From the President
by Eric Andresen
We’ve all been extremely busy during the past several months with elections and fights at city hall, so that the ever-worsening insurance crisis has received very little of our attention—at least as far as our members.
First, CAA’s Political Action Committee has recognized the important opportunity for supporting our new Insurance Commissioner, John Garamendi. Mr. Garamendi has fully appreciated our support, as well as the severity of the problems we face in the insurance market. CAA has also earned a spot on a very important task force that Mr. Garamendi has created. The goal of the task force is to review pressing insurance issues and to prioritize the order for addressing each problem.
Second, I now sit on the newly formed CAA Insurance Committee along with several other CAA members and staff. The charge of this committee is to seek potential solutions to our insurance concerns and to report these findings back to the May meeting of the CAA Board in Sacramento.
The primary focus of CAA’s Insurance Committee is to address the concerns we face about both property and liability insurance and Workers’ Compensation insurance. On the property and liability side, the committee is exploring the feasibility of providing industry-wide coverage—basically a CAA members-only program to help those members who cannot find insurance anywhere else, or those members with programs so large as to benefit from mass participation. This insurance program might be in the form of a “captive” program, with CAA as the actual carrier for its members through a specially-monitored CAA account. Another alternative might be to find and engage a brokerage firm that could oversee a package policy in which CAA members would be allowed to participate. Many CAA members, including me, already participate in our own individual package policies and have found them, in the long run, to be quite cost effective.
In either case, members of the CAA Insurance Committee and the CAA Board of Directors hope that some type of program will be available by the end of this year, if not sooner. We certainly recognize the extreme severity of the current market. We also recognize that many CAA members have already experienced not only the non-renewal of their policies, but have also discovered the near impossibility of finding replacement coverage.
The other major issue that we all face is Workers’ Compensation insurance. The hardest hit by the current state of the program are small businesses that are faced with huge increases, with the cost borne by their customers. Governor Davis has indicated he will focus on improving the small business climate, which will directly result in more jobs and an improved economy. Since this is the governor’s focus, it clearly must be the focus of the insurance commissioner as well. Therefore, through CAA, we are actively participating in discussions regarding potential changes to the system. Here again, costs have skyrocketed out of control and abuse of the system is rampant. The Workers’ Compensation program obviously needs a complete and major overhaul.
The issues facing the insurance industry as well as the ones we are all facing are huge. Reform is going to take time. Such efforts will likely stir up a great deal of debate and even hostility. While the need for change is obvious and immediate, the corrections may not come as swiftly as any of us would like. In the meantime, we must work through CAA to create and provide programs that nourish our own industry.
The opinions expressed in this article are those of the author and do not necessarily reect the viewpoint of the SFAA or the SF Apartment Magazine. Eric Andresen owns West Coast Property Management< and West Coast Property Maintenance Companies. Eric is also the Treasurer of the California Apartment Association 's Executive Board and serves on the boards of many other leading housing industry organizations. Copyright ©2003 San Francisco Apartment Magazine