December 1, 2025 • 34 mins
Learn how HOA insurance is shifting in 2025, why premiums are stabilizing, and how boards can lower risk and costs!
✅ Is a Reserve Study right for you? 👉 https://www.reservestudy.com/
What’s really happening with HOA insurance in 2025? Robert & Kevin break down the latest trends shaping premiums, risks, and reinsurance markets across the country. From the impact of billion-dollar wildfires to the rise of “thermonuclear” you’ll learn what’s driving insurance costs and how your association can position itself as a lower-risk community. Kevin shares how reinsurance stability is finally bringing balance back to the market, and why your board’s maintenance, rule enforcement, and financial discipline are key to getting better rates.
Chapters
00:00 Why 2025 has been a turning point for HOA insurance
04:17 What does it mean that we’ve “crossed the Rubicon” for insurance stability?
06:58 How reinsurance markets shape HOA insurance premiums
08:41 Are insurance rates finally flattening out for associations?
09:50 Why weather-related claims are still driving losses
12:17 How tariffs and inflation impact rebuilding costs and coverage
15:04 What are “nuclear” and “thermonuclear” verdicts—and why they matter?18:15 Ad Break - Association ReservesÂ
18:47 What can HOA boards do to become lower-risk associations?
21:32 Why maintenance, funding, and enforcement lower your insurance risk
24:18 How reserve studies and strong finances help protect your community
26:11 How “social pessimism” affects board performance and trust
30:55 Why culture, optimism, and diligence are key for strong associations
33:02 Why 2026 could bring better insurance rates for prepared HOAs
The views & opinions expressed in this program are those of the Hosts & Guests, intended to provide general education about the community association industry. The content is not intended to provide specific advice or recommendations for any individual or organization. Please seek advice from licensed professionals.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Kevin Davis (00:00):
Let's go through our basics with the board
(00:01):
responsive. You know, I alwayssay start with the board.
Responsibility is to collectassessments, maintain the
property, enforce the rules. Ifthey do those three things,
guess what, they're gonna be abetter Association than any
association out there this,doing their job properly,
effectively. They will be abetter risk than the ones that
(00:25):
are next door, the ones that areacross
Announcer (00:27):
HOA Insights is brought to you by five companies
that care about boa (00:29):
Association Association Reserves, Community
Financials, Kevin DavisInsurance Services, and the
Inspectors of Election. You'llfind links to their website and
social media in the show notes.
Robert Nordlund (00:52):
Hi I am Robert Nordlund of Association Reserves
Kevin Davis (00:52):
And I am Kevin Davis of Kevin Davis Insurance
Services, and this is HOAInisghts where we promote
Common Sense...
Robert Nordlund (00:52):
for Common Areas. Well, welcome to episode
134 where we're again speakingwith insurance expert and
regular co host Kevin Davis.
We're recording this in late2025 trying to get our arms
around what has gone on withinsurance this year. Higher
insurance premiums have beenheadline issues all year, and
our regular listeners may thinkthe title of this episode sounds
(01:12):
familiar, and it is early in2025 we presented episode 92 to
give you an understanding ofwhat economic forces were at
play, big economic forces, andlikely what was going to happen.
And a reminder, Kevin and I bothlive in the metropolitan Los
Angeles area, and that episodewas recorded shortly after the
devastating wildfires here thatmade us both prepared to
(01:36):
evacuate. So that's sensitive toour hearts. Friends of ours lost
their homes, and we thenrecorded another episode, number
107 talking about risinginsurance rates here in 2025 so
we'll be reflecting back a biton what went on this past year,
so you'll have a betterunderstanding of the dynamic
forces affecting insurance atthis time and into 2026 Well,
(01:58):
last week's episode 133 featuredan enlightening interview with
Curtis Peterson of theinspectors of election. I was
reminded that elections are aspecial event at your
association. They'recomplicated, and having an
expert in these multi monthprojects can be a wise decision.
There's no reason to tough itout and risk getting some detail
(02:21):
wrong that unravels the wholeprocess, undermining the trust
you're trying to build in theassociation, and possibly making
you have to do the election allover again. It's much more of a
minefield than I hadappreciated. So if you missed
that episode, or actually anyother prior episode, you can
take a moment and listen fromour podcast website, Hoa
(02:45):
insights.org or watch on ourYouTube channel, but better yet,
subscribe from any of the majorpodcast platforms so you don't
miss any future episodes. Well,those of you watching on YouTube
can see the HOA insights mugsthat Kevin and I both have kind
of fun puts a smile on my face.
(03:06):
I got it from the merch store,and you can browse through that
from our Hoa insights.orgwebsite, or the link in the show
notes, you'll find we have somegreat free items, like board
member zoom backgrounds and somespecialty items for sale, like
mugs. So go the merch store,download a free zoom background,
take a moment, look around, findthe mug you'd like, and if
(03:29):
you're the 10th person to emailme at podcast, at reserve
study.com mentioning episode134, mug giveaway, we'll ship
that mug 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 always
contact us at 805-203-3130, oremail us at podcast at reserve,
(03:55):
study.com but today's episodecomes straight from Kevin. He
wanted to convey some thoughtsto you in order to give you an
advantage in understandingwhat's going on in this hot
topic of insurance. So Kevin,tell me the realities of what
you're seeing here in 2025 hasit gotten better or worse? Well,
got
Kevin Davis (04:17):
good news for you and everybody was listening. We
have crossed to Rubicon. Ah,nice. Isn't that great? The
first thing comes out my mouthis that we officially crossed to
Rubicon. Okay. Now what's thatmean? Is that we can tell when
insurance has became stable isby their reinsurance market. Now
(04:38):
we talked in April, I said, waitunĆ’til July the first, because
July 1 where the reinsurers gettogether and kind of determine
what the rates should look likefor the next six months. Okay,
so my first question is, what'sthe reinsurer right? Yeah. Okay,
the reinsurers are the peoplewho insure the insurance
companies. So insurancecompanies take. Risk in
(05:00):
insurance company can say, Guesswhat? This is way too much for
me to handle, so I'm going topush it out to other companies.
Got it so you got reinsurancecompanies out there whose one
job is to take on risks thatinsurance companies want to
offset a little bit.
Robert Nordlund (05:14):
Okay? So if State Farm is insuring your
house, state and somethinghappens to your house, State
Farm is going to be the first topay up, but they have a backup
plan. They've got someone elsethat can help them if their
losses get too big, exactly, orokay, what
Kevin Davis (05:29):
they may do is reinsure all their wildfire area
or earthquake. They may say, Idon't want to do that at all,
but I'll take the premium andthis one part of it is saying,
I'm going to push it over tosomebody else, let them take
care of it. Got it. Okay. Okay.
So what happens in July thefirst comes is that
historically, rates at Januarythe first two, January the first
the new rates come out, and theysay, Guess what? We want more
(05:51):
because we don't have enoughmoney. Okay, without we're
losing money. But this is whathappened this year, is that they
didn't say anything. It was veryquiet out there. So when it's
quiet, that means that, hmm,it's flattened out. It's
flattened out exactly, exactly.
