092 | HOA Insurance Tips for 2025 (Don't Breach your HOA Board’s Fiduciary Duty!) - HOA Insights: Common Sense for Common Areas

Episode Transcript
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Kevin Davis (00:00):
If you are a good account, you have a little bit

(00:03):
more power than anybody else outthere, because insurance people
know that I got the right rateright now. I know I'm making
five cents on every dollar, somy rate is the correct rate. So
I want to write the good stuffso I can make that five cents. I
don't write the bad stuff. Gottheir stuff going to go from
five losing, making five centsand losing five cents. Okay? HOA

Announcer (00:27):
Insights is brought to you by five companies that
care about board members,association, insights and
marketplace Association,reserves, community, financials,
Hoa invest and Kevin Davis,Insurance Services. You'll find
links to their websites andsocial media in the show notes,

Robert Nordlund (00:42):
Hi. I'm Robert Nordlund of association
reserves, and I'm

Kevin Davis of Kevin Davis Insurance Services.
And this is HOA Insights, wherewe promote common sense

for common areas. Welcome to episode number
92 where we're again speakingwith insurance expert and
regular co host Kevin Davis, andin warming up for this meeting,
I'm reminded he puts a smile onmy face, and we're going to talk
today about what to expect in2025 with respect to insurance,
a little bit of a soberingconversation, but an amazingly

(01:12):
informative conversation. Wewant your association to thrive.
So we want you to be wellinformed about what insurance
issues and costs you're likelyto face at your association in
2025 we don't want anyone in ourpodcast audience to be surprised
by what's going on out there.
Well, this is a follow up toepisode number 91 none of
another one of our popular boardhero episodes. It was a fun one

(01:34):
told by a board member who had adrug house in their nice
suburban community that causedenough trouble in the
neighborhood that it led to abomb scare. And I'll leave you
with that. It's a heck of astory. If you missed that
episode or any other priorepisodes, take a moment after
today's program to listen fromour podcast website, Hoa
insights.org, or watch on ourYouTube channel, better yet,

(01:59):
subscribe from any of the majorpodcast platforms so you don't
miss any future episodes. Thoseof you watching on YouTube TV
can see, if I hold it up, my HOAinsights mug with a cartoon on
it. It's my favorite. I got thatfrom our merch store, which you
can browse through from our HOAinsights.org, website, or the

(02:20):
link in our show notes, you'llfind we have some great free
stuff, like the mug I showedboard member, Zoom backgrounds
and so go to the merch store,download a free zoom background
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(02:43):
92 mug giveaway. I'll ship thatmug to you free of charge. We
enjoy hearing from youresponding to the issues you're
facing at your association. Soif you have a hot topic, a crazy
story, or a question you'd likeus to address, you can contact
us at 805-203-3130, or email usat podcast at reserve study.com

(03:06):
some of those questions led totoday's topic, what to expect in
2025 with respect to insurance?
Insurance was a big deal theselast two years, so fortunately,
we have the right guy here tohelp answer that question. So
Kevin, tell us more about what2025 is going to bring with

(03:28):
respect to insurance.

Okay, let me put, let's talk a disclaimer and
that. Okay, every account shouldbe viewed on his own merits.
Okay, so whatever we talk aboutfor the next 30 minutes, very
account should be viewed on hisown merits that way. I'm gonna
speak in general terms. So wedon't a lot of phone calls say,
Kevin, you said X, Y, Z, veryaccount should be viewed on his
own merits promised exactlyhowever, this is the interesting

(03:53):
thing. If you think about sinceCOVID coming out of COVID, the
insurance companies looked atthe numbers and realize that for
every dollar they took in, theywere paying out $1.05

$1.08 $1.06 you can't stay in business. Six
cents for every dollar, yeah,can't stay in business doing
that.

And that's what they looked at. They looked at
it because of all you know,catastrophes that's going on out
there. They look at theinflation that was happening out
there, so many different thingshappening out there that they
just didn't they weren't makingmoney, so now all of a sudden, a
perfect example that is thatlove is Farmers Insurance.
Farmers Insurance went from 106to 105 and then went to 103 so

(04:36):
last year, they finished at 103okay, for every dollar, yeah,
explain that. So for everydollar they took in, they paid
$1.03 Okay, so they operate inthe negative. And again, most
insurance operate in thenegative over the past couple of
years. American family, whowrites a lot of community
associations, they went 114Okay, and 110 so after they

(04:58):
realized those numbers, twothings. Happened, they either a
pulled out of the market likefarmers did, and the American
family this time, we don't writeany more condominiums, even
though they have commercials.
You see the commercial all thetime without the community
association in the marketplace.
So they left, and then you hadthe other ones say, Okay, we're
going to stay in it, but we'regoing to raise the rate
significantly. We're going toincrease deductibles, you know,

(05:20):
up high, and we're going tolower the

threshold, lower coverage. Okay, I'm going
to slow you down there. Raiserates. Okay, increase raise
rates.

