking needs to be applied.

You're free to believe whatever you want.

I’d like to move forward on the premise that my above statement is potentially correct. To do this it would be helpful to have a conversation with someone with knowledge on how to seize this opportunity.

You already did, and you've instead decided to dig you heels in, ignore the advice, and double down on your opinion, which is quite frankly based on little more than your hopes and imagination.

Even if you were right, there's not enough money to be made for an expert to spend time on it.

 

[Markthebroker]

You're free to spend far more time on this than you would earning the money to pay your premiums.

Call Zurich and Lloyd's of London. They have historically built custom policies.

If they take your call, ask them if the reinsurance market will entertain your "different thinking".

 

[adjusterjack]

Do you (or anyone else) have any thoughts on some next steps to facilitate such a conversation?

I have had success in doing just what you propose. But before I give you any information about it you'll have to tell me how much you pay for your condo policy and what your coverages (liability limit and personal property limit).

Also tell me if you are a licensed agent or just a condo owner.

 

[Al3x Lee]

Let's not dog on him too much; as we all know, Florida is an insurance nightmare right now. I also appreciate this guy's transparency; it never hurts to ask the question. Maybe he's determined enough to actually make something happen, although I agree with the other posters, highly unlikely. I personally don't know if it's even possible.

You're up against some expensive, challenging, and time-consuming steps to get there, if it's even possible. You'd have to start with a feasibility study. Can you get everyone in your community on board? What will lenders think about this? Will the condo association bylaws support it? Is there a legal risk pooling structure that can support it, if not, how will you create one that's legally and regulatorily viable? Who's responsible for running it? Do you have any regulatory compliance experts, or are you willing to hire one? What are the capital requirements to sustain the finances and comply with regulations? How will you conduct risk assessments? Will there be underwriting guidelines? i.e. will everyone in your community qualify equally? Will you have reinsurance in the event of disaster? What will your agreement look like with community members / "policyholders"? Will you have a board that includes risk management, financial, legal, and other experts? How will they be protected if they fail to perform their duties properly? How will you initialize the pool of funding needed to get the risk pool off the ground? How will you convince all of the condo owners to join the risk pool instead of purchasing their own insurance? Who will handle claims? Will you use outside adjusters?

While on the surface, your idea probably seems simple enough in your own mind, the reality of making this happen is extremely challenging. Insurance is one of the most complex and heavily regulated industries in the USA.

 

[David A Levins]

All good questions. I am taking things one step at a time. Like you said it is a long shot, but positive, constructive posts are greatly appreciated,

 

[Al3x Lee]

All good questions. I am taking things one step at a time. Like you said it is a long shot, but positive, constructive posts are greatly appreciated,

Good for you. Do you have any insurance background? If not, you're probably better off hiring a consultant who has experience setting up risk pools in Florida. They could probably answer a lot of your questions and see how feasible it really is

 

[Lloyds of Lubbock]

You are going to get a majority to get a majority of condo owners to agree on this?
My condo association had 60 units and the meetings were a bloodbath.
A few questions
Who administers the policy?
How much will you need in reserves...and where will it come from?
What if disaster hits year 1, what are you going to use to pay claims.
Excellent advice
Good for you. Do you have any insurance background? If not, you're probably better off hiring a consultant who has experience setting up risk pools in Florida. They could probably answer a lot of your questions and see how feasible it really is.
Don't give up! Maybe take a different approach....you never know