Inside a Co-op's Insurance Nightmare and Remarkable Recovery

If your building was suddenly hit with a 400% insurance premium hike, who do you turn to? That was the question facing a Queens co-op after a devastating fire. Vik Shingwani, a property manager at First Management Corporation, reveals how strategic management helped reduce their renewal from $750,000 to $510,000 — still high, but a significant improvement. Shingwani offers practical insights on navigating catastrophic claims, managing affected residents, and implementing preventive measures that insurance companies actually respond to. Habitat’s Paula Chin conducts the interview. 

How To Run Your Building: For Co-ops and Condos

Transcript

[00:00:00] Paula Chin: Welcome to Inside Track, a conversation with New York's leading property management executives. I'm Paula Chin with Habitat, and my guest today is Vik Shingwani, a property manager at First Management Corporation. 

Boards are really feeling the brunt of the continuing increases in insurance premiums and at those buildings where policies are coming up for renewal, understandably, they're very much on edge. That's especially true at buildings with middle and lower income residents, and even worse, for buildings that have put in claims that have put a black mark on their run loss record. I understand you represent one such co-op in Queens that's facing this exact challenge.

Can you tell us about it? 

[00:00:48] Vik Shingwani: So we manage a property in Flushing, Queens, that's dealing with this right now. Most of our portfolio of condos, co-ops, rental buildings are dealing with insurance hikes, but nothing like this. Two years ago, the insurance policy package was around $150,000.

Last year's renewal came back at $750,000. It was a huge hit. That's mostly due to a large fire which took place at the property, but again, it really put the building and the owners in a bad place financially because they had to come up with this money to pay for the policy. 

[00:01:26] Paula Chin: Tell me a little bit about the fire.

How bad was it? What was the claim filed and were they made whole? 

[00:01:34] Vik Shingwani: Sure. The fire occurred in April 2023. There was a vacate order on 14 units in the building. The total cost for repairs came out to around three and a half million, which includes engineering, architects, and things of that nature.

So it was quite a large fire. We still have people that can't get into their homes. 

[00:01:57] Paula Chin: Wow. Now, did the insurance cover everything or did the board have to take the difficult measures of, increasing maintenance or imposing assessments? 

[00:02:09] Vik Shingwani: So the good thing is the insurance coverage was great.

We have an insurance coordinator who deals with insurance for every property, and the insurance company did a great job giving us advance payment and covering the entire loss, including all the extra fees like air monitoring, clean up, things like that. 

[00:02:31] Paula Chin: And did the board have to impose an assessment or raise maintenance as a result of the fire?

[00:02:37] Vik Shingwani: We had to do an assessment last summer to raise funds to pay for the insurance premium. 

[00:02:43] Paula Chin: Now what's the demographic makeup? Are these people that this is going to hit really hard? 

[00:02:49] Vik Shingwani: Oh it's tough for residents, especially the ones who can't get into their apartments. So they're spending more money to rent an apartment for over a year now while repairs are being made. And you're looking at middle income housing in Flushing, Queens. A lot of elderly people who've been there most of their lives and it's quite unfortunate that they were hit with this bill. 

[00:03:13] Paula Chin: Now at co-ops, shareholders, obviously if they don't have personal insurance, they have to keep paying for the rental.

But do they also have to keep paying maintenance? 

[00:03:26] Vik Shingwani: They do. They do. And we have a few owners who stopped paying maintenance and that's affected the building as well. Everyone else is carrying on that burden. Now we've worked out payment plans with most of these individuals. But only when they can get back into the apartment and financially stop paying rent in their temporary housing so they can start catching up on maintenance at the co-op.

[00:03:52] Paula Chin: So this has been really difficult for the co-op budget wise. Now, you said that the insurance coverage was great, but what happened when their renewals came up and you said they were hit with a 50% increase? Was this by the same company or did they go to different insurance companies as well? 

[00:04:12] Vik Shingwani: So we're working with the same broker, Hub, and they've been instrumental in trying to market this property.

Many insurance carriers declined to bid based on the run loss history, but Hub did a great job in getting a renewal, which is later this month, and they brought the premium down from 750 to 510. Now, it's still a lot higher than what the building used to pay, but we all understand that this fire is gonna stay on the run losses for another six, seven years, so they know what to expect.