Increase deductibles and limit coverage.
Okay?

If I was losing money, I would do what I needed
to do. And so the simple thingis, yes, raise your rates. If
I'm at 105 I'm paying more thanI'm bringing in. That's clearly
not sustainable. You can't stayin business doing that, so you
got to raise your rates at least5% to get break even, or you can

(05:54):
limit how much you're payingout, which is increasing the
deductibles, or carve out alittle tighter what you are and
aren't insuring. Is that

perfect? Okay, perfect. Okay. And as a Plan B,
say I can't write this coverageanymore. You know? I can't. It's
too costly for me, and I'llnever get the amount of rate
that I need. So I'm out of thisbusiness. So that's what's
happened on the past couple of

years. Just throw in the towel and say, I'm
out. Yep, I'm out. Okay, I'mdone.

So that's why you look at over the past couple of
years, the demand was greaterthan the supply,

because the supply had stepped out of

the room, yep, okay, yes. So now, all of a
sudden, the unlimited supply,and so that supply saying, Okay,
I'll be in this business, butit's gonna cost you. It's all
you add or you're gonnaparticipate in the loss. That
means a $25,000 deductable, ifyou have water damage, if that,
if that, you know, wateroverheats or the water spills
over, you're gonna participatein that loss. So now all of a

(06:57):
sudden, insurance company issaying, we can't afford it. You
got a great deal. And we makingchanges in changes right now. So
the past couple of years, therates have been lined up a lot,
and people understand it. Andfeeling you probably felt
yourself in your auto insurance,yes. So now you look at numbers
in 2025 and I love doing thesetalks, because I have to do
research myself. And I looked upFarmers Insurance. Because

(07:21):
Farmers Insurance is big inCalifornia, they went from a 106
Okay, to 105 to 103 from 20212022 and 2023, 2024 they expect
to be at 95 cents. So that meansfor every dollar they take in,
they only spend 95

cents. You know? I like that. I feel like
that's what you want as abusiness. You want to make a
profit, a sustainable profit,but not as a consumer. I don't
want them to make a killing onme, but I want them to stay in
business and

95 cents, 95 so five cents on the dollar is
pretty acceptable right now.
Most of them are at 98 eightcents on a dollar. And again, it
varies all across the board, but98 cents so this year has been
somewhat profitable. One reasonwhy it's been profitable because
the losses out there, the severelosses from the wind and the

(08:16):
hurricanes and their flyerseverything, have not been as
great as they have been in thepast. Okay, explain that to me.
Okay, so in the past. So let'ssay that we have 24 weather
related climate disasters thisyear in 2024 Okay, 24 of them.
Okay. Now, historically, you mayhave more, okay, but they didn't

(08:37):
cost as much. So you averageabout a billion dollars per
storm. So that's about, youknow, $24 billion this year. But
last year we spent more than 24billion,

Kevin, just, just you throwing out words like
billions I got me rubbing myforehead. Just Yes,

yes, big deals, okay, and that, but it is, and
that's the issue there. And fora for example, we had two major
hurricanes in the past severalmonths. We had Milton in Florida
and Helene doing up the coast.
Now, what happened now when wedid a podcast at the podcast of
Robin new again, a couple ofmonths ago, and we were worried
because those two storms camein, and we expected more storms

(09:23):
to come in after that, becausethat hurricane season was still
in effect then. But guess what?
Milton wasn't as bad as wethought it would be, because it
missed major areas until leandamage didn't damage the
property that caused insurance,a lot of money. So

it was more. It wasn't major metropolitan areas,
densely populated, a lot ofstructures. It was more what I
heard flooding in Asheville,kind of sparsely populated
outlying areas.

Yes, and flooding is. Covered by the federal
government, not by your regularinsurance companies.
Interesting. So the federalgovernment took a big loss on
that one, not insurancecompanies, interesting.

