The property and casualty insurance market can provide a slippery slope for co-ops and condos in the New York metropolitan area. Insurance companies can be your best friend or worst enemy. Fortunately, co-ops and condos have a great deal of control over this determination, and there are some fairly simple recommendations on how your management company and/or board of directors can work effectively with insurance carriers to control insurance costs. Working with the right insurance broker is key to making sure you are getting the most comprehensive coverage at reasonable costs.
Current Market & Insurance Carriers
Historically insurance rates and markets are cyclical, moving from hard to soft markets, based on a number of interrelated factors.These factors can include interest rates, reinsurance capacity, industry earnings, and projections of future losses.
The current market in the New York metropolitan area is somewhat soft. The industry as a whole has been profitable, and there have been relatively few significant catastrophic losses since Katrina. All other factors being equal, commercial insurance rates over the past year or two have been steady or slightly declining.
Working against the market are some equally important factors. There are relatively few quality insurance carriers willing and able to offer coverage to residential co-ops and condos in the New York area. This limits the number of competitive premium quotes, which can be secured on a given property, especially if underwriting characteristics are not all favorable.
In addition, although carriers have been profitable, insurance company reserves are based to a large extent on estimates of future losses. It is impossible to say when a hurricane, flood, or terrorist attack might hit our area, but the actuaries assume that it is just a matter of time. If and when a category 3 or higher storm hits the New York region, insurance company profits can be wiped out for decades. These projected costs are incorporated in current premiums.