Insurance forecast according to Ed Mackoul, president of the insurance brokerage, Mackoul Risk Solutions. The premiums on property insurance will increase for two reasons. One, the cost of materials and labor has increased, therefore the cost to rebuild a building is more than in prior years. Insurance carriers are increasing building limits, sometimes drastically, to ensure the property is insured to its full value. Two, reinsurance companies have increased their prices. (Reinsurance is insurance for insurance carriers, which can safeguard them from insolvency in the event of a major catastrophe, such as Tornado or building collapse.) Reinsurance, though more expensive, is a good option because it safeguards carriers from insolvency. When there are fewer insurance providers willing to offer quotes, you can almost guarantee that you will receive a higher premium.
General liability insurance. In the current “hard” insurance market, general liability premiums have been increasing for the past few years. Although the price increases appear to have decreased, that does not mean budget a lower amount or even a flat renewal. Carriers continue to tighten their coverage guidelines and are examining claims more diligently. Don’t be surprised if you receive a non-renewable policy statement.
Commercial umbrella insurance. Commercial umbrellas, which provide added coverage to standard policies, were probably the most significant factor in premium increases in the past few years. Most insureds now have a lower limit at a much higher premium, sometimes as much as 25%. One of the best ways a co-op or condo can assist their cause is to close all building violations with the city. Some carriers will prohibit umbrella coverage if there are any open violations. Adding central station alarms or sprinklers, however costly, could reduce your umbrella premium significantly.
Directors & Officers liability insurance. In response to an uptick in claims over the past few years, D&O carriers, which typically are not very profitable in New York, have been increasing their rates by 10-20%.
Employee Dishonesty/Crime/Fidelity insurance. You may experience a slight increase in your crime insurance premium simply because most limits are based on three months of maintenance fees. As monthly maintenance increases, premiums will increase.
Cyber liability insurance. This is one of the fastest-growing insurance policies. While the cost of a co-op or condo is relatively low, we’re starting to see a rise in this area as well. The reason is the rise in social engineering claims, which arise when hackers acquire a system and deceive a co-op or condo board into paying them instead of the actual billing. Cyber liability carriers that incorporate social engineering in their policies are increasing their premiums; companies that don’t include it are allowing insureds to add this coverage for an additional premium. Consider allocating a 20% increase in this area.
In conclusion, budgeting a minimum of a 20% increase in your insurance budget for 2024 and if the premium comes in less than that, everyone will be pleased — and you will be protected.
