In this highly unpredictable year, many unusual factors are affecting insurance. As your partner, we want to keep you informed of industry trends we’re seeing, especially when they’re relevant to Community Associations and Boards of Directors planning your budgets for 2021. Kevin Davis Insurance offers three reasons why D&O premiums are increasing this year.
- COVID–19
- Social Inflation
- Increase in Enforcement Challenges
COVID–19
Community Associations are concerned about COVID–19 and how to continue to operate the association during this pandemic. Possible claims arise when the Board makes decisions about:
- Closing common areas (clubhouses, fitness centers, etc.)
- Opening common areas
- Disinfectant protocols in common areas
- Enforcement of rules such as masks or social distancing – or the lack of enforcement
Social Inflation
That’s the term for the rising costs of claims that can be attributed to societal moods and trends such as increased litigation and class actions and a broader definition of liability. Recent social trends have lead to increased sensitivity and scrutiny, and triggered an increase in high-profile lawsuits with large jury awards to the plaintiff, especially when there is perceived social injustice.
Potential claims include:
- Defamation
- Sexual Harassment
- Discrimination of any protected class
- Wrongful termination
- Enforcement of procedures outlined in the governing documents
Enforcement Challenges
Enforcement of rules, regulations and governing documents still remains the top driver of increasing D&O premiums. Potential claims include:
- Noise complaints
- Not enforcing the regulations of the community
A well-educated and managed Board of Directors can avoid costly claims to the association that would continue to drive high D&O costs. Community Associations Institute (CAI) offers a Board Leadership Development Workshop this fall on September 11th and 12th. For more information or to register – click here.