So the type of catastrophe and earlier you were
thrown around, you're speakingso fast, I'd just slow you down.
You're talking about cat thisand like so you live in the
world of cats catastrophes, yes,yes, yes, and, and,

and what's interesting about cat losses
this year, because they werelower that the insurance
companies still made money.
Okay, good, though. It wasn'tsignificantly lower. It wasn't
like, you know, they it wasthis, they still lost, you know,
$24 billion they still the lossamount was in the billions, and
still counting. Okay, the yearis not over yet. Okay, even
though this will be 2025 whenthey see this presentation, we

(10:50):
have a couple days left beforethe year. So what we're doing,
what we're seeing now, isbecause of the year, because of
lack of cat losses, okay? Nowall of a sudden, inflation has
lowered and everything so thecost to repair and replace the
items, okay, has flattened out.

(11:13):
All of a sudden. In 2024 theinsurance providers in the
commercial insurance, theinsurance that we're in has made
some money. No, let's say theyhaven't lost money. Okay?
Because, from the way insuranceworks, is that they right now
look on paper, that 5% ismeaningful, but they're still

(11:34):
paying claims for night fromfrom this year, so still claim
from Milton Elaine, they'restill paying those clients at
the end of the year. It may goup a little bit, but still, for
the first time, they have not,they will not, they should not
lose money.

Good. Okay, so we're not you and I just talking
to each other here. We're notreally expecting that they're
going to try to recoup all thatmoney they lost in the last few
years. They just want to getback to stability, making a
sustainable profitability.
Exactly

Okay, exactly. It's not a matter. Because as far as
they're concerned, if everydollar they put out, they they
for every dollar they take in,they lose 95 cents. They're okay
with that, including a catlosses, you know? So they look
at all the loss that they'veseen all the hurricanes, and
say, well, guess what? We madefive that means our rates are

(12:27):
correct rates. You know, whereour rates are, where they should
be. If we're making 5% with allthe things happening out there
right now, we feel good aboutwhat we're doing in an insurance
industry. As

a consumer, I'm starting to feel good that. Can
I say the worst is over?

Can you say the worst is over? I would say, we
don't. I can't we can feelcomfortable with the coming
year. Okay, okay, let's put itthat way. Okay, go get it now.
What does that mean? Be feelingcomfortable with the mean
suggests is that now I love tocall this this what we're
talking about, The Good, the Badand the Ugly. Okay, okay, okay.

(13:07):
I called the good the bad andthe ugly is most reason. So if
you're looking at insurancecompanies saying, guess what,
we're making 95 cents at everydollar. I mean, we're paying 95
cents on every dollar. We'remaking five cents. That means we
want to write more business now,okay, we're ready, because we
know our rates at what theyshould be, to make 95 cents.

(13:28):
Now, there could be somedisasters out. There could be
something happening. But guesswhat? There were disasters last
year. We still made money, so webelieve that we had the right
price. So now what's going tohappen? It was should happen is
now on the good accounts. Okay,

accounts that that's your asterisk,

yes, the good accounts. And this is the most
you know. This is the point thatwe're going to make today. Right
now, if you are a good account,you have a little bit more power
than anybody else out there,because insurance people know
that I got the right rate rightnow, I know I'm making five
cents on every dollar, so myrate is the correct rate. So I

(14:07):
want to write the good stuff at,so I can make that five cents. I
don't write the bad stuff. Thatbad stuff's going to go from
five losing making five centsand losing five cents. Okay? So
that's what's happening rightnow. All the insurance companies
are out there saying, Okay, wegot the perfect rate, so we want
to, we want to use that rate totrack all the good accounts out

(14:29):
there. So that's number one. Soright now, if you are a good
account, okay, you haveleverage. You

know, I'm going to follow up on that, but I got
to tell you, my brain isspinning right now, okay, we did
a reserve day. 100 unit, planneddevelopment. 100 unit, Hoa, no
big deal. Should be easy peasy.
Asphalt entry, monument sign, noclubhouse, no tennis courts or
nothing. We bid it nice and low.