It's flat now, but it's morethan flat now. They start to
(06:12):
panic a little bit, because theystart to lose premium. So
instead of charging more moneyand it flattens out, what
happens is you start to losebecause before you're getting
10% more, 20% more, you'regetting money, more money, but
if it flattens out, that meansthe State Farm will say, Guess
what, we can keep more of thatmoney now. Okay, okay, and you
(06:33):
know what, we're not losing muchmoney, because, guess what, we
raised the rate so high on ourproperty that we're making
enough money, so we're going tokeep more of that. And so you
have to reinsure and say, well,we want more of it. And then you
got investors out there, youknow, the pension funds and all
those, you know, they're saying,guess what? You're making money
in insurance now. And so all ofa sudden, that allows us to
(06:57):
cross the Rubicon,
Robert Nordlund (06:58):
okay? Because insurance, fundamentally, is a
business, and you got to bemaking money, or you're going to
step out of the state, or you'regoing to raise your premiums or
something. Yeah, okay,
Kevin Davis (07:09):
so and what they've done over the past several
years, a couple things. Theyraise rates, they lower the
coverage and increasedeductibles. So over the past
two and a half years, guess whathappened is that they started
making more money, and we makemore money. Guess who raises
their hand and say, I want to bea part of that. You know,
investors will be part of it.
The companies who said, Well, Iwant to make more money also. So
(07:32):
one thing we talked about beforethere was more demand, there
were supply. That was a wholething, there's more demand and
supply, the supply has gottenbigger. It hasn't gotten great,
but it's gotten bigger to thepoint where it's kind of
flattening out, which bringsstability to the marketplace,
Robert Nordlund (07:53):
because when there's more demand than supply,
and if the suppliers are makingmoney, then other suppliers can
step in and say, Yes, I want apiece of that too. And then
takes us back to what highschool economics, where we learn
about supply and demand, and youwant them to be somewhat
(08:13):
balanced, not crazy, offset fromeach other. Yes.
Kevin Davis (08:16):
And another thing that we when we talked about it
in January and early, past fewyears, insurance company, for
every dollar they took in, theypaid out $1.05 you can't that
you can't last. And then lastyear, for every dollar they took
in, they paid 96 cents. Okay, sothat's okay. This year, year to
date, is about 94 cents. So nowstability has entered the
(08:40):
marketplace.
Robert Nordlund (08:41):
Okay? So we're going to have listeners saying,
Okay, does that mean my premiumsare going to go down by a couple
points?
Kevin Davis (08:47):
Here's the issue, though, even though stability is
there, there's some thingshappen this year that really
scared us. Number one is thefires. Okay? That was a $40
billion insurable event. Yeah,
Robert Nordlund (09:02):
that insured the entire industry. And as Los
Angeles homeowners, you and I,that's shook us, yes.
Kevin Davis (09:11):
I mean, for example, last year, the whole
year was 130 $7 billion fire.
And you know, for those kind ofthings, for hurricanes and wind,
it was a 130 $7 billion whatevent? Crazy large. Crazy large
was $40 billion okay, and then,but since then, we had, you
know, hurricanes. We had windtornado. We had a huge but
(09:33):
tornado, the first four or fivemonths of this year was a
disaster. I mean, we spent moremoney this year. In fact, we
expect to spend about $150billion in weather related
claims this year, last year, oneto 37 billion.
Robert Nordlund (09:50):
So it's already above last year. Yeah, are you
better last year at the timethat we're recording, this is
already above last year? Okay?
Kevin Davis (09:56):
Not yet, but they expect it to be okay. Expected
to be it. But. Right now. Again,we spend 80 billion right now.
So I mean, the first six months,about $80 billion in losses
from, you know, cat catastrophicsituations. Meaning, what I'm
saying is that it hasn'tchanged. It's more than it was
last year. But as we saw thatwhen July came, July 1 came in,
(10:19):
they knew these numbers. WhenJuly 1 came in, they didn't say
we want more. Normally, theysaid We want more. They didn't
say now they are going to wantmore, more money in areas that
are chasing you prone. So if youlive near wildfires or
tornadoes, they want they willget more rate. They will get
more rate.
Robert Nordlund (10:37):
So it's going to be locally dependent. So
that's going to be wildfires.
What? California, Arizona,Colorado, Washington,
Kevin Davis (10:46):
but this is wind, all kind of anything, weather
related, let's say weatherrelated. So weather related,
we'll still get there. Probablystill have some rate in there,
but not significantly. Becauseagain, what happens is, when you
increase that property for somuch and get it's been quiet for
the past, you know, six, threeor four or five months, you
(11:08):
know, they expected majorhurricanes, and it's been quiet.
And so what happens is thatquietness, it kind of brings
that flattens everything out.
You know, there's, there'scomfort. For the first time in
insurance world. We feeling
Robert Nordlund (11:22):
comfortable. I was supposed to be at a
conference last month inSarasota, Florida, and my
schedule got complicated. Iended up not going, but I was
kind of interested in goingbecause it got pummeled last
year by a hurricane. I wanted tosee what it looked like 12
months afterwards, what recoverylooks like, because I've driven
(11:44):
through the Palisades area herein Los Angeles, and it's just
devastating. Yeah, devastating.
And I was wondering how a localarea responds to a hurricane,
because that's different thanresponding to a fire. But losses
are losses, okay, so we had sometremendous losses earlier this
year. The reinsurers are sayingwe feel that we're in a
(12:07):
comfortable place, but still,there's high risks. Are high
risks. So, yes, yes, Florida,hurricanes, wildfire areas,
Kevin Davis (12:17):
tornadoes and things in Texas. I mean, you
have a lot of things going on,but there's also part two, a
couple things we talked aboutearlier in the year. We talked
about the weather, the secondthing we talked about with a
tariffs. The tariffs was a thingthat we were worried about,
because now you have inflationand a cost to repairing place.
That was, that is the secondarea that we were concerned
(12:40):
about. But guess what happenedis, is that we haven't really
seen those issues yet. You know,we haven't. We haven't seen the
impact of of inflation in termsof rebuilding
Robert Nordlund (12:55):
right now. Is that, because rebuilding takes
longer, it's going to take amulti year process, or we're
buying refrigerators and roofingmaterial that were in warehouses
that haven't been purchased withtariff money, or facing tariffs?
Kevin Davis (13:12):
Yes, I would say probably both. In other words,
also too. You know, as society,we get used to hearing tariff,
tariff, tariff, tariff, tariff,and things are going up, and
we've got ignored it ashumanity. You know, we go, we
still go shopping. We go, Ah,man, I can't push costs more
money gas. Yeah, exactly. And soI think from insurance point of
(13:34):
view, they they're spendingmoney, but they that it's not
impacting the bottom line rightnow, the tariff hasn't impact
enough where insurers aresaying, uh oh, we got to back
away. We have a problem here. Soagain, I thought that would be a
major problem about six monthsago, but it has not been. And
(13:55):
from an insurance point of view,it's been a problem for me
because I'm spending more moneynow that did before.
Robert Nordlund (14:01):
Yeah, well, that's a good point, because you
and I, if we need, if I need anew refrigerator, I'll buy a new
refrigerator. Period. I justwill. But if you're buying a
house, yeah, the lumber is goingto be a little more expensive,
roofing materials, therefrigerator, the washer, dryer,
is going to be a little moreexpensive. But if you want to
buy a house, you're probablygoing to buy a house. Is that
kind of what boils down to,
Kevin Davis (14:22):
that's what boils down to. But also, too is that
you had those fires. You hadfires years ago, but it takes
time to build and put, you know,new refrigerators in and new
garages. I mean, it just takestime. And so the things that we
thought, I thought about, thethree things I thought would
happen that would reallyincreased rates. Number one,
(14:42):
where the weather relatedstorms? Number two, was it
tariffs? And the third area is,I was concerned about where that
they these legal claims, theseliability claims, the nuclear
verdicts. Yeah, in fact. We gotto a point where we changed the
name from nuclear verdict tothermonuclear
Robert Nordlund (15:04):
verdicts.
You're making up bigger andbigger, scarier names. Yeah,
okay, thermal, vertical. Yournuclear is what 10 million or
more, and thermonuclear is 100million or more. Yikes. That's
inflation. That matters. I Okay,all right. So what has happened
with those?
