Insurance renewal costs addressed in joint effort
FROM THE GRF BOARD
The insurance renewal cost for 2024 presented our entire community with one of its most significant financial challenges. The budget for 2024, adopted almost two months before the insurance policy pricing was determined, was over $2 million short of the actual final cost.
The GRF Board has been working with Foundation staff to determine the least disruptive strategies to address the immediate problem of the budget shortfall and take steps to provide better lead time for the community on insurance costs so that our budgeting processes can better plan for the critical need.
The shortfall mentioned above is shared by both the GRF and all mutuals.
Staff has been meeting with mutual boards to assist them with their individual strategies based on their budget and financial health.
The GRF’s portion of the shortfall is nearly $1.2 million dollars, the equivalent of approximately 5% of our annual budget. Solving a budget issue of that size is not something that can be done quickly or easily, as the Board wants to preserve the service level currently being provided to shareholders.
Working with staff over the last three months, significant progress has been made. GRF is implementing savings against the budget in Human Resources (3.1%), IT (13.5%), and Contributions (10%) that will result in over $800,000 in savings against the budget for 2024. This puts the Foundation well on the way to completely closing the budget shortfall created by insurance.
These efforts will continue throughout the year as we continue to look for ways to reduce costs and increase revenue to cover the shortfall of $400,000. The Board is not—repeat, not—considering any raise in the assessment level for 2024.
The successes noted above would not have been possible without the diligent work of all Board members and the cooperation of staff. In addition to addressing the budget shortfall for 2024, the Board has been looking ahead to 2025’s insurance renewal and what can be done to have a better structure in place to help prevent such a significant unplanned event.
GRF is exploring what it would take to change the policy terms for Leisure World so that it renews Nov. 1, instead of the current Dec. 1.
That earlier renewal date, if coupled with a shift in the budget preparation and finalization, would put all our boards in a more informed position for an accurate budget. We’ve also made clear to our insurance broker that going forward, a more active forecast on the possibilities of the market—good and bad—is needed for our financial planning.
Finally, the Board has retained an outside, independent consultant to review the various policy coverages and coverage levels at Leisure World, to ensure that our coverage is adequate and neither too much nor too little.
The Board will continue to update you on its efforts throughout the rest of this year. As always, we appreciate your support and patience; we are all in this together.
