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Aug. 30 town hall to address insurance challenges

Meeting time moved to 10 a.m. at Event Center

By Sam Richards

Staff writer

 

(Wednesday, Aug. 23) Environmental disasters – wildfires in Hawaii this month and in Canada earlier this year, huge earthquakes that decimated Turkey and Syria in February, and flooding that has inundated China and parts of Alaska and Vermont this month, all just in 2023 – are becoming more frequent, and more expensive.

There have been so many costly disasters in the past several years that the insurance industry has had a hard time keeping up with the massive claims. That, in turn, has made all kinds of insurance, notably property insurance, increasingly expensive – when it’s available at all.

Ken Johnson said this situation hasn’t spared Rossmoor, where premiums for the GRF master property insurance policy have skyrocketed – 30 to 50% jumps each year for the past few years. Such increases are major drivers in coupon increases. Individuals and Mutual governing boards alike have had to contend with rising premium costs.

Further, at least as of now, Rossmoor can’t secure enough property insurance to guarantee that all Mutual- and trust-owned facilities could be completely rebuilt in the event of a catastrophic wildfire or other event.

“It’s not just GRF; it’s a problem for property insurance accounts all over the world,” said Johnson, an area senior vice president with Arthur J. Gallagher and Co. Insurance Brokers, which serves as the broker for GRF’s master property insurance coverage. “Property insurance in general has become extremely difficult.”

Rossmoor residents can get more information about GRF’s insurance situation, and how they should be handling their own private insurance needs, at a town hall meeting on Wednesday, Aug. 30, starting at 10 a.m. in the Event Center.

To feature Johnson, GRF General Manager Jeff Matheson, GRF Insurance Coordinator Brenda Campos and others, the town hall will include a review of GRF’s master property insurance program and what it does and doesn’t cover; the challenges presented by the insurance market, including those described earlier by Johnson, regarding how much insurance is available and how much it costs; how the current difficulties in finding insurance could affect individual homeowners; and a review of personal insurance coverage options and what Rossmoor homeowners may want to ask their personal insurance brokers about their individual coverage plans.

“For some reason, I don’t think all the questions have been asked, or answered, thoroughly enough,” Campos said.

Matheson said that while some Rossmoor residents are underinsured for their personal coverage, others – likely uncertain about what the GRF master policy covers – are overinsured.

And Rossmoor doesn’t have any earthquake insurance, the cost of which Matheson said is “astronomical.”

Matheson said 21 of Rossmoor’s 23 Mutuals are covered by GRF’s master property insurance program: Mutual 58 (The Waterford) and M61 are not. The master policy, he explains, covers the outside surfaces of every manor and trust-owned building, plus stationary indoor “infrastructure” like cabinets, plumbing, flooring and built-in appliances, such as stoves and microwave ovens built into the wall, that stay with the unit. There is a $250,000 deductible, Campos said.

Most personal property – including large appliances like most refrigerators and standalone microwaves – are not part of the GRF coverage; for such things, residents need to purchase their own insurance.

Matheson said it would cost approximately $1.7 billion to fully rebuild Rossmoor to current building codes if fire or other disaster destroyed it. But GRF only has enough insurance to cover about $1.4 billion of that.

Johnson and his team at Gallagher’s San Francisco office work to assemble GRF’s insurance policies, for property and other types of coverage. To best meet GRF’s needs, Gallagher depends on coverage from some 60 insurance companies, Matheson said.

Campos said that isn’t always enough to secure full replacement coverage. “Unfortunately, more and more companies are unwilling to insure,” she said.

The plethora of disasters in recent years has also sapped the strength of “re-insurance” providers, to which insurance companies transfer risk. Re-insurers act functionally, Johnson said, like “insurance for insurance companies” – and those providers also have lost money over the past decade or so, and investment in these re-insurance providers has all but dried up.

Concern about the future of insuring Rossmoor against property loss – from wildfire in particular – has been building in recent months. And actions have been taken.

In June 2022, the Contra Costa County Fire Protection District was awarded a $3.1 million wildfire-prevention grant to help clear vegetation to create a fuel break, including around much of Rossmoor. GRF officials lobbied state fire officials in support of that plan and grant.

Mutual Operations Director Jeroen Wright is working to build a Firewise USA group in Rossmoor dedicated to wildfire preparedness, in an effort to make the community more fire-resistant, and therefore more “insurable.”

Johnson said that Rossmoor becoming Firewise-certified should definitely help in that area.

Johnson was scheduled to talk on Tuesday, Aug. 22, to Rossmoor’s Financial Forum about how pricing risk insurance in Rossmoor is becoming an increasingly serious issue.

 

 

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