Kevin Davis (15:26):
So now let's look at this. You know, do you
remember the coffee? The ladywho at the McDonald's? Oh, yes,
built the coffee. Yeah, longtime ago, right? Long time ago,
right? And that was a, that wasa $3 million verdict, right? And
we thought this is the worstthing ever. Besides, I can't
believe it's been $3 millionyeah. Well, you and I remember
it, yes. Now, a couple of yearsago, Starbucks had a had an
(15:48):
ineffective lid on top, and itburned somebody. And with $30
million I
Robert Nordlund (15:52):
don't know about it, which is amazing,
because everyone heard aboutthat $3 million one, how long
was that 10 years ago, or 10years ago? Is that 10 years ago?
Okay? And yet there was a 30million similar and it got lost
in the wash. Of other news
Kevin Davis (16:07):
got lost in the wash. Yeah. Hoa, wow. So that's
what nuclear verdicts have done.
So all of a sudden we do is gofrom nuclear verdicts a
thermonuclear verdict, which,now you've seen a billion dollar
claim. Then the billion dollarclaim was Johnson, Johnson and
Monsanto data, $2 billion claimsout there,
Robert Nordlund (16:25):
Champlain tower south, that ended up being just
about a
Kevin Davis (16:29):
billion. It was about a billion dollars. Yes,
yes, yeah, that's a good point.
So we never talked aboutbillions of dollars before. We
never talked about hundreds ofmillion dollars before. That's
still scary. So we spend moremoney this year, is paying these
large claims that we've had in along time. But again, insurers
are not saying that, you knowwhat we're going to increase is
(16:50):
not going to happen. Butoverall, they're looking at
different parts, differentsegments, and saying, We are
concerned here, and what we needto do is to underwrite better,
look at accounts better, and bemore efficient at the way we
handle the business. And that'swhy, right now, they are able to
(17:11):
do what we're saying. They'redoing, be stable. I
Robert Nordlund (17:17):
like that.
Okay, we've stated thesituation. We've got three
issues, the weather related, andit is what it is, but so far, so
I don't want to say so far sogood, but we haven't lost our
pants. So far this year, tariffssounded bad. All that 20% 50% we
felt earlier this year like thesky was falling and hasn't legal
(17:38):
verdicts are big getting bigger.
So yeah, those are all going on,but I'm looking at the clock
here. It's time to take a quickbreak, and I want to come back
and just finished withunderwriting better. So what can
individual associations dodifferently to articulate that
(18:01):
they're maybe on the better sideof things, right, separate
themselves from the averageAssociation. Okay, so let's take
a quick break. It's time to hearfrom one of our general
sponsors, after which we'll beback with more common sense for
common areas.
Paige Daniels (18:15):
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(18:36):
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and
Robert Nordlund (18:47):
we're back.
Okay? We talked about kind ofindustry in big picture. Now,
Kevin, can you guide us throughwhat can board members do about
their association? You talkedabout underwriters needing to
underwrite a little smarter, soasking more questions, and we
clearly want our audience to beon the positive side of that.
(19:07):
How can they respond? Well, sothey become maybe a low risk or
a favored account.
Kevin Davis (19:16):
First of all, there's certain things you we
have to live with. If you livein an older building, it's an
older building. It's not reallymuch you get. You can't bring
into the old a new building,right? If you live in a weather
prone area, guess what? You livein a weather prone area, there's
not much you can do about that.
Another area that's created aproblem is the crime area. If a
lot of crime in your area, youknow certain things, you know
(19:38):
you can't do anything about andyou will be dinged for those
things
Robert Nordlund (19:44):
and location, if you're, I know, on a lake,
then you have boats, you have adock, and there are hazards
related to being
Kevin Davis (19:56):
water. Exactly Okay, so automatically, expect
to be dinged. Looking for thingsthat you have no control over.
Robert Nordlund (20:02):
Yeah, the hazards don't just plain exist
because they're playing well.
That may be why you bought intothat association. Because you
wanted to be waterfront. Youwanted that grand look of that
older building. There's
Kevin Davis (20:14):
classic view in a area of fire from you know, you
may want to be a Lake Arrowheador Big Bear, or certain areas
where it's beautiful. But guesswhat? You know you choose to
live there, or you may want tobuy an older place because you
can afford it. Those things youget dinged for, your goal is to
do this is not to be dinged asmuch as as the association down
(20:36):
the street. That's your goal.
You know I'm going to be dingedbecause my buildings over 25
years old. Okay, but guess what?
That one down the street there,they gonna be ding, you know,
plus 10% well, I might be ding,plus 5% okay, so that's what we
want to do right now. We want totalk to the associations and
say, your job is to say ourassociation is a little bit
(20:59):
better, okay, than the oneacross the street. Because,
again, as insuranceprofessionals, we're not going
to we're going to look at allthe associations in particular
area and say, I want to quote, Iwant to quote, I want to quote.
So when they knock on your door,that agent knocks on your door
and says, Guess what? I want toquote it. You wouldn't say that.
Guess what? We're doing thesethings to make sure we're better
(21:19):
than the one down the street,and now my eye is going to get
big, because you're the one Iwant to
Robert Nordlund (21:24):
write, yeah, because you're going to be a
good account, an easy account, Ican maybe soften the price get
you and not have a lot ofclaims.
Kevin Davis (21:32):
Yes, exactly good, especially today, because
there's more supply than it wasbefore. So before there was more
demand and supply. We're in aworld now where there's more
supply, there's more this ismuch supplies as demand. It's
about equal right now, and therewill become a time where to be
more supply than demand, and youwant to be ready as an
association.
Robert Nordlund (21:53):
Got it. Okay, so how do they separate
yourself? How? What is that listthat they can. Have to say,
Okay, this is
Kevin Davis (22:03):
let's, let's go through our basics with the
board's responsive. You know, Ialways say start with the board.
Responsibility is to collectassessments, maintain the
property, enforce the rules.
Okay? If they do those threethings, guess what? They're
gonna be a better Associationthan any association out there
this doing their job properly,effectively, they will be a
(22:25):
better risk than the ones thatare next door, the ones that are
cross anybody else, because,simple as that,
Robert Nordlund (22:35):
Kevin, you're making me think about love
languages. My wife's lovelanguage is quality time doesn't
matter if I give her a nicegift, she says I'm a lucky man,
because she doesn't lovejewelry, but she likes quality
time. So if I think I'm scoringpoints by buying her something,
she smiles and knows thatdoesn't really make a
(22:58):
difference. So what you'retalking about is speaking the
language of the insurancecompanies. And the language of
the insurance companies is,maintain the property, collect
the money that you need tocollect and enforce the rules.
That's their love language. Youwant to speak to them on those
Kevin Davis (23:12):
terms. Speak to them on their terms. Because as
we talk to them about thosethree things, then all of a
sudden, the underwriter or thebroker, or wherever you're
dealing business with, they cango back to the insurance
provider and say, Guess what?
They're doing their job. Becausethey're a specialist, they're
focused in on those things. Soin other words, you've
maintained the ability. We wantto see your maintenance
(23:33):
schedule. We're going to seeyour maintenance policy. Okay?
We want to make sure you'redoing the things that you said
you'll be doing, but you showthem up front. We have a
maintenance policy. This is ourmaintenance schedule.
Robert Nordlund (23:46):
And we're talking about maintenance chart,
where we vacuum the hallwaysonce a week, we clean the
gutters once a month. Welubricate the something once a
month, whatever it is you have,okay, cool.
Kevin Davis (23:59):
You having proof, so you get you from a financial
point of view, you're saying wehave a reserve study. And guess
what, we're following a reservestudy. We're funding for the
reserves, funding it, you know,which is so you have to worry
about, you know, us, you know,coming back and having a
liability claim. Because, guesswhat, we haven't fund the
reserve.