(14:57):
Should be a smooth, easy reservestudy. We go there. We find out
that the board member hadmisrepresented. He was new, no
real fault of his own. But inthis Hoa, the association was
responsible to maintain theexteriors of all the residences.
And not only that, but the homeswere all slightly different, and

(15:20):
they were built over five years.
And so basically, we had toinspect 100 homes, and not just
the asphalt and the entrymonument sign. And so what did
we do? We finished the reservestudy. We said, thank you very
much, and we put a note in thefile raise their rate 50% for
next year. Yeah. And you knowthat what you're talking about

(15:41):
is the normal business reactionto getting slammed on an
account. Yeah, and

you said something really great, because, as a
reserve study specialist,there's certain accounts you
want to go after, the ones thatmore profitable for you then the
less copied. Or it depends onwhat you are you might want to
do the complicated ones. You maywant to do the easy one, but you
know what you want to do? Andfrom insurance point of view
right now, everybody's saying, Iwant to write, give me the good
accounts. You know, we can do abetter job on the good accounts.

(16:12):
Now, that doesn't mean you'regoing to have people fighting
over it, yet fighting them,because again, five cents on the
dollar can easily go to losingfive cents on the dollar pretty
quickly. All it takes is, issomething, you know, a cat
catastrophe happening out there.
So it's not going to go crazy,but the good accounts are so
let's talk about what

a good account.
Okay, we'll get to that. Okay,see. What are we gonna do? We're
gonna take a quick break for amessage, but I want to talk
about what's it take to be agood account. And you also
talked about the catastrophes,but you mentioned a couple of
Floridian type catastrophes. Iwant to get you talking about

(16:53):
hail storms, wind storms,wildfires, a lot of other
things. It's not just damning,lots of stuff. Okay, so Hey
everyone, it's now time to takea quick break and hear from one
of our generous sponsors, afterwhich we'll be back with more
common sense for common areas

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And we're back.
So Kevin, we left, and I amaching to hear, how does an
association know if they're agood account, or how they become
a good account

if you're under 30 years of age, if your
association less than 30 yearsokay, that automatically,
automatic puts you in thatposition to be a good account.
So, number one, less than 30years old. Number two, you have
to be a well managed, maintainedAssociation. That's where you
come along with that reservestudy, that reserve study, is

(18:22):
there, they paid attention toit. They have budgets. They have
maintenance. That's number twoand number three, no law, no
losses or no significant losses.
You could have a few losses, butnothing significant. So that is
an account that you were lookingat, that every Association,
every Association you have thatevery insurance person out there
right now wants that account.

(18:44):
They want to write that account.
Okay,

couple of questions. You talked about
under 30 years. The flashinglight in my brain is Champlain
tower South was 40 years old. Sois this driven by Champlain
tower south? Or is it justcommon knowledge in the
insurance

industry? Okay?
Yeah, and comment, because after30 years, I began you as a as a
reserve specialist. You know,you everything, you know starts
to break down. You know,electrical, plumbing, you know,
you know everything, yeah,

there's more.
There's more that is old andinclined to fail. Okay, you
can't do anything about the age,but you can do something about
how well you maintain the place.
So is it in good condition?
Mother Nature, Father Time, areundefeated, but you can put up a
good fight. You can maintain theplace and minimal losses. Is
that related to maintaining theplace? Well, I

would say the number one thing related to loss
is maintenance of theassociation. Okay, let's say
that you have washing machinethat have old rubber hoses in
there. What happens to thoserubber hoses? They break, and
all of a sudden you flood,especially and then you have a
significant loss in there. Youknow, you know whatever it is,
and you associate thecomponents. And again, you
understand the components there,whenever you don't maintain them

(19:58):
correctly. What happens. Is youend up having a potential loss.
And you know from the roof, nomatter what it is, you have a
potential loss in there for lackof maintenance, if you under 30
years, okay, then those are kindof counts that you have to be
more aware that you have thatcontrol. Okay. That means when
you're talking to your insuranceagent, make sure he understands

(20:20):
that you are a well maintainedassociate. Press that button you
have your button. Yeah, yourresearch press that button, yes,
yes, yes. Call to your insuranceagent, let them know that. Wait
a minute. You know, are we goingto get a discount issue now? Do
I think? Do I think we had apoint in time for discounts
gonna happen? No, I don't thinkso. Because at five cents on the
dollar, you can easily go tofive cents the other way, and

(20:42):
you still have inflationaryissues that they're concerned
about. The repair in place stillcost a little bit more than they
cost in the past. So I don'tthink so. But if you get an
increase, they may say this, andyou'll give you a three to 5%
inflationary increase. Okay, soon that, on that. So I would say
it goes to that, but I would saytalk to your insurance agent

(21:04):
about getting a discount. Younever know. You never know,
because that's the kind ofbusiness that every insurance
company wants. Looks like

that. Okay, so you talked about maintenance,
and I'm going to push you intomaybe a corner here, but you
talked about washing machinehoses inside even inside a
condo, we're not even talking aHOA or planned development,
inside a condo that's privatespace, yes, but you're talking
about washing machine hoses thatclearly water doesn't care about

(21:34):
boundaries. If you get a breakin a hose, it's going to create
a mess. It will go throughcommon area to get to the next
home. So we're encouraging boardmembers to be proactive. Here is
that what I hear?

