Why did insurance premium jump so high in 2024?
FROM THE GRF TREASURER
by Nick Massetti
GRF Treasurer
It is a fact that in the 2025 budget, the GRF portion of the insurance premium is $2.7 million. That is 10% of the overall budgeted expenses. In the 2023 budget, the insurance premium was $848,000 and represented 4% of the overall expense budget. To find out what actually caused this, one has to look at how the various components of the overall insurance premium contributed. I’ll do that here.
It has been suggested that the overall insurance premium increase of 93% that occurred with the December 2023 premium, and carried forward into the 2025 budget, was due to the Northern California wildfires. And although the recent Los Angeles area fires may contribute to next year’s increase, that factor had little to do with the 2023 insurance premium increases, according to the data.
Let’s start by looking at the data. The table above shows the premiums for three of the insurance coverages that make up the GRF portion of the overall insurance package. The package actually includes nine different types of coverage, and except for those shown in the table, the remainder increased very little. The overwhelming bulk of the increase was due to a 264% increase in the umbrella and excess liability premium.
To support the claim that the wildfires likely had little to do with Leisure World’s insurance increase one only has to look at the GRF property replacement premium increase from 2023 to 2024. The fires destroyed properties that were insured by the insurance companies. Property replacement insurance covered those losses. The GRF property replacement premium only went up $40,000 or 14% and that was justifiably due to the value of the properties having gone up by 11%.
So why then did the umbrella and excess liability premium go up by $1.1 million? It all had to do with lawsuits. The general liability policies provide coverage up to $2 million in claims. The umbrella and excess liability provides coverage above $2 million up to $40 million. According to the December 2023 summary provided by the insurance broker in relation to the umbrella and excess liability insurance, “liability claims from $2.5 million to over $5.8 million in just over 18 months has led to a large increase in premium.” That increase in claims came about from three instances where people were hit by vehicles on Leisure World streets.
GRF was not at fault in any of those instances but it had the deepest pockets. The insurance company only cares if they are at risk of a settlement and when it started to look like settlements might exceed $2 million, they took no chances and raised the premium.
The real reason for the insurance premium jump had to do with residents being hit and suing GRF because of it.
Interested in learning more about GRF? Read past news stories, columns and more at www.LWweekly.com.