Robert Nordlund (24:18):
Yeah, and that gets into collecting the cash,
because you need to collect thecash that the association
fundamentally needs. If you gotbills, you need to collect the
cash so you can pay the bills.
Kevin Davis (24:28):
Okay? And we're enforcing the rules of the
association, because we'reforcing the rules Association,
guess what? We're not going tobe sued later on as an insurance
you know, as insuranceprofessional, what I'm worrying
about is a a property loss. Thatmeans, you know the roof is
leaking. You know you have waterdamage claims. You know we
(24:48):
worried about that. You knowwe're at place being on fire,
okay? Worry about the liabilityclaims, a slip and fall, the
loose railings. You know theydidn't trim the trees over the
stop sign. Sign, oh, that's acaution sign. So we're worried
about life. Those are thingswe're worried about. If you're
saying we have those two thingsunder control, and we're not,
(25:09):
you know, you don't have toworry about those two things.
Guess what? You're gonna looklike a better risk than somebody
who say, Oh, well, yeah, we havea maintenance contract. We have
a maintenance agreement and themaintenance person we haven't
again, it is about doing thebest job you can do any
(25:30):
association maintaining it. Now,here's, here's another area that
we, you and I love talkingabout, and that is the attitude
and associations. You know,because the attitude helps you
to do a better job. There'ssomething out there, new word
that we haven't talked aboutyet, called Social pessimism.
Okay, that's that's reallycreating through society, and
(25:55):
you can feel it. You go toplaces, and we just pessimists,
and we just don't have thatfaith and trust in things that
social pessimism is creating aproblem for community
associations, because you go tomeetings and you're pessimistic.
They didn't get lack trust,
Robert Nordlund (26:11):
complaining about the board. They botched
the election. We have to redothe election. We didn't have a
quorum for the annual meeting.
We got to do that again,
Kevin Davis (26:20):
and then you can't get things done. You can't
enforce the rules, you can'tmaintain it, and you can't
collect this special assessmentyou may need for the roof, for
whatever you need. So that'sagain, from a community
association point of view.
You're in a great shape tohandle insurance, 2026 because
right now it's stable. We crossthe Rubicon is stable, and to
(26:42):
the point where again, and we'lltalk again another six months,
maybe in first quarter, you'llprobably see rate decreases in
about six months. So we'll talkabout that.
Robert Nordlund (26:54):
We, we may hold you to that. Yeah,
Kevin Davis (26:56):
okay, yeah, yeah.
You notice this time I'd like togive a disclaimer. Last time I
gave a disclaimer, okay, well, Ifeel more comfortable today than
I ever did in terms of whatwe're looking at for next year.
Robert Nordlund (27:08):
Well, you're my insurance friend, so of course
you're going to have adisclaimer, only of this, only
of that, but I like what you'resaying, because now my brain is
thinking of my firstcondominium. First condominium
had overhanging trees. And sotree trimming is not just
esthetics. Tree Trimmingminimizes the fire hazard. It
(27:28):
minimizes the damage during awindstorm to the roof. There's
all these things that you can doto say we are doing these
things, and I can start to seethe insurance agent smile
exactly these little things thatmatter, speaking their love
language and saying we are. Wehave a reserve study. We updated
(27:50):
it, we and now look at, look atour budget. We are funding per
the amount that's recommended inthe reserve. Say all these kinds
of things. Our landscaper, weincrease landscaping from, I
don't know, couple 1000 a month,to 2500 a month, because they
now, once a month, clear theperimeter vegetation. You know,
just those kinds of things. Isthat that's what you're talking
(28:12):
about,
Kevin Davis (28:12):
but it's so important. Because, again, why
is that important? The weatherarea. There's two areas that
we're concerned about weather,but you may live in an area
there's no weather damage, butwe all worry about liability
claims. The liability claims arethe ones where that we used to
see one to $2 million claims.
Now we worried about nuclearverdicts. We're not worried
about a thermonuclear verdict ina condominium. Thank you. I'm
(28:34):
glad to know that. But what arewe worried about? Really? We
worried about their 1.3 millionlawyers out there, 1.3 million
lawyers, about 30,000 everyyear. Come into that. Come into
it, come into and they want tomake money. And what they're
doing now is specializing in acertain area, and as it becomes
specialist, guess what they'redoing? They're fine tuning their
(28:57):
skill set. First of all, whatthey do is get a copy of
insurance policy, and they'lllook at your insurance policy
say, Okay, you have a milliondollars here, a $5 million here,
$10 million here. Well, guesswhat we're going to we're going
to sue for $10 million whateverlimit you have on the policy,
I'm going to sue you for it.
Okay, so they're being smartenough to say, this is what
(29:19):
we're going to do. And one morething they're doing, Robert, and
this is the thing that scaresus, insurance more than anything
else. You a new lawyer, you putyour single outside, you go to a
community association flyingout. They didn't trim the trees,
and it's blocking the stop signor yield sign, and a person runs
through it, and they get it,gets hurt. And then you do more
(29:41):
research and find out that, wow,guess what? It's not the first
person. There's a third ofpersons, a lot of people here
who had gotten hurt because theyfailed to trim that tree. And
union order said, Guess what?
You got to trim that tree. Sonow all of a sudden, I'm a new
lawyer. I could make a ton ofmoney off of here, but I don't
have resources. I don't haveanybody on my hand. Am. So now
what the lawyers are doing isgoing out and getting investors.
(30:02):
Oh, you're saying, guess what?
Yes, I have a $10 millionlawsuit against this association
because they failed the trim thetree. They were notified they
should have trimmed tree, andpeople were damaged and hurt by
it. So now I know I get $10million you give me $2 million I
can hire people to do it, andyou'll get $4 million back.
(30:25):
Yeah, 40% contingency on that.
But you get the investor willget money. I'll get some money,
you'll get some money. And guesswhat? We're gonna clean up. So
you got a brand new, you know,fresh out on law school. You
know, got his law degree. Heputs out. He happened to live in
an association, and he sees it,and he can make a killing just
by going to investors, thirdparty investors, and saying,
(30:46):
back me up on this thing. Andthat's what's hurting us from
the insurance point of viewright now, there's third party
investors
Robert Nordlund (30:55):
got it. Well, gee, I have mixed feelings. Now
I like to end episodes on a highnote. And you got me, you got me
with my arms all crossed here, Igot all nervous. We know our
audience. We know running anassociation is hard. It's hard
to be perfect, and there aregoing to be things that you do
wrong. And so that's why cultureis so important that you're
trying hard. You're you talkabout lowering the temperature,
(31:20):
increasing the community aspectof it, and so you don't have,
well, you're always going tohave this 3% or so that are just
always unhappy. But tominimizing that, getting more
people on your side, andstacking well, just like what
you talked about, stack the oddsin your favor. So okay,
Kevin Davis (31:43):
again, what we're talking about with social
pessimism is more about Guesswhat? You understand that's out
there, and as a board, that'snot us. Okay? We're going to be
excited, we're going to befocused, we're going to do our
job, we're going to force therules, we'll maintain the
association, and we're going tocollect assessments, and that's
our job. If you do that, wedon't care about the attitude of
(32:07):
Association. Our attitude has tobe the right attitude. And now,
when an insurance agent comes toyour door, you're going to tell
them that, and the first thingyou're gonna say, Listen, are we
up for discount this year? Andhear what they have to say. They
may say, You know what? I'mgoing to see if we can get a
discount.
