When HOA managers decide to review or “shop out” the master insurance on their condo complex there are several pitfalls that they need to avoid. Below is a list of 5 mistakes a property manager will want to avoid when managing the master insurance of a condominium association.
1. They shop the master insurance out every single year. First, when done correctly, the shopping the insurance out is a time-consuming and tedious process for the property manager. Shopping out the insurance every year may help you get a good rate for a year or two. But, like in most businesses, your reputation is everything. If you gain a reputation of shopping out the insurance every single year, both agents and carriers will begin to shy away proposal opportunities on this complex AND THE OTHERS THAT YOU MANAGE.
2. They never shop out the policies. Don’t get me wrong, if you really like a particular carrier/agent and feel as though they have great customer service, claim services, and rates, it’s perfectly OK to stay with them. However, be sure to review your coverage with your agent. Ask questions about potential gaps in coverage and potential savings opportunities. Your agent can do the shopping for you. Most agents represent more than 1 carrier. Simply ask your agent if he/she will shop out the current policies every so often.
3. They have too many agents and/or insurance companies participating in the proposal process. Most agents who are experienced in writing master insurance programs have access to most of the same insurance companies who are competitive in master condo insurance programs. Therefore, there is not a lot of upside in inviting more than 2-3 qualified agents into the proposal process. Not only will this make the process harder to manage (more participating agents means more proposals to review, more questions to answer, and more applications to complete), it really does not mean you will receive better proposals. TIP: Sometimes, It’s a good idea to assign participating agents with specific insurance companies. Ask your incumbent agent to provide a list of 2-3 markets that wish to access and the other proposing agents(s).
4. Their primary focus is the price of each proposal. Sure price is an important factor in the decision making process. However, coverage is obviously very important too. Watch out for things such as deductibles, sublimits, and exclusions. Some other factors to consider are billing terms and options, ease of doing business (i.e. making payments or filing claims conveniently and efficiently), loss control assistance, etc.
5. The proposal process is not managed properly. Gathering proposals is a task that requires the devotion of time and careful planning. When done properly, it ensures the association’s insurance costs and coverage are manageable and adequate. If the process is “winged,” it can be counterproductive and actually end up costing you valuable time, money, energy, effort and your reputation for future proposals.
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