I tell you, great point. Water heaters are the
biggest problem. Okay, okay,those water heaters, you know,
people don't maintain until theway they should maintain them.
Okay? They leak. They causeproblems. People are out of
town, they're home, and again,you do have a problem because
you can't You're not allowed toenter somebody's unit,
everything like that, but youhave to, as boards, let to save

(22:12):
money on your insurance.
Maintenance is the key. And letthem know that things like water
hoses and water heaters andthose things are the ones that
cause you problems over, youknow, overflowing anything. Most
of your problems you have nearCommunity Association is water
damage. Water damage, and that'swhy the deductible is so high
right now. Or water damageclaims you're seeing, you know,
25 light, hot, high deductibles.

(22:35):
So if you're looking at yourcomponents, you want to make
sure your components are up todate. And even though your
reserve study may say it maylast five years, look at it and
see, will this last five years?
You know, maybe we maybe needreplace these hoses now. Maybe
replace the water heater now.
Maybe need to do certain thingsthat we haven't done in the

(22:55):
past, because at the end of theday, deferred maintenance is the
reason why you know yourassociation is paying a lot more
money for insurance than anybodyelse you know, the ones that
automatically is in thatcategory of your rates going to
continue to go up higher andhigher and higher is ones that
have deferred maintenanceissues. That's the problems.

Yeah, Kevin, you got my brain spinning again.
We had a client, and we dealtwith this nuance that one of the
foundations in in my business isthere's a three part test for
what should be included in areserve study. And it starts
with it needs to be a commonarea maintenance responsibility.
This board of directors, it wasa high rise. Wanted us to

(23:35):
include washing machine hoses inthe reserve, say, because they
wanted to proactively replacethem. And the project manager
came to me and said, Robert, wecan't do that because it's not
common area. I said, again, whenwater leaks, it goes through
common area. So they areprotecting common area by
replacing the washing machinehoses. And I can see that same

(23:58):
issue for like you say, waterheaters and other things, that
there is a real reason to beproactive. And that's that
combination between maintain theproperty and minimizing your
losses. If you see a loss aboutto happen, if you see the hose
spigot out by the pool, wherethe pool service company sprays

(24:23):
off the pool deck or somethinglike that, and it's leaking.
It's always been leaking. Or thepool gate never quite closes,
quite right? You fix thosethings. Fix those things, do
what you can. I have a feelingthose are those leverage points
that are going to push yourassociation from the average who
cares about it into the and yourword were good account, or

(24:45):
preferred account? Yes, yeah,nice. It's

such a important thing what you're saying,
because just the self closinggate is a shit out on the pool.
You know how often you see thatone's not shut all the way shut.
This a little bit you. Andthat's what causes your
liability claims. You know, allof a sudden you have a kid that
drowned, that didn't belong inthe area, and all of a sudden,
association upset becausesomebody suck in, yeah, and you
say that well, but your selfclosing gate is not self

(25:12):
closing. So all of a sudden,now, of a sudden, you have a
huge, multi million dollarlawsuit. Because all you if it
was self closing and it closed,he said we did everything we
could do to control the loss wehad, but if you didn't do it,
now of a sudden, the loss isgreater. And then again, that's
another part of some of theseaccounts where the rates not
going to go down, but you stillhave situations out there where

(25:35):
the payment amounts on theseliability claims are still
pretty high. Yeah,

if you have a waterfront Association, whether
it's a lake with a dock oroceanfront, that there's still a
liability possibility there.
Okay, walk me through some otherthings. We talked about wind,
hurricane and flood type thingsin Florida and the Southeast.
How is that different? If you goto situations like ice storms,