Robert Nordlund (32:22):
I like that. I like that good positive. Keep
your chin up and thinkpositively. I like Okay, I like
that. We can, we can do thatnow. So I like that. Yes, Kevin,
hey, as always, it's greattalking with you. You take us to
highs, you take us to lows, youtake us around circles. But I
come up learning somethingtoday. I learned the love
language for insurancecompanies. So that's cool for
(32:45):
me, I'm going to get that intothe show notes. So any closing
thoughts to add at this timeagain,
Kevin Davis (32:51):
right now, you were the driver seat that the
associations next year will bein a driver's seat. They needed,
needed to ask for a discount,but they have to show they can
deserve a discount.
Robert Nordlund (33:02):
I like that we've given some motivation.
Well, we hope you learned someHOA insights from our discussion
today that helps you bringcommon sense to your common
areas. Thank you for joining ustoday. We look forward to
bringing many more episodes toyou, week after week after week.
We're going to be here, andit'll be great to have you join
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Let's go through our basics with the board
(00:01):
responsive. You know, I alwayssay start with the board.
Responsibility is to collectassessments, maintain the
property, enforce the rules. Ifthey do those three things,
guess what, they're gonna be abetter Association than any
association out there this,doing their job properly,
effectively. They will be abetter risk than the ones that
(00:25):
are next door, the ones that areacross
Announcer (00:27):
HOA Insights is brought to you by five companies
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Association Association Reserves, Community
Financials, Kevin DavisInsurance Services, and the
Inspectors of Election. You'llfind links to their website and
social media in the show notes.
Robert Nordlund (00:52):
Hi I am Robert Nordlund of Association Reserves
Kevin Davis (00:52):
And I am Kevin Davis of Kevin Davis Insurance
Services, and this is HOAInisghts where we promote
Common Sense...
Robert Nordlund (00:52):
for Common Areas. Well, welcome to episode
134 where we're again speakingwith insurance expert and
regular co host Kevin Davis.
We're recording this in late2025 trying to get our arms
around what has gone on withinsurance this year. Higher
insurance premiums have beenheadline issues all year, and
our regular listeners may thinkthe title of this episode sounds
(01:12):
familiar, and it is early in2025 we presented episode 92 to
give you an understanding ofwhat economic forces were at
play, big economic forces, andlikely what was going to happen.
And a reminder, Kevin and I bothlive in the metropolitan Los
Angeles area, and that episodewas recorded shortly after the
devastating wildfires here thatmade us both prepared to
(01:36):
evacuate. So that's sensitive toour hearts. Friends of ours lost
their homes, and we thenrecorded another episode, number
107 talking about risinginsurance rates here in 2025 so
we'll be reflecting back a biton what went on this past year,
so you'll have a betterunderstanding of the dynamic
forces affecting insurance atthis time and into 2026 Well,
(01:58):
last week's episode 133 featuredan enlightening interview with
Curtis Peterson of theinspectors of election. I was
reminded that elections are aspecial event at your
association. They'recomplicated, and having an
expert in these multi monthprojects can be a wise decision.
There's no reason to tough itout and risk getting some detail
(02:21):
wrong that unravels the wholeprocess, undermining the trust
you're trying to build in theassociation, and possibly making
you have to do the election allover again. It's much more of a
minefield than I hadappreciated. So if you missed
that episode, or actually anyother prior episode, you can
take a moment and listen fromour podcast website, Hoa
(02:45):
insights.org or watch on ourYouTube channel, but better yet,
subscribe from any of the majorpodcast platforms so you don't
miss any future episodes. Well,those of you watching on YouTube
can see the HOA insights mugsthat Kevin and I both have kind
of fun puts a smile on my face.
(03:06):
I got it from the merch store,and you can browse through that
from our Hoa insights.orgwebsite, or the link in the show
notes, you'll find we have somegreat free items, like board
member zoom backgrounds and somespecialty items for sale, like
mugs. So go the merch store,download a free zoom background,
take a moment, look around, findthe mug you'd like, and if
(03:29):
you're the 10th person to emailme at podcast, at reserve
study.com mentioning episode134, mug giveaway, we'll ship
that mug 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 always
contact us at 805-203-3130, oremail us at podcast at reserve,
(03:55):
study.com but today's episodecomes straight from Kevin. He
wanted to convey some thoughtsto you in order to give you an
advantage in understandingwhat's going on in this hot
topic of insurance. So Kevin,tell me the realities of what
you're seeing here in 2025 hasit gotten better or worse? Well,
got
Kevin Davis (04:17):
good news for you and everybody was listening. We
have crossed to Rubicon. Ah,nice. Isn't that great? The
first thing comes out my mouthis that we officially crossed to
Rubicon. Okay. Now what's thatmean? Is that we can tell when
insurance has became stable isby their reinsurance market. Now
(04:38):
we talked in April, I said, waitunĆ’til July the first, because
July 1 where the reinsurers gettogether and kind of determine
what the rates should look likefor the next six months. Okay,
so my first question is, what'sthe reinsurer right? Yeah. Okay,
the reinsurers are the peoplewho insure the insurance
companies. So insurancecompanies take. Risk in
(05:00):
insurance company can say, Guesswhat? This is way too much for
me to handle, so I'm going topush it out to other companies.
Got it so you got reinsurancecompanies out there whose one
job is to take on risks thatinsurance companies want to
offset a little bit.
Robert Nordlund (05:14):
Okay? So if State Farm is insuring your
house, state and somethinghappens to your house, State
Farm is going to be the first topay up, but they have a backup
plan. They've got someone elsethat can help them if their
losses get too big, exactly, orokay, what
Kevin Davis (05:29):
they may do is reinsure all their wildfire area
or earthquake. They may say, Idon't want to do that at all,
but I'll take the premium andthis one part of it is saying,
I'm going to push it over tosomebody else, let them take
care of it. Got it. Okay. Okay.
So what happens in July thefirst comes is that
historically, rates at Januarythe first two, January the first
the new rates come out, and theysay, Guess what? We want more
(05:51):
because we don't have enoughmoney. Okay, without we're
losing money. But this is whathappened this year, is that they
didn't say anything. It was veryquiet out there. So when it's
quiet, that means that, hmm,it's flattened out. It's
flattened out exactly, exactly.
It's flat now, but it's morethan flat now. They start to
(06:12):
panic a little bit, because theystart to lose premium. So
instead of charging more moneyand it flattens out, what
happens is you start to losebecause before you're getting
10% more, 20% more, you'regetting money, more money, but
if it flattens out, that meansthe State Farm will say, Guess
what, we can keep more of thatmoney now. Okay, okay, and you
(06:33):
know what, we're not losing muchmoney, because, guess what, we
raised the rate so high on ourproperty that we're making
enough money, so we're going tokeep more of that. And so you
have to reinsure and say, well,we want more of it. And then you
got investors out there, youknow, the pension funds and all
those, you know, they're saying,guess what? You're making money
in insurance now. And so all ofa sudden, that allows us to
(06:57):
cross the Rubicon,
Robert Nordlund (06:58):
okay? Because insurance, fundamentally, is a
business, and you got to bemaking money, or you're going to
step out of the state, or you'regoing to raise your premiums or
something. Yeah, okay,
Kevin Davis (07:09):
so and what they've done over the past several
years, a couple things. Theyraise rates, they lower the
coverage and increasedeductibles. So over the past
two and a half years, guess whathappened is that they started
making more money, and we makemore money. Guess who raises
their hand and say, I want to bea part of that. You know,
investors will be part of it.
