Protecting Your AOAO Board & Your Association
By: Sharilyn Tanaka, Vice President AOAO & Personal Lines
If you are responsible for procuring insurance for your AOAO, you may be tempted to just choose the plan with the lowest-priced insurance premium. From a fiduciary perspective, this may be best, but we want to educate you how to secure a policy that provides not just optimal pricing but also proper coverage and maximum support.
There are many factors that drive the cost of your property insurance. One factor is the construction type of your building. Wood-framed buildings are more susceptible to fire and wind damage, so they have the highest rates. On the other side of the spectrum, if you have a newer building that is fire-resistive, wind-resistive, and sprinklered, you may fall into a “Highly Protected Risk” (HPR) category and receive the lowest rates available.
After the construction type is determined, other factors are also taken into consideration, but the biggest determinant of risk is always loss history. You can have a building that is considered an HPR, but if your loss history is bad, your rates will be too. In many ways, it’s like applying for a loan, because to a certain extent, it doesn’t matter who your bank is if your credit score is bad. In the insurance market, some agencies will help you review losses, and some may have specialized resources to help stabilize your losses and close out your claims. If your losses are high, consider what agency will provide the best service for your association and select an agent that has the time and resources you need to best move forward.
If your losses are mounting, the carrier may choose not to renew your policy or even cancel mid-term. The question then becomes, who is keeping your best interest at heart and advocating for you? It’s important to realize that there is a difference between carrier-provided and agency-provided services. A large agency will have an independent claims manager that can be an advocate on your behalf in settling your claim without the potential bias of an insurance carrier. Your claims manager can go a long way in assisting in completing paperwork, representing your interests and reducing stress too!
When it comes to AOAO’s in Hawaii, there are only five major insurance carriers: Allianz, Dongbu, First Insurance Company of Hawaii (FICOH), Lexington, and Lloyd’s. However, it’s important to realize that not all agencies have access to all carriers, so be sure to choose an agency that has a broad selection of options to best represent your association.
In a competitive bid situation, your agent must provide the carrier with your loss history from the previous five years to obtain pricing. If your current agent is hesitant to share this information, they are effectively blocking the market from competitors. While it may look like your agent is more capable than others in this situation, in reality, your agent may have simply locked out their opponents from obtaining a competitive bid.
To avoid this problem, choose the best two agents that specialize in AOAO and ensure that they work with a range of different carriers. We advise working with no more than two agents; the situation can quickly become unwieldy in comparing prices, limits, deductibles and coverage details over multiple policies. It can quickly become overwhelming to compare three policies from three different agencies with three different carriers.
Contact an AOAO Specialist
Obtaining the optimal price involves many factors such as construction type, previous loss history, and choosing the right agent. With the right guidance, we believe you will find the best insurance program that best fits your AOAO.
The dedicated Atlas AOAO team is here to answer any questions for you, even if you’re not a current client.
Please call us at 808-628-5320 or email Sharilyn at firstname.lastname@example.org.