[00:04:46] Paula Chin: If you could run by the numbers again to give me an idea of what they were paying before the fire. And what they were going to pay after the increase, and what they've actually gotten. 

[00:04:59] Vik Shingwani: Before the fire, the premium was around $150,000. After the fire that jumped up to 750, so there was a big gap in the budget there and the renewal coming up this month, the pricing we've received for the entire package is right around $510,000.

[00:05:17] Paula Chin: That's amazing. And how is the coverage? Did they have to go with shrinking coverage as a result of the lower price? 

[00:05:24] Vik Shingwani: No, we didn't shrink coverage at all. We took various steps such as passing a rule against e-bikes, which a couple insurance companies wanted to see before they bid on the building.

We did walkthroughs with insurance companies to show them that we've done everything we can to make sure an accident does not occur again. 

[00:05:45] Paula Chin: Okay. So would you say that's an important thing to do, to bring in somebody who might bid to show them what you've done and show them the preventive measures you've taken so presumably the same problem won't happen again?

[00:06:01] Vik Shingwani: Oh, definitely. We're doing it across our whole portfolio because insurance premiums are rising and buildings need to do everything they can to keep those costs down. And the only way to really do that is assure the insurance carrier that the building is taking steps to make sure things like trip and falls don't occur.

Fire safety. And collecting COIs from vendors for any job, reviewing any private work going on, collecting licenses, insurance. Just so the insurance carrier's comfortable and can hopefully give you a better price. 

[00:06:37] Paula Chin: I'm curious, was it an e-bike problem that caused the fire in this building? 

[00:06:42] Vik Shingwani: Not this one.

We actually had an e-bike fire at another property on New Year's Day, but for this one, it was a contractor who was approved to do tile work in a bathroom. He decided to do plumbing work, was not licensed, and it was not part of the approved scope of work and decided to sweat a joint. Sparks went down into the wall.

And the fire just spread. 

[00:07:10] Paula Chin: Boy, that's terrible. So for shareholders it's been a relief because their premiums have actually gone down, which would be unexpected with the renewal, correct? 

[00:07:22] Vik Shingwani: And I don't think they're rejoicing because of course they wanted a bigger savings than that. Ideally they want it to be much closer to the 150 they were paying in the past. But we've had meetings with the board and the insurance broker and we plan on having a town hall meeting to explain this to owners as well. 

[00:07:43] Paula Chin: Another question. If the building goes for another year or two with no fires, can you go back to the broker and say, we've demonstrated we've taken these preventive measures, can it come further down?

Is that a possibility? 

[00:07:56] Vik Shingwani: It is, and we plan on doing that exercise every year for this property. We start 90 days out before the expiration of the insurance so they can market the building, and we'll set up meetings with the broker to show them the steps we took to make sure the building is protected.

[00:08:14] Paula Chin: Great. Vik, is there any advice you can offer boards in terms of how they should deal with their insurance renewals and also how they should deal with shareholders or unit owners, presumably if there's an increase, and their reaction, which might be obviously not very pleasant. 

[00:08:35] Vik Shingwani: In regards to the insurance company, your broker can start marketing 90 days before expiration.

Most insurance carriers won't give you pricing until 30 days before expiration, but it makes sense to start early and work with a broker who has a big reach to market the property to as many carriers as possible. And when it comes to shareholders, communication is key. This is their biggest investment and they all do want to protect that.

But with costs rising this fast, it's scary. So whether it be email memos or I suggest town hall meetings. Bring the insurance broker just so they can explain it. It just makes sense communicating to shareholders. 

[00:09:23] Paula Chin: Is that a strategy that you've seen actually work in some of your other buildings that in fact, did get hit with a big premium increase?

[00:09:32] Vik Shingwani: We're approaching annual meeting season, or we're in annual meeting season. So it's definitely a topic that we have the agenda because we're seeing a lot of buildings forced to do maintenance or common charge increases due to the rising cost of insurance and other factors as well. So at a lot of these meetings, we have the accountant there to explain it, and management tries to explain it the best we can.

Just so the residents know we're trying everything we can to keep their maintenance or common charges low. But there are rising costs and we can't fight that unfortunately. 

[00:10:10] Paula Chin: Vik, this has been really informative and thank you so much for joining us today. 

[00:10:15] Vik Shingwani: Of course. Anytime.