The companies who said, Well, Iwant to make more money also. So
(07:32):
one thing we talked about beforethere was more demand, there
were supply. That was a wholething, there's more demand and
supply, the supply has gottenbigger. It hasn't gotten great,
but it's gotten bigger to thepoint where it's kind of
flattening out, which bringsstability to the marketplace,
Robert Nordlund (07:53):
because when there's more demand than supply,
and if the suppliers are makingmoney, then other suppliers can
step in and say, Yes, I want apiece of that too. And then
takes us back to what highschool economics, where we learn
about supply and demand, and youwant them to be somewhat
(08:13):
balanced, not crazy, offset fromeach other. Yes.
Kevin Davis (08:16):
And another thing that we when we talked about it
in January and early, past fewyears, insurance company, for
every dollar they took in, theypaid out $1.05 you can't that
you can't last. And then lastyear, for every dollar they took
in, they paid 96 cents. Okay, sothat's okay. This year, year to
date, is about 94 cents. So nowstability has entered the
(08:40):
marketplace.
Robert Nordlund (08:41):
Okay? So we're going to have listeners saying,
Okay, does that mean my premiumsare going to go down by a couple
points?
Kevin Davis (08:47):
Here's the issue, though, even though stability is
there, there's some thingshappen this year that really
scared us. Number one is thefires. Okay? That was a $40
billion insurable event. Yeah,
Robert Nordlund (09:02):
that insured the entire industry. And as Los
Angeles homeowners, you and I,that's shook us, yes.
Kevin Davis (09:11):
I mean, for example, last year, the whole
year was 130 $7 billion fire.
And you know, for those kind ofthings, for hurricanes and wind,
it was a 130 $7 billion whatevent? Crazy large. Crazy large
was $40 billion okay, and then,but since then, we had, you
know, hurricanes. We had windtornado. We had a huge but
(09:33):
tornado, the first four or fivemonths of this year was a
disaster. I mean, we spent moremoney this year. In fact, we
expect to spend about $150billion in weather related
claims this year, last year, oneto 37 billion.
Robert Nordlund (09:50):
So it's already above last year. Yeah, are you
better last year at the timethat we're recording, this is
already above last year? Okay?
Kevin Davis (09:56):
Not yet, but they expect it to be okay. Expected
to be it. But. Right now. Again,we spend 80 billion right now.
So I mean, the first six months,about $80 billion in losses
from, you know, cat catastrophicsituations. Meaning, what I'm
saying is that it hasn'tchanged. It's more than it was
last year. But as we saw thatwhen July came, July 1 came in,
(10:19):
they knew these numbers. WhenJuly 1 came in, they didn't say
we want more. Normally, theysaid We want more. They didn't
say now they are going to wantmore, more money in areas that
are chasing you prone. So if youlive near wildfires or
tornadoes, they want they willget more rate. They will get
more rate.
Robert Nordlund (10:37):
So it's going to be locally dependent. So
that's going to be wildfires.
What? California, Arizona,Colorado, Washington,
Kevin Davis (10:46):
but this is wind, all kind of anything, weather
related, let's say weatherrelated. So weather related,
we'll still get there. Probablystill have some rate in there,
but not significantly. Becauseagain, what happens is, when you
increase that property for somuch and get it's been quiet for
the past, you know, six, threeor four or five months, you
(11:08):
know, they expected majorhurricanes, and it's been quiet.
And so what happens is thatquietness, it kind of brings
that flattens everything out.
You know, there's, there'scomfort. For the first time in
insurance world. We feeling
Robert Nordlund (11:22):
comfortable. I was supposed to be at a
conference last month inSarasota, Florida, and my
schedule got complicated. Iended up not going, but I was
kind of interested in goingbecause it got pummeled last
year by a hurricane. I wanted tosee what it looked like 12
months afterwards, what recoverylooks like, because I've driven
(11:44):
through the Palisades area herein Los Angeles, and it's just
devastating. Yeah, devastating.
And I was wondering how a localarea responds to a hurricane,
because that's different thanresponding to a fire. But losses
are losses, okay, so we had sometremendous losses earlier this
year. The reinsurers are sayingwe feel that we're in a
(12:07):
comfortable place, but still,there's high risks. Are high
risks. So, yes, yes, Florida,hurricanes, wildfire areas,
Kevin Davis (12:17):
tornadoes and things in Texas. I mean, you
have a lot of things going on,but there's also part two, a
couple things we talked aboutearlier in the year. We talked
about the weather, the secondthing we talked about with a
tariffs. The tariffs was a thingthat we were worried about,
because now you have inflationand a cost to repairing place.
That was, that is the secondarea that we were concerned
(12:40):
about. But guess what happenedis, is that we haven't really
seen those issues yet. You know,we haven't. We haven't seen the
impact of of inflation in termsof rebuilding
Robert Nordlund (12:55):
right now. Is that, because rebuilding takes
longer, it's going to take amulti year process, or we're
buying refrigerators and roofingmaterial that were in warehouses
that haven't been purchased withtariff money, or facing tariffs?
Kevin Davis (13:12):
Yes, I would say probably both. In other words,
also too. You know, as society,we get used to hearing tariff,
tariff, tariff, tariff, tariff,and things are going up, and
we've got ignored it ashumanity. You know, we go, we
still go shopping. We go, Ah,man, I can't push costs more
money gas. Yeah, exactly. And soI think from insurance point of
(13:34):
view, they they're spendingmoney, but they that it's not
impacting the bottom line rightnow, the tariff hasn't impact
enough where insurers aresaying, uh oh, we got to back
away. We have a problem here. Soagain, I thought that would be a
major problem about six monthsago, but it has not been. And
(13:55):
from an insurance point of view,it's been a problem for me
because I'm spending more moneynow that did before.
Robert Nordlund (14:01):
Yeah, well, that's a good point, because you
and I, if we need, if I need anew refrigerator, I'll buy a new
refrigerator. Period. I justwill. But if you're buying a
house, yeah, the lumber is goingto be a little more expensive,
roofing materials, therefrigerator, the washer, dryer,
is going to be a little moreexpensive. But if you want to
buy a house, you're probablygoing to buy a house. Is that
kind of what boils down to,
Kevin Davis (14:22):
that's what boils down to. But also, too is that
you had those fires. You hadfires years ago, but it takes
time to build and put, you know,new refrigerators in and new
garages. I mean, it just takestime. And so the things that we
thought, I thought about, thethree things I thought would
happen that would reallyincreased rates. Number one,
(14:42):
where the weather relatedstorms? Number two, was it
tariffs? And the third area is,I was concerned about where that
they these legal claims, theseliability claims, the nuclear
verdicts. Yeah, in fact. We gotto a point where we changed the
name from nuclear verdict tothermonuclear
Robert Nordlund (15:04):
verdicts.
You're making up bigger andbigger, scarier names. Yeah,
okay, thermal, vertical. Yournuclear is what 10 million or
more, and thermonuclear is 100million or more. Yikes. That's
inflation. That matters. I Okay,all right. So what has happened
with those?
Kevin Davis (15:26):
So now let's look at this. You know, do you
remember the coffee? The ladywho at the McDonald's? Oh, yes,
built the coffee. Yeah, longtime ago, right? Long time ago,
right? And that was a, that wasa $3 million verdict, right? And
we thought this is the worstthing ever. Besides, I can't
believe it's been $3 millionyeah. Well, you and I remember
it, yes. Now, a couple of yearsago, Starbucks had a had an
(15:48):
ineffective lid on top, and itburned somebody. And with $30
million I
Robert Nordlund (15:52):
don't know about it, which is amazing,
because everyone heard aboutthat $3 million one, how long
was that 10 years ago, or 10years ago? Is that 10 years ago?
Okay? And yet there was a 30million similar and it got lost
in the wash. Of other news
Kevin Davis (16:07):
got lost in the wash. Yeah. Hoa, wow. So that's
what nuclear verdicts have done.
