Gag Clause Attestation Deadline: December 31, 2024
Under the transparency provisions of the Consolidated Appropriations Act, 2021 (CAA), health plans and issuers must annually submit an attestation of compliance with the gag clause prohibition to the Departments of Labor, Health and Human Services and the Treasury (Departments). This is due by December 31, 2024.
What is the Consolidated Appropriations Act, 2021?
The CAA prohibits health plans and insurance issuers from entering into contracts with healthcare providers, third-party administrators (TPAs) or other service providers that contain gag clauses. The first attestation was due December 31, 2023. The attestation due by year-end covers the period since the last attestation.
Highlights
Health plans and issuers must ensure their agreements with healthcare providers, TPAs and other service providers do not include gag clauses.
Health plans and issuers must submit an annual attestation of their compliance.
The Departments may take action against plans and issuers that violate these regulations, or that fail to submit the required attestations.
What is a Gag Clause?
A gag clause is any contractual restriction preventing a health plan or issuer from providing, accessing or sharing certain information, such as provider price/quality and de-identified claims.
In the case of the CAA, group plans and issuers are prohibited from entering into agreements with any partners who restricts them from:
Providing provider-specific cost or quality of care information or data to referring providers, the plan sponsor, participants, beneficiaries, or enrollees; or
Electronically accessing (de-identified) claims information for each participant, beneficiary or enrollee upon request, consistent with existing privacy regulations*
Sharing information described in either of the above items, or directing such information to be shared with a business associate, consistent with applicable privacy rules
Plans and issuers must ensure their agreements with healthcare providers, networks or associations of providers, TPAs or other service providers offering access to a network of providers don't contain provisions that violate the CAA's prohibition of gag clauses.
Covered Health Plans
The attestation requirement applies to fully insured and self-insured group health plans, including ERISA plans, nonfederal governmental plans and church plans. Additionally, this requirement applies regardless of whether a plan is considered “grandfathered” under the ACA. However, plans that provide only excepted benefits and account-based plans, such as health reimbursement arrangements (HRAs), are not required to submit an attestation.
Taking Action
Employers should review all contracts and agreements with service providers to ensure they do not contain prohibited gag clauses.
Employers with fully-insured plans do not need to provide attestation if their plan's issuer provides the attestation. Self-insured employers can enter into agreements with their TPAs to provide the attestation, but the legal responsibility still remains with the health plan.
If you have questions about the Affordable Care Act (ACA) and CAA, 2021, view the FAQs.

This document is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. Gregory & Appel is neither a law firm nor a tax advisor; information in all Gregory & Appel materials is meant to be informational and does not constitute legal or tax advice.
When a workplace accident results in an injury, it's crucial to ask quickly. The main priority is ensuring the safety and care for the injured individuals. Steps must also be taken to protect additional people from danger, and to mitigate further risk and cost (money, time and resources) for the organization.
Consider implementing the following procedures to help protect what matters most – your organization and your people.
Here are some of the important factors to consider:
Immediate Care
The most important thing is to ensure the injured employee receives care immediately. Depending on the injury, this could mean on-site first aid, arranging for quick transport to the hospital or calling emergency medical services.
Report the Incident
Incident reporting procedures should state clearly that the employee is to self-report their injury when it occurs, unless their injury is so severe that they cannot make the report. In the event the employee cannot report their injury, a manager, supervisor or designated safety officer should accurately and officially record and report the injury.
Establish a hotline for reporting employee injuries outside normal business hours. Provide the appropriate contact information to employees – and post it somewhere in the workplace. Require the employee to report after-hours injuries to Human Resources, safety office and/or their supervisor.
Medical Provider
Establish, post and direct injured workers to an occupational medical provider who is open after hours. Avoid the emergency room unless it is a severe injury.
Timely Investigation
Investigate the accident scene and interview witnesses as soon as possible after the report. The physical environment can change, and memories can fade over time, so it’s important to investigate the incident the day it occurred or as soon as possible. A thorough and detailed report is vital. Complete an accident report form detailing the event, the injury and any treatment given. Include photographs and witness statements if possible.
Video Surveillance
Install video cameras in the workplace. Depending on the number and location of cameras, the reported injury could be recorded. This information is critical to the investigation process. Any record or documentation helps.
Employee Training
Train employees that state workers’ compensation and federal OSHA laws require timely reporting, and that failure to report injuries when they occur could jeopardize their benefits. There are strict deadlines for reporting in many jurisdictions.
Supervisor/Manager Training
Train supervisors and managers about workers' compensation, OSHA, how it impacts the employee – and the company's bottom line. Not only should they understand reporting procedures and policies, they should be contributing to an overall culture of safety where processes are in place to protect employees and avoid workplace incidents.
Severe Injuries & Fatalities
If you are a Gregory & Appel client, contact our emergency claims service line by calling our 24-hour emergency claims line at 1.800.968.7491 and following the voice prompts. You will be connected with a Gregory & Appel claims advocate who will assist you.
File Workers' Compensation Claims, If Applicable
If the injury qualifies for workers' compensation insurance, assist the employee in filing a claim. This may include providing necessary documentation and details about the injury and the circumstances surrounding it. If you have followed all the steps mentioned above, you should already be able to provide important details due to your thorough and accurate documentation of the incident.
Did You Know?
Gregory & Appel Insurance provides workