Skyrocketing insurance rates mean higher condo association fees

Condominium owners struggle to pay special assessments; associations consider fighting insurers’ hikes by self-insuring

Article Courtesy of NAPLESNEWS.COM

By I.M. Stackel
Published Monday, July 31, 2006

It doesn't matter if your condominium is east of Goodlette-Frank Road, built like a fortress, or if your condo association has never filed a hurricane-related insurance claim.

The rates have gone up anyway.

And the hardest-hit policies are for the association's common areas. That's because insurance companies view that as a commercial policy and lump it in with an agency's small-business division, a market segment insurers have labeled unprofitable and are discarding.

While residential insurance policy rates soar, and insurers cancel policies held by small-business owners, condo associations around Southwest Florida are voting in special assessments to cover steep hikes in insurance premiums.

The Wilshire Pines condominium got hit with a double whammy.

First, the Naples-area 64-apartment building lost its insurance policy.

Then, when condo association leaders found a new insurer, the premium was almost three times what they had been paying.

The premium increased from $35,000 to $100,000, Wilshire Pines condo owner Tony Monaco said.

It means a special assessment for the 64 unit owners and creates another hurdle in the quest for affordable housing in Southwest Florida, Monaco said.

Association directors had no choice but to impose a $1,534-per-apartment special assessment, above and beyond any existing association fees and assessments, Monaco said.

"That is only to cover the premium," he stressed.

The premium increases proportionally were comparable in the upscale Pelican Bay subdivision.

The association's insurer dropped them — they got the notice Wednesday — and association directors had to scramble for a new policy.

Built in 1986, the Glencove never has filed an insurance-related claim, condo owner Jim Burke said.

Condo association directors of the Glencove, a 96-apartment building in Pelican Bay, watched their premium soar from $96,227.59 to $369,490.57.

Glencove association directors are scheduled to meet Aug. 10 to vote on a per-apartment special assessment of $1,729.23 to cover the increase in the insurance premium, said Burke, who also is chairman of the Pelican Bay Services Division, a municipal taxing and beautification agency.

"The numbers are shocking, and no one is talking about it," Burke said.

It's not just affecting already built and longstanding condominiums.

Because of the way condo law is set up — the builder owns each condo until it is sold — developers also are taking a nasty hit, said Kim Minarich, vice president of Gulf Bay Group of Companies.

Her company isn't having problems getting insurance, but the premiums have skyrocketed, Minarich said. Her company is still in the process of building out Fiddler's Creek on Collier Boulevard, between Marco Island and East Naples.

"For instance, our builder's risk insurance increased nearly 450 percent from 2005 to 2006; property insurance increased 241 percent, and liability — which has nothing to do with hurricanes, does it? — increased 40 percent," Minarich said, although the dollar figures associated with the percentage hikes weren't immediately available.

Bonita Springs homeowner Robert Barbieri said he hopes home and business owners have a long memory and don't forget what insurers have done, and which insurers were especially heartless.

His home is on the water, and for three years he had a policy with Allstate and never filed a claim.

Allstate dropped him six months ago, Barbieri said.

Then, Allstate had the gall to "cold call" him to try to sell him car insurance, he said.

Insurers take note, he said: "I won't — ever — give them a lick of business."

Furthermore, condo associations are thinking about fighting back by self-insuring, a trend — if carried through by every association in the state — that severely could damage the remains of the insurance industry to shock them back into reality.

If every condo association in Pelican Bay decided to self-insure by pooling money through the Pelican Bay Foundation or Pelican Bay Property Owners Association, associations probably wouldn't need insurance companies, Burke said. There are 92 individual condo and homeowners associations in Pelican Bay. Some of the high-rises have considerably more units.

Take that per-condo special assessment, multiply it by the number of apartments in each building, then, by the number of condo and homeowners associations in Pelican Bay, and the community could probably tell all insurers to take a hike, Burke said.

Insurance companies justify pulling out of markets by saying that continuous risk analysis indicates which markets are profitable and which are black holes. State leaders are scrambling to address the dropped policies and skyrocketing premiums, but haven't yet come up with a solution.