MD - Insurance costs jump 40-150 percent for some OC condos, property managers say
As coastal condominium and cooperative housing associations in Ocean City renew the insurance on their buildings this year, some are seeing the price of plans more than double.
Some are finding it difficult to find an insurer who will even cover a coastal condominium.
Local property managers are reporting historic leaps in insurance prices for master plans that cover damages from things such as wind, flooding and other losses for condominiums along the coast this year. The trend follows several consecutive years of losses and major claim filings that are forcing many insurance companies to reduce their risk exposure and increase revenue.
Master plans cover the entire building or all the shared resources for an association and are paid for by all members through fees. These plans are different from personal unit coverage, which covers everything inside a resident’s unit and is paid for independently.
While the insurance increases in Ocean City aren’t as bad as in states such as Florida and the Carolinas, which have much greater risk exposure to storms and hurricanes, it's still enough to force some associations to increase their insurance budgets substantially and thus raise condo fees on association members to fund it, according to Igor Conev, CEO of Mann Properties.
Mann Properties manages around 116 properties in the region, most of them in and around Ocean City.
Conev said he recently has seen an average 40 percent increase in cost for multi-peril insurance to cover housing associations managed by his company Multi-peril insurance is a plan that covers several types of losses.
One 28-unit condo in Ocean City that’s managed by Mann Properties was paying about $39,000 a year for coverage in 2014, Conev said. By 2022, the account’s mutli-peril insurance budget went up to around $60,000, and this year it went up to over $80,000. The condo’s multi-peril insurance budget for 2024 is set to be $115,000, which is based on expected increases next year, Conev said.
Some insurance renewals for associations Mann manages have gone up as much as 150 percent, and Conev said insurers have advised him to expect another approximately 40 percent price hike for next year.
Conev said that over the last two years, about four insurance companies that had written policies for buildings in the resort have stopped altogether.
“Typically, insurance companies lose money for up to three years and (then) they'll have easy years, make some money, but (for) the last seven years they've continued to lose money year after year,” Conev said.
One of the big factors in insurance price increases is that - because of inflation inflation - insurance companies have had to increase the replacement value of buildings. On top of that, with major storms on the coast over the last few years, as well as other natural disasters nationally, or even globally, insurers have had more claims to pay.
In 2022, the U.S. had 18 separate natural disasters with damages going over $1 billion each, according to a 2023 report called “Commercial Property & Casualty Market Outlook Mid-Year Addendum,” by USI, a consulting company for – among other things – property and casualty insurance.
