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Continental Group Property Management issued a response to the article that appeared in the Sun-Sentinel entitled "Property Managers Make Money Off Condo's Insurance".   I commented on the article in the post entitled More on Conflicts of Interest: Management Company Commissions?

The letter explains the relationship between Continental and First Service Financial (FFI).  Its CEO notes that Continental's clients saved $1.5 million in insurance premiums in the past 12 months alone and stressed that the relationship between the companies is disclosed.

You can read the letter by clicking HERE.

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Conflicts of interest, or at least claims of conflict of Interest are in the news lately.  The Sun-Sentinel ran an article entitled "Property Managers Make Money Off Condo's Insurance" on Sunday.  It says some of the property management companies are affiliated with insurance agencies that procure property insurance.  If the board of directors selects the products or insurance package recommended by the management company, in some cases the agency will share the commission.  Commissions can run into the tens of thousands of dollars per policy.  Critics argue that this financial incentive skews management's recommendations.  Community association board members often look to and rely upon the expertise of their managers/management companies when making significant decisions.   

The Department of Financial Services, Division of Agent and Agency Services is considering rules prohibiting "unlawful inducements" in connection with property insurance.  The rule, if adopted, would prohibit:

• Paying, crediting, allowing, or giving, or offering to pay, credit, allow, or give, directly or indirectly, an inducement to the purchase of insurance.
• Facilitating any discount, reduction, credit, or paying any portion of any premium, fee or cost of underwriting, policy fee, or claim cost.
• Facilitating any discount, reduction, credit, or paying any fee or portion of the cost of an inspection, inspection report, appraisal, or survey, including wind inspection. 
• Bringing about any discount, reduction, credit, or paying any portion of the premium or any portion of the cost of premium financing.
• Making possible any lowered, credited, or discounted commission.
•  Providing membership in any organization, society, association, guild, union, alliance or club at a discount, reduced rate, or at no cost.
•  Making or offering to make a charitable or other tax-deductible contribution on behalf of the purchaser.
•  Providing or offering stocks, bonds, securities, property, or any dividend or profit accruing or to accrue thereon.
•  Providing or offering employment in exchange for the purchase of insurance.

Some of these are obviously problematic, but "business as usual" in many industries. 

Is it wrong to contribute to charities or non-profit organizations when your client supports those efforts?  Is it wrong to obtain discounts on behalf of your clients?  Isn't that one of the factors that plays a part in deciding which agent (or any service provider for that matter) to use?  If the agent has access to discounts that are not available to other agents, doesn't that benefit the association?  Same with reducing the commission - the premium goes down if the agent will agree to accept less of a commission from the insurance carrier.  How does that harm the association?

On the other hand, do the board members (and unit or home owners) know of this financial incentive?  Are they able to compare 'apples to apples' quotes for products and services?  Do they know they have options when it comes to financing insurance premiums?  Is the association getting the best rate for the financing?

Disclosure here is key.  Board members need to ask those tough questions and carefully review different proposals.  Insurance is a major part of an association's budget.  If the board is not sure, hiring a consultant to compare packages and prices is well worth the expense  - it could even save your association money in the long run if there are changes in coverage necessary or appropriate under the circumstances.

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 Did you know you can potentially collect full policy limits from both your flood and property insurance policies?  Do you know how?

According to the National Flood Insurance Program, flood is the most common disaster in the United States.  On average flood claims stem from more than thirty thousand ($30,000) worth of damages.

Did you know that almost 25% of flood insurance claims come from moderate to low risk areas?

Floods do not discriminate.  They can and do happen all over the country.  Flood damages may be due to a heavy rainstorm or hurricane, melting snow, plumbing malfunctions, levee or dam failures and rising bodies of water.  Even new development can cause floods due to a change in the drainage patterns of adjacent properties.   

Becker & Poliakoff's Disaster Claims Recovery Team is in place to help you prepare for the consequences of a flood in your community. Answers to important questions will be provided in this live web event:

• What exactly does flood insurance cover?
• Who needs it?
• Are community associations required to carry it? 

Join moderator Ken Direktor, Esq. of Becker & Poliakoff ( Ft. Lauderdale ), and Greg Marler, Esq. of Becker & Poliakoff ( Naples ), who will present with guest speaker Tammy LoVecchio, AAI of Gulfshore Insurance for this Free Webinar Flood Insurance: What You Should Know to Protect Your Community.

Register below and you will receive a confirmation email with information on how to participate.

Live Webinar on Thursday, August 19, 2010
10:00 AM-11:00 AM EDT (9:00 AM-10:00 AM CDT)

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