(25:59):
snow load, hail storms, and evenfire exposure, wildfire
exposure, is it? Same thingsapply,

all right? This is interesting, because you what
they do is put higherdeductibles. Okay? One thing
like ice damning claims. Okay,hail, wind. And they also put a
higher doctor or they put apercentage deduct upon them
also, okay, meaning you you'llparticipate in that loss by
about two or 3% okay, so whatthe insurance company has done

(26:37):
over the past couple of years,again, they have not made
changes in how they're going tohandle the claim they're saying.
We recognize that communityassociations will have losses,
and we know where the losses arecoming from. So we're going to
do is have you participate inthose losses as much as
possible. If there's a fire,there's other avenues out here
that handle the fire. We're notgoing to use our insurance to

(26:59):
pick up this fire. If you haveice dampening, if you have hail,
what we're going to do is saywe're going to give you a
another product, anotherpossible, another product, to
cover that up. But as you askedme to pick it up, it's like your
earthquake policy. You have anearthquake policy. A lot of that
earthquake policies inCalifornia is a percentage
deductible, so I have $100,000claim. And if it's a 5%

(27:21):
deductible, it's a $5,000percentage. So I'm participating
in the claim. Okay? Sobasically, what's happening
right now is the insurancecompanies, even though they
recognize that they're makingfive cents on the dollar, they
know they can lose five cents onthe dollar, and so they are
saying, you're going toparticipate in these losses and
help us out, because if you dothat, the likelihood of a loss

(27:44):
will be slightly diminished, andyou will think long and hard
before you submit the claim ornot, because you may have that
water damage claim from the fromthe washing machine hoses, and
you go, Wait a minute. If wesubmit that claim, our insurance
rates going to go up. I don'twant that, so I will pay for it
ourselves. We will take care ofthat ourselves, and then we will

(28:04):
build back the unit owner thatcaused the problems. So it's
really tricky right now ofinsurance, because yes, they're
making money. They're doingthings a little smarter, but
they're not changing the way thecoverage is okay.

Now I hear you with a couple of things. One is
that you're talking about thedifference between losing five
cents on $1 per year and gettingback to a healthy place, which
is maybe making five cents onthe dollar per year. And one of
the ways is playing with adeductible, which can shift it a
couple of cents right there, andthat helps the insurance company

(28:38):
feel a little bit closer towhere they're getting to a
stable point they can trim offfrom losing five cents to at
least losing only three cents ifthey are potentially shifting
that. What about if you have a,I'm thinking, from fourth floor
to third floor, you have waterdamage between two things, and

(29:00):
maybe you get to a decisionpoint, it's going to cost 20
grand to fix that water damage.
Do we do it internally and spendthe 20 grand, or do we notify
the insurance company and theyraise our rates by 50 grand per
year? Exactly?

Unknown (29:14):
Okay, that's

it. Yeah, interesting.

That's the worry right now, the worry for me
again, association knows thatthat's where you talk to your
insurance agent, insuranceproducer, your broker, and say,
Listen, this where we at rightnow? What happens right now?
Because there will come a pointin time where, when they start
making 10 cents on $1 or 12cents on the dollar, where now
the sudden, two things thatdeductibles, the deductibles

(29:38):
will go back to beingreasonable. Okay, okay, the
coverage will come back. Okay,then premiums will drop. Because
it's all a matter of, Am Igetting enough money to pay the
claims? And that's everythingboils down to that. So if
inflation is no longer a problemanymore, and we think we're
making enough money for the caplosses out there, and guess what
we feel comfortable with theamount of. Money, but charging

(30:01):
to the point where, you knowwhat this open that door up a
little bit and say, okay, yes, a30 year building I don't like. A
35 year building I don't like,but maybe I'll change it from,
you know, make it 32 years.
Yeah, okay. And then whathappens? Okay, 35 years, and
then anything before, you know.
And that's what happens, andthat's what happened in our

(30:21):
industry. It happened at eightindustry is that they want to
grow. If they're making 10 centson the dollar, it's a healthy
organization now, they want toexpand it, and if they start
losing, they may go back to 95to 98 they're still making
money. And so it's a matter offor us to know and understand
that right now, who is this abuyer's market or a seller's

(30:43):
market? Kind of when you buy ahome, and historically, for the
past four or five years, there'sbeen more demand and supply.
Supply is coming back in. Supplyis coming back in, when farmers
and American family come backin. Now, so you have more
supply, that more supply, thenall of a sudden you want to have
rates will start getting lowerand getting lower and getting

(31:05):
lower Yeah.

