MAINE ASSOCIATION OF REALTORS E-NEWS
Tuesday, September 17, 2002
In this issue:
* MAR Interview with Maine Insurance Industry President
* MAR Broker Workshop Price Increases Tomorrow
* Kennebec Valley Board Golf Tournament Rescheduled
* MAINE ASSOCIATION OF REALTORS TALKS WITH MAINE INSURANCE INDUSTRY PRESIDENT: MAR understands there are changes in the availability and cost of homeowners insurance (as well as other insurance products) and the impact it is presently having on costs and closings. The National Association of REALTORS is also aware of this issue nationwide, and is forming a Work Group to provide recommendations as to what can potentially be done to address the problem/crisis. MAR contacted Kristie Rowell, CPCU, who is the President of the Maine Insurance Agents Association to learn what their industry recommends and is currently doing about homeowner insurance issues. Kristie owns an independent insurance agency in Hallowell, Maine.
MAR: When did the availability of insurance, the price of premiums, and the level of areas with problems tighten in a significant way?
Rowell: Our Association noticed a tightening of the market in March. We did a survey of our members to identify the areas of greatest concern. We formed a committee that has been meeting monthly since May to monitor the situation and identify potential solutions. We have also met with the Superintendent of Insurance to keep him alerted to these insurance problems. Another meeting is scheduled for mid-October.
MAR: What are those areas of concern with insurance?
Rowell: Many areas -- multi-family properties, rentals, island/coastal, homes with 60 AMPs, diving boards, vicious dogs (including mixed breeds),
trampolines, age of home/roof, and a wide range of systems areas including the roof, wiring and heating systems - and others. In addition, the
insurance industry has access to a database named CLUE that tracks historical information on claims made by an insured or on specific property. Properties with a claims history will be problematic for future buyers. In addition, some vendors are now using credit scoring, bad pay on prior policies, bankruptcy, and history of filing claims as additional underwriting tools.
MAR: What is causing this?
Rowell: Several factors - loss of investment income by the insurance firms due to the stock market (many companies claim they have never made money from premiums), impact of industry due to 9-11 claims, the resulting bankruptcy of several reinsurance companies, and the business decision of insurance firms that they need to take less risk. Claims cost and the legal climate are also factors. Underwriters are not flexible or creative on many issues.
MAR: Any other problems?
Rowell: Because of increasing situations where standard insurance carriers are unable or unwilling to provide coverage, the surplus lines market is
being accessed more frequently. At first they were handling the volume of business sent their way well, but as the requests to that market have
increased, so have delays getting quotes. And in some circumstances, even the surplus lines market is unable to provide coverage.
MAR: Do you have recommendations for real estate licensees?
Rowell: As soon as a property goes under contract, the buyers needs to contact their insurance agent. It is essential that a buyer agent inform
their clients to begin the insurance search at once. Next, the information insurance agents are provided can be erroneous which leads to other problems. There are important facts needed by insurance agents that will impact insurability of property that may not be provided by the sellers. For
example, the age of the house, updates to the systems in the house (wiring, roof, heating, plumbing). Also only one heating appliance may be vented into the same flue so if there is a woodstove and furnace vented into the one flue, adequate time needs to be allowed to correct that problem. If the
house has 60 AMP fuses, an update to 100AMP circuit breakers will need to be made. The sooner the buyer is aware of these problems, the smoother their closing will be.
MAR: Any final advice?
Rowell: If you have current coverage, don't switch carriers. Don't pay premiums late. Inquire about increasing the deductible, for example consider
a $2500 or $5000 deductible. And if your're buying new property, start early.
* MAR BROKER WORKSHOP FEES INCREASE TOMORROW: If you're planning to attend the MAR Broker Workshop, being held Wednesday, September 25, register today by fax using your credit card or put your registration form and check in the mail today to ensure you pay the lowest price. In addition, lunch is ONLY included with the fee for those who register prior to September 18th. The course is being held at the Sheraton South Portland Hotel (across from Maine Mall) and offers up to 5 hours continuing education credit. Morning program is legal issues related to independent contractors, employees, teams, agents who incorporate, personal assistants; the afternoon program is about changes to the MAR standard forms for 2003, including the new change on heating systems effective 1/1/02 by MREC, and updates to MAR's sample office policies
on agency. A registration form is posted on the MAR website at http://me.realtorplace.com. The courses will be repeated at the MAR
Convention as part of the convention registration fee.
* KENNEBEC VALLEY BOARD GOLF TOURNAMENT RESCHEDULED: The 4th Annual Charity Golf Tournament sponsored by the Kennebec Valley Board of REALTORS originally scheduled for Monday, September 16 had to be rescheduled for Tuesday, October 15 due to rain. Registration remains at 7:30 a.m. and tee off at 8:00 at the Belgrade Lakes Golf Course. Call tournament director Paul Fecteau at 622-9000, ext 103 if you have any questions.
MAINE ASSOCIATION OF REALTORS
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