So all of a sudden we do is gofrom nuclear verdicts a
thermonuclear verdict, which,now you've seen a billion dollar
claim. Then the billion dollarclaim was Johnson, Johnson and
Monsanto data, $2 billion claimsout there,
Robert Nordlund (16:25):
Champlain tower south, that ended up being just
about a
Kevin Davis (16:29):
billion. It was about a billion dollars. Yes,
yes, yeah, that's a good point.
So we never talked aboutbillions of dollars before. We
never talked about hundreds ofmillion dollars before. That's
still scary. So we spend moremoney this year, is paying these
large claims that we've had in along time. But again, insurers
are not saying that, you knowwhat we're going to increase is
(16:50):
not going to happen. Butoverall, they're looking at
different parts, differentsegments, and saying, We are
concerned here, and what we needto do is to underwrite better,
look at accounts better, and bemore efficient at the way we
handle the business. And that'swhy, right now, they are able to
(17:11):
do what we're saying. They'redoing, be stable. I
Robert Nordlund (17:17):
like that.
Okay, we've stated thesituation. We've got three
issues, the weather related, andit is what it is, but so far, so
I don't want to say so far sogood, but we haven't lost our
pants. So far this year, tariffssounded bad. All that 20% 50% we
felt earlier this year like thesky was falling and hasn't legal
(17:38):
verdicts are big getting bigger.
So yeah, those are all going on,but I'm looking at the clock
here. It's time to take a quickbreak, and I want to come back
and just finished withunderwriting better. So what can
individual associations dodifferently to articulate that
(18:01):
they're maybe on the better sideof things, right, separate
themselves from the averageAssociation. Okay, so let's take
a quick break. It's time to hearfrom one of our general
sponsors, after which we'll beback with more common sense for
common areas.
Paige Daniels (18:15):
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(18:36):
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study.com to learn more and geta proposal for your association,
and
Robert Nordlund (18:47):
we're back.
Okay? We talked about kind ofindustry in big picture. Now,
Kevin, can you guide us throughwhat can board members do about
their association? You talkedabout underwriters needing to
underwrite a little smarter, soasking more questions, and we
clearly want our audience to beon the positive side of that.
(19:07):
How can they respond? Well, sothey become maybe a low risk or
a favored account.
Kevin Davis (19:16):
First of all, there's certain things you we
have to live with. If you livein an older building, it's an
older building. It's not reallymuch you get. You can't bring
into the old a new building,right? If you live in a weather
prone area, guess what? You livein a weather prone area, there's
not much you can do about that.
Another area that's created aproblem is the crime area. If a
lot of crime in your area, youknow certain things, you know
(19:38):
you can't do anything about andyou will be dinged for those
things
Robert Nordlund (19:44):
and location, if you're, I know, on a lake,
then you have boats, you have adock, and there are hazards
related to being
Kevin Davis (19:56):
water. Exactly Okay, so automatically, expect
to be dinged. Looking for thingsthat you have no control over.
Robert Nordlund (20:02):
Yeah, the hazards don't just plain exist
because they're playing well.
That may be why you bought intothat association. Because you
wanted to be waterfront. Youwanted that grand look of that
older building. There's
Kevin Davis (20:14):
classic view in a area of fire from you know, you
may want to be a Lake Arrowheador Big Bear, or certain areas
where it's beautiful. But guesswhat? You know you choose to
live there, or you may want tobuy an older place because you
can afford it. Those things youget dinged for, your goal is to
do this is not to be dinged asmuch as as the association down
(20:36):
the street. That's your goal.
You know I'm going to be dingedbecause my buildings over 25
years old. Okay, but guess what?
That one down the street there,they gonna be ding, you know,
plus 10% well, I might be ding,plus 5% okay, so that's what we
want to do right now. We want totalk to the associations and
say, your job is to say ourassociation is a little bit
(20:59):
better, okay, than the oneacross the street. Because,
again, as insuranceprofessionals, we're not going
to we're going to look at allthe associations in particular
area and say, I want to quote, Iwant to quote, I want to quote.
So when they knock on your door,that agent knocks on your door
and says, Guess what? I want toquote it. You wouldn't say that.
Guess what? We're doing thesethings to make sure we're better
(21:19):
than the one down the street,and now my eye is going to get
big, because you're the one Iwant to
Robert Nordlund (21:24):
write, yeah, because you're going to be a
good account, an easy account, Ican maybe soften the price get
you and not have a lot ofclaims.
Kevin Davis (21:32):
Yes, exactly good, especially today, because
there's more supply than it wasbefore. So before there was more
demand and supply. We're in aworld now where there's more
supply, there's more this ismuch supplies as demand. It's
about equal right now, and therewill become a time where to be
more supply than demand, and youwant to be ready as an
association.
Robert Nordlund (21:53):
Got it. Okay, so how do they separate
yourself? How? What is that listthat they can. Have to say,
Okay, this is
Kevin Davis (22:03):
let's, let's go through our basics with the
board's responsive. You know, Ialways say start with the board.
Responsibility is to collectassessments, maintain the
property, enforce the rules.
Okay? If they do those threethings, guess what? They're
gonna be a better Associationthan any association out there
this doing their job properly,effectively, they will be a
(22:25):
better risk than the ones thatare next door, the ones that are
cross anybody else, because,simple as that,
Robert Nordlund (22:35):
Kevin, you're making me think about love
languages. My wife's lovelanguage is quality time doesn't
matter if I give her a nicegift, she says I'm a lucky man,
because she doesn't lovejewelry, but she likes quality
time. So if I think I'm scoringpoints by buying her something,
she smiles and knows thatdoesn't really make a
(22:58):
difference. So what you'retalking about is speaking the
language of the insurancecompanies. And the language of
the insurance companies is,maintain the property, collect
the money that you need tocollect and enforce the rules.
That's their love language. Youwant to speak to them on those
Kevin Davis (23:12):
terms. Speak to them on their terms. Because as
we talk to them about thosethree things, then all of a
sudden, the underwriter or thebroker, or wherever you're
dealing business with, they cango back to the insurance
provider and say, Guess what?
They're doing their job. Becausethey're a specialist, they're
focused in on those things. Soin other words, you've
maintained the ability. We wantto see your maintenance
(23:33):
schedule. We're going to seeyour maintenance policy. Okay?
We want to make sure you'redoing the things that you said
you'll be doing, but you showthem up front. We have a
maintenance policy. This is ourmaintenance schedule.
Robert Nordlund (23:46):
And we're talking about maintenance chart,
where we vacuum the hallwaysonce a week, we clean the
gutters once a month. Welubricate the something once a
month, whatever it is you have,okay, cool.
Kevin Davis (23:59):
You having proof, so you get you from a financial
point of view, you're saying wehave a reserve study. And guess
what, we're following a reservestudy. We're funding for the
reserves, funding it, you know,which is so you have to worry
about, you know, us, you know,coming back and having a
liability claim. Because, guesswhat, we haven't fund the
reserve.
Robert Nordlund (24:18):
Yeah, and that gets into collecting the cash,
because you need to collect thecash that the association
fundamentally needs. If you gotbills, you need to collect the
cash so you can pay the bills.
Kevin Davis (24:28):
Okay? And we're enforcing the rules of the
association, because we'reforcing the rules Association,
guess what? We're not going tobe sued later on as an insurance
you know, as insuranceprofessional, what I'm worrying
about is a a property loss. Thatmeans, you know the roof is
leaking. You know you have waterdamage claims. You know we
(24:48):
worried about that. You knowwe're at place being on fire,
okay? Worry about the liabilityclaims, a slip and fall, the
loose railings. You know theydidn't trim the trees over the
stop sign. Sign, oh, that's acaution sign. So we're worried
about life. Those are thingswe're worried about. If you're
saying we have those two thingsunder control, and we're not,
(25:09):
you know, you don't have toworry about those two things.
Guess what? You're gonna looklike a better risk than somebody
who say, Oh, well, yeah, we havea maintenance contract. We have
a maintenance agreement and themaintenance person we haven't
again, it is about doing thebest job you can do any
(25:30):
association maintaining it. Now,here's, here's another area that
we, you and I love talkingabout, and that is the attitude
and associations. You know,because the attitude helps you
to do a better job. There'ssomething out there, new word
that we haven't talked aboutyet, called Social pessimism.
Okay, that's that's reallycreating through society, and
(25:55):
you can feel it. You go toplaces, and we just pessimists,
and we just don't have thatfaith and trust in things that
social pessimism is creating aproblem for community
associations, because you go tomeetings and you're pessimistic.
They didn't get lack trust,
Robert Nordlund (26:11):
complaining about the board. They botched
the election. We have to redothe election. We didn't have a
quorum for the annual meeting.
We got to do that again,
Kevin Davis (26:20):
and then you can't get things done. You can't
enforce the rules, you can'tmaintain it, and you can't
collect this special assessmentyou may need for the roof, for
whatever you need. So that'sagain, from a community
association point of view.
You're in a great shape tohandle insurance, 2026 because
right now it's stable. We crossthe Rubicon is stable, and to
(26:42):
the point where again, and we'lltalk again another six months,
maybe in first quarter, you'llprobably see rate decreases in
about six months. So we'll talkabout that.
Robert Nordlund (26:54):
We, we may hold you to that. Yeah,
Kevin Davis (26:56):
okay, yeah, yeah.
You notice this time I'd like togive a disclaimer. Last time I
gave a disclaimer, okay, well, Ifeel more comfortable today than
I ever did in terms of whatwe're looking at for next year.
Robert Nordlund (27:08):
Well, you're my insurance friend, so of course
you're going to have adisclaimer, only of this, only
of that, but I like what you'resaying, because now my brain is
thinking of my firstcondominium. First condominium
had overhanging trees. And sotree trimming is not just
esthetics. Tree Trimmingminimizes the fire hazard. It
(27:28):
minimizes the damage during awindstorm to the roof. There's
all these things that you can doto say we are doing these
things, and I can start to seethe insurance agent smile
exactly these little things thatmatter, speaking their love
language and saying we are. Wehave a reserve study. We updated
(27:50):
it, we and now look at, look atour budget. We are funding per
the amount that's recommended inthe reserve. Say all these kinds
of things. Our landscaper, weincrease landscaping from, I
don't know, couple 1000 a month,to 2500 a month, because they
now, once a month, clear theperimeter vegetation. You know,
just those kinds of things. Isthat that's what you're talking
(28:12):
about,
Kevin Davis (28:12):
but it's so important. Because, again, why
is that important? The weatherarea. There's two areas that
we're concerned about weather,but you may live in an area
there's no weather damage, butwe all worry about liability
claims. The liability claims arethe ones where that we used to
see one to $2 million claims.
Now we worried about nuclearverdicts. We're not worried
about a thermonuclear verdict ina condominium. Thank you. I'm
(28:34):
glad to know that. But what arewe worried about? Really? We
worried about their 1.3 millionlawyers out there, 1.3 million
lawyers, about 30,000 everyyear. Come into that. Come into
it, come into and they want tomake money. And what they're
doing now is specializing in acertain area, and as it becomes
specialist, guess what they'redoing? They're fine tuning their
(28:57):
skill set. First of all, whatthey do is get a copy of
insurance policy, and they'lllook at your insurance policy
say, Okay, you have a milliondollars here, a $5 million here,
$10 million here. Well, guesswhat we're going to we're going
to sue for $10 million whateverlimit you have on the policy,
I'm going to sue you for it.
Okay, so they're being smartenough to say, this is what
(29:19):
we're going to do. And one morething they're doing, Robert, and
this is the thing that scaresus, insurance more than anything
else. You a new lawyer, you putyour single outside, you go to a
community association flyingout. They didn't trim the trees,
and it's blocking the stop signor yield sign, and a person runs
through it, and they get it,gets hurt. And then you do more
(29:41):
research and find out that, wow,guess what? It's not the first
person. There's a third ofpersons, a lot of people here
who had gotten hurt because theyfailed to trim that tree. And
union order said, Guess what?
You got to trim that tree. Sonow all of a sudden, I'm a new
lawyer. I could make a ton ofmoney off of here, but I don't
have resources. I don't haveanybody on my hand. Am. So now
what the lawyers are doing isgoing out and getting investors.
(30:02):
Oh, you're saying, guess what?
Yes, I have a $10 millionlawsuit against this association
because they failed the trim thetree. They were notified they
should have trimmed tree, andpeople were damaged and hurt by
it. So now I know I get $10million you give me $2 million I
can hire people to do it, andyou'll get $4 million back.
(30:25):
Yeah, 40% contingency on that.
But you get the investor willget money. I'll get some money,
you'll get some money. And guesswhat? We're gonna clean up. So
you got a brand new, you know,fresh out on law school. You
know, got his law degree. Heputs out. He happened to live in
an association, and he sees it,and he can make a killing just
by going to investors, thirdparty investors, and saying,
(30:46):
back me up on this thing. Andthat's what's hurting us from
the insurance point of viewright now, there's third party
investors
Robert Nordlund (30:55):
got it. Well, gee, I have mixed feelings. Now
I like to end episodes on a highnote. And you got me, you got me
with my arms all crossed here, Igot all nervous. We know our
audience. We know running anassociation is hard. It's hard
to be perfect, and there aregoing to be things that you do
wrong. And so that's why cultureis so important that you're
trying hard. You're you talkabout lowering the temperature,
(31:20):
increasing the community aspectof it, and so you don't have,
well, you're always going tohave this 3% or so that are just
always unhappy. But tominimizing that, getting more
people on your side, andstacking well, just like what
you talked about, stack the oddsin your favor. So okay,
Kevin Davis (31:43):
again, what we're talking about with social
pessimism is more about Guesswhat? You understand that's out
there, and as a board, that'snot us. Okay? We're going to be
excited, we're going to befocused, we're going to do our
job, we're going to force therules, we'll maintain the
association, and we're going tocollect assessments, and that's
our job. If you do that, wedon't care about the attitude of
(32:07):
Association. Our attitude has tobe the right attitude. And now,
when an insurance agent comes toyour door, you're going to tell
them that, and the first thingyou're gonna say, Listen, are we
up for discount this year? Andhear what they have to say. They
may say, You know what? I'mgoing to see if we can get a
discount.
Robert Nordlund (32:22):
I like that. I like that good positive. Keep
your chin up and thinkpositively. I like Okay, I like
that. We can, we can do thatnow. So I like that. Yes, Kevin,
hey, as always, it's greattalking with you. You take us to
highs, you take us to lows, youtake us around circles. But I
come up learning somethingtoday. I learned the love
language for insurancecompanies. So that's cool for
(32:45):
me, I'm going to get that intothe show notes. So any closing
thoughts to add at this timeagain,
Kevin Davis (32:51):
right now, you were the driver seat that the
associations next year will bein a driver's seat. They needed,
needed to ask for a discount,but they have to show they can
deserve a discount.
Robert Nordlund (33:02):
I like that we've given some motivation.
Well, we hope you learned someHOA insights from our discussion
today that helps you bringcommon sense to your common
areas. Thank you for joining ustoday. We look forward to
bringing many more episodes toyou, week after week after week.
We're going to be here, andit'll be great to have you join
us on a regular basis. So spreadthe word.
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(34:10):
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