Because, as we know, in our country, with the
free market economy, ifsomeone's making a lot of money
on something Yeah, or even areasonable amount of money on
something, there's going to beother people saying, Yeah, we
want a piece of that

exactly, exactly yes. And what happens is, it's,
it's interesting for theinsurance, because this is
normal. This is where theinsurance cycle works. It goes
up and down. Now, this is lasttime it went up. Was or after
911 911 buildings came down. Welost a lot of money out of just
the cars alone that was parkedat, you know, the World Trade

(31:40):
Center, you know, and then youhad 10 years after that, you had
the fiscal prices that we'vehad, the rates went up and down.
Now, this is the high. This isthe most rates have been up in a
very long time. And I think thereason why because we missed a
couple of years of COVID, youknow, once during that COVID
area, all of a sudden, peopletook their eye off the ball a

(32:01):
little bit, and they started tosee that for the past four or
five years, we've been losingmoney. And then they start
seeing why. And then inflationstarted coming to repair in a
place costs a lot more moneythan did five years ago, and
well, and the value your home ismore than was five years ago. So
a lot of that, lot of thoseincreases are due, not because

(32:23):
of the degree of the insuranceis that it costs a lot more
money to repair, replace somesome of those components we
talked about earlier, just

fundamentally does inflation is real? Okay,
but we heard that the is it theFed is gonna anticipating lower
interest rates? Yeah, they'regonna lower the their magic
rate. They are expecting tolower that a couple of times in
2025 that's good, and with more

one thing about that, I'm glad you mentioned
that, because for the firsttime, insurance had made a lot
more money off of their interestrates, so they put that money
in. So you talking about thebillions of dollars in losses
that we have, let's say that,you know, they had $24 billion
in loss. What they do, they take$24 billion out and they put it
over there to fund claims. Okay,now that's stuff to get interest

(33:17):
off of that. So interest rate isat that high interest rate, they
make more. They make money offthe interest rate also, as
opposed to zero interest rate,which has been for the past

10 years. It's been, well, that's that's
exactly what associations arefinding. Now, in the last few
years, they were gettingsomewhere between zero and 1% on
the reserve interest, and nowyou can get three or 4% and
that's a nice swing that reallyhelps the reserve funding. And I
can see the insurance companies,with their bigger piles of
money, that they have to beready for the billions of

(33:49):
dollars of losses. Boy, it's gotto be nice for them to be making
4% instead of 1%

nice stuff. If I make a lot more than that,

let's, let's not go there. Let's let's just
they have wise money managersdoing exactly, making smart
decisions. Well, Kevin, asalways, it's great talking with
you. Any closing thoughts to addat this time?

You know what I would say? This? Control what
you can control. You knowcertain things you have no
control over. You know, ifyou're over 30 years, you're
over 30 years, but show yourinsurance provider that, guess
what? Yes, we're over 30 years,but we don't have deferred
maintenance problems. We're ontop of what we're doing. We have
a reserve study. We oversee it.
We have a maintenance contract.

(34:31):
We do the thing so that we don'tlook at us at school over 30
years, that we're uninsurable orwe don't we shouldn't have good
rates. If you control what youcan control, you be in a better
position. If you happen to beover 30 years, if you under 30
years, then I would say, beassertive, be aggressive. And
say, Guess what? I'd like to seeif I can get a lower rate. And

(34:54):
above all else, okay, make sureyou understand that each account
is underwritten on its own.

Nervous you're you're looping us back to where
you started. I like thatexactly,

because I know I'm against some I've got a couple
of emails saying, Well, Kevin,you said yes, each each account
there is underwritten his ownmarriage. So yeah. Well, I

like having you on my closing. Thought there,
Robert got it. Okay. Well, Ilike having you on the account
because to me, you make thingsso clear. And likewise, we hope
you in the audience learn someHOA insights today from our
discussion that helps you bringcommon sense to your common
area. We look forward to havingyou join us for another great
episode next week.

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092 | HOA Insurance Tips for 2025 (Don't Breach your HOA Board’s Fiduciary Duty!)

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.css-14f5ked{margin:0;word-break:break-word;display:-webkit-box;-webkit-box-orient:vertical;box-orient:vertical;-webkit-line-clamp:2;overflow:hidden;}092 | HOA Insurance Tips for 2025 (Don't Breach your HOA Board’s Fiduciary Duty!)