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Sea Ranch Club

6/18/08……

What follows is an overview of the presentation made to a larger group than normal for a Wed. 9 am meeting in the Ocean Room…

Included will be links…for agents….companies….. articles….information….and definitions….

Readers from Sea Ranch or other Condos …contact BCbythesea…and I will forward the email received from Willis of Florida of the power point presentation…..

The validity or non- validity found in this new insurance offering……will be left to you to decide….

This was the second visit for Brown Insurance Services Representative….Rob Tallent,CIC…Account Executive/Risk Manager…and M. Craig Brown, AIP…Account Executive…www.browninsuranceservices.net

Previous Sea Ranch Club post in SRC category…. provides overview from their 1st presentation….

This visit was made after new information was provided to them by the Sea Ranch Club Comptroller through a Board member …..

A new program became available to offer to us initially …with 100 condos currently in this group plan….only to become unavailable until November/December….with a moratorium due to the ire of the insurance industry…who feel threatened….Willis of Florida…is in the process of hiring a law firm that will include a former Insurance Commissioner…..

The power point presentation lasted approx. 45 minutes and was made by Stephen van Wert, author of this new program…. Account Executive … Willis of Florida…www.willis.com

Willis is a global Insurance broker…est. 1828…15,800 colleagues in 324 offices…110 countries…a public company…listed on NYSE…(WSH)…annual revenues over $2.4 billion….transact over $30 billion in insurance premium…Willis of Fl. is headquartered in Tampa…..125 employees ….Willis represents big name companies such as 3M/Merrill Lynch/Toyota/Sony/Nike..

NOTE: Mr van Wert was not allowed to say the actual name of of the state program…Citizens….so from this point on …it will be referred to by initials…CPI…(Citizens Property Insurance)...www.citizensfla.com

The program being offered… “Condo Elite”…high end condos…

a “group” policy…not a “pool” policy…CIP is a “pool” policy….

combines all Associations under one property policy….. not all located in the same area…

Advantages…Economies of scale and group purchasing power…premium savings… the example used … Sam’s Club…buying in bulk….

More leverage with insurers…superior coverages….higher limits…placed with “A” rated companies…

The alternatives are now available due to recent legislative changes …statues…718.111….www.stateofflorida.com

These alternatives allow 3 or more condos to group together to purchase wind coverage…

in order to comply with this law…

Limit must equal the Probable Maximum Loss (PML) of a 250-year windstorm event….www.rms.com

…..www.myflorida.com

and must be conducted on the Catastrophe Modeling Software approved by the Florida Commission on Hurricane Loss Projection Methodology (FCHLPM)…www.sbafl.com

Mr van Wert offered to do a Cat model for Sea Ranch Club buildings…

There is no need to have full wind coverage for all locations…. wind will not completely take out all these properties… takes the “fat’ out of the insurance premiums… some buildings will have major damage…others minor… real losses from a hurricane…the storm surge...www.cunninghamlindsay.com

The program includes flood coverage in excess of the National Flood Ins. Program…(NFIP)..www.fema.gov

Condos share one master limit per event….for each event…no maximum limit for the year…no matter how close together..

A scenario using SRC Bldg.A was used to show what would happen in the event of hurricane damage and the claim process….

The astounding difference …… the current CIP with each condo owner being assessed $40,443 dollars…and $1.84 ….(not a misprint)..with the new program CondoGuard…..

A comparison between programs was presented side by side with CIP …not rated…VS…. Lexington Ins….A+XV…..rated……. www.lexingtoninsurance.com

Lexington will also match the NFIP and offer an adjuster ….Vericlaim,Inc…www.vericlaiminc.com that covers both wind/flood…compared to present system of separate adjusters……also offers ‘building ordinance and law’ currently not provided…which covers the increased cost of construction/demolition/value of undamaged...www.coverageglossary.com.……...www.imakenews.com

An eye-opener about the deficits of CIP was revealed……. from the Florida Association of Insurance Agents…excerpts from a White Paper explaining the impact to policy owners ...www.faia.com……..

Including the market update from Florida Chief Financial Officer …Alex Sink who wrote an article …including this statement…in the Tampa Tribune …Feb. 20,2008…www.tampatrib.com

“Volatility in the financial markets already hampered Florida’s ability to raise capital in the bond markets, I am very concerned about our ability to sell bonds of this magnitude at a reasonable price and I am not alone. The Cat Fund’s Advisory Council last month expressed “concern” about the “realistic potential to adequately fund” our increased insurance risk”….

Bottom Line…By purchasing Insurance as a group, the Associations are shifting their risk of severe assessments from the reasonably expected losses…emanating from a “normal” hurricane, such as building ordinance,demand surge,storm surge/ flood, property in the open, potential lack of timely claims payments, etc…to the unlikely event…a hurricane loss exceeding the 250-year PML…

Downside….It is possible that the damages to all properties can exceed the blanket limit as a whole….though extremely unlikely…in such a case, each property suffering a loss gets a pro-rata share of the claims payments….

Disadvantages…of CondoGuard …possibility that the 250-year wind PML limit can be breached….if wind loss approaches the Groups limit, final claims payments will not be settled until all claims are adjusted…. currently, a surplus lines placement does not have Guaranty Fund Protection….coverage enhancements are limited to available sublimits….

Advantages …of CondoGuard…. large premium savings of 30% estimated…no mandatory annual appraisals….no need to purchase AOP …(all other perils)/DIC…(difference in conditions) wrap property policy….NFIP claims payments rrode the windstorm deductable….

Again…for the full power point presentation…send a request by comments below……or to [email protected]

Final notes….

The comparison was made with CPI…and not with QBE…..www.qbe.com

SRC is in the process of switching out of CPI for windstorm by the 1st of the year…with a lower deductible….either 3% or 5%…..

The savings would need to be recalculated…. along with commissions…..

There is still a question of mortgage companies approving sales with this type of coverage….

They are a subsidiary of AIG….www.aig.com

Research should be done on previous payouts of claims…for both companies…

more to come………

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