It’s much more difficult for co-ops and condos to get a good general liability insurance policy today. There are fewer carriers, coverage is shrinking and price tags are growing. In this episode, Jonathan Steward, vice president at OSA Insurance Brokerage Services, explains what co-op and condo boards need to do to find an affordable carrier in this challenging market. Jonathan Steward is interviewed by Carol Ott for Habitat Magazine.
Thanks for listening. Subscribe to this podcast for more stories on how New York co-ops and condos have solved a myriad of problems. Brought to you by Habitat Magazine, the "bible" that hundreds of board directors turn to every day!
It’s much more difficult for co-ops and condos to get a good general liability insurance policy today. There are fewer carriers, coverage is shrinking and price tags are growing. In this episode, Jonathan Steward, vice president at OSA Insurance Brokerage Services, explains what co-op and condo boards need to do to find an affordable carrier in this challenging market. Jonathan Steward is interviewed by Carol Ott for Habitat Magazine.
Thanks for listening. Subscribe to this podcast for more stories on how New York co-ops and condos have solved a myriad of problems. Brought to you by Habitat Magazine, the "bible" that hundreds of board directors turn to every day!
Carol Ott: Welcome to Problem Solved, a conversation about problems that have been solved in New York's co-op and condo buildings. I'm Carol Ott, publisher and editor in chief of Habitat Magazine. My guest today is Jonathan Steward, vice president at OSA Insurance Brokerage Services, with offices in New York and New Jersey.
For the past year or so, we've heard that insurance is in what's called a hard market. For those of us who need to buy insurance for our co-op and condo buildings, and that's about all board directors, this means that you're going to pay more, but you won't get more. In fact, you might get less or even find that your policy won't be renewed. Jonathan is here to shed light on what's going on in the market today, and what you can do to make sure your building is insurable. Welcome, Jonathan.
Jonathan Steward: Hi, Carol.
Carol Ott: How difficult is it for a co-op or condo to get a good general liability policy today?
Jonathan Steward: I would say nowadays it is probably much more difficult than it was in comparison to say, five years ago. Carriers have exited the market; claims have happened that have caused this, too. For example, things like the Bronx fire in January, and last year the building collapse that happened in Florida.
These things play a role in carriers' appetites, and a lot of carriers are getting out of the market. As a result, a lot of carriers are changing their underwriting approach. For example, a building that's a five-story walk up that has a sprinkler system in the hallway used to be able to be placed with specific carriers. These carriers have changed their approach on that and are requiring fire escapes or something along those lines. So at that point, they aren't insurable with the current carrier that they're placed with.
Carol Ott: And if you're placed with your current carrier and that carrier comes back and says we won't offer you insurance next year, what are your options?
Jonathan Steward: The options at that point are other markets. I would say there are about 10 out there in general. That's basically the only option at that point.
Carol Ott: If I've been turned down by one carrier, do they talk to one another? Will other carriers know that?
Jonathan Steward: There's no communication between carriers themselves. There are certain points that they will look at. The biggest things are violations on the buildings, so make sure those are limited as well. Aside from that, you also need a proper risk transfer process in place with your cooperative building.
Carol Ott: What is a risk transfer process?
Jonathan Steward: This is the process where, for example, a unit-holder goes ahead and hires a contractor to perform work in their unit. The condo or co-op board themselves need to oversee this process and make sure that they are utilizing indemnification, hold-harmless agreements and alteration agreements. Aside from that, you also need to make sure that the contractor's naming the building as an additional insured, to make sure you are protecting yourself from these large claims that tend to happen when contractors are performing work in buildings.
Carol Ott: If I as a board say yes, we have proper risk transfer procedures in place, will insurance carriers want to see that?
Jonathan Steward: Sometimes it depends on the carrier, but they'll ask for a sample agreement. Some of the harder carriers out there that are more strict will definitely want to see something like that.
Carol Ott: And given that this is a hard market, can you give me an idea what kind of premium increases a co-op or a condo board can expect to see?
Jonathan Steward: For the package which would incorporate your property coverage and general liability coverage, those policies we are seeing right now range from, I would say about 10 to 15%.
And then there's a separate policy called an umbrella policy that extends over these. Those are actually sustaining the biggest increase. We're seeing 50% increases on those policies, maybe even 70%. It's substantial.
Carol Ott: Do all buildings have umbrella policies ?
Jonathan Steward: I would say about 85 to 90% of building owners, at least co-ops and condos, definitely have umbrella policies .
Carol Ott: Give me a sense of what your role is as a broker.
Jonathan Steward: As a broker, the way that we've been approaching it is prior to our insured’s renewal, or even after our insured's renewal, we'll contact them and advise them about these DOB violations or these HPD violations to let them know they definitely should be addressing these. The other way is asking management companies to make sure they are contacting us about any hiring of contractors to make sure they're using the proper wording in their contracts, obtain the coverage for the building and for the unit owners when this work is being performed.
Carol Ott: Most buildings are managed by a property management company. Is your relationship with the property manager or is it with the board?
Jonathan Steward: My relationship kind of splits. I deal with a lot of buildings that are self-managed, and then I also deal with management companies as well.
Carol Ott: If I'm on the board, and if there's going to be a lawsuit against my building, should we as a board take the time to have the relationship with you, or should I just assume my manager has covered all these bases?
Jonathan Steward: We would suggest having a direct relationship with the board themselves. It's basically going to go from the managing agent to us anyway, so we just want to be in the middle of things, overseeing it. I would definitely suggest having unit-owners or board members contact us regarding matters like this.
My advice would be, make sure that you have proper maintenance done to your properties, because unfortunately, unlike prior years where carriers used to look at just loss history, it's becoming more and more focused on things like HPD violations, DOB violations and the risk transfer as well. They're definitely coming up all the time. And you want to have a head start in terms of being able to find an affordable carrier that's giving you proper coverage in this limited hard insurance market.
Carol Ott: Okay. Thank you very much, Jonathan. Much appreciated.
Jonathan Steward: Thank you, Carol.