Frank Scerbo Jr., a senior family office advisor at The Baldwin Group, said that Florida’s condo insurance market is experiencing changes in policy structure and storm funding. He made this statement on LinkedIn.
“Florida’s condo insurance market is on the brink of more changes,” said Scerbo, according to LinkedIn. “I uncover the risks of new ‘loss limit’ policies. reveal how wind mitigation discounts are changing. and break down the state’s hurricane fund stability.”
According to the Insurance Journal, Florida’s condo insurance market is undergoing significant shifts as insurers seek alternatives to traditional commercial policies. Reciprocal insurance exchanges are emerging as one option. These exchanges, where policyholders essentially insure one another, offer potential cost advantages but carry structural risks if undercapitalized or mismanaged. Regulatory officials are closely monitoring their expansion amid broader volatility in Florida’s property insurance landscape.
As reported by Merlin Law Group, Florida condominium owners face exposure to financial assessments when insurance policies include loss limits capping payouts for catastrophic events. These policies, often issued by surplus lines insurers, manage reinsurance costs but can result in uncovered expenses for condo associations. For instance, if a $5 million condo complex sustains $8 million in damages, unit owners may be responsible for assessments to cover the difference. Standard HO-6 policies typically cover up to $1,000 of such assessments.
According to the Florida Office of Insurance Regulation (FLOIR), reciprocal insurance exchanges have gained traction as an alternative to traditional insurers in response to Florida’s challenging insurance market. These member-owned entities allow policyholders to share in underwriting profits and potentially benefit from surplus distributions. The FLOIR has approved several such exchanges, including the Condo Owners Reciprocal Exchange, aiming to provide more stable and community-focused insurance solutions.
