I hope everyone had the opportunity to read the General Manager’s Letter that was circulated yesterday, which reminded us all how wonderful San Francisco has been, and continues to be, despite many challenges.
Today’s letter will not, however, be as uplifting as Cynthia’s. In advance of Saturday’s Board of Directors Meeting, the Board wanted to inform its ownership of some challenges we’ve recently faced in obtaining insurance coverage for the Suites.
At the beginning of July, Farmers Insurance notified us that the insurance for the Suites would not be renewed on September 1st, although we had been a loyal Farmers’ customer for decades. The “official” reason the insurance was not available was because the Suites no longer qualified because the building is more than 100 years old, but that cancellation was really based on a massive failure in the insurance industry, particularly in California, where many carriers such as State Farm and Allstate have abandoned the state. In previous times, many carriers were able to share risks by buying “reinsurance” — we learned, however, that market has collapsed, and carriers are much less willing to take on risks and have substantially increased the cost of insurance if you are lucky enough to find it.
We asked our existing agent to seek out substitute coverage, but we knew that we needed to pursue other alternatives. Through our Treasurer Dwight Walker we were fortunate to get help from Gallagher, one of the largest insurance brokerage companies in the United States – which ordinarily would not have helped a small time share like the Suites. During August we worked exhaustively toward finding possible coverage through both agents and sought ways to lower costs. Gallagher was able to find all the needed coverage but at a substantially increased cost. We received indications of a possible smaller increase from our existing agent, but that coverage failed to be available at the last minute. Fortunately, we had a backup from Gallagher.
Our property and business insurance from Farmers cost us $39,606 from 9/1/22 to 8/31/23. Despite efforts to reduce costs, the premium for the next year will total $140,284 – almost exactly a $100,000 increase. When divided among the 816 shares, that is an annual cost increase of $123 per share (and that’s before accounting for other cost increases, we face due to inflation and continued supply chain disruptions).
We want all Suites owners to know that the Board will continue doing everything it can to keep costs down to minimize the financial burden for our owners during these challenging times.
My very warm regards,
President of the San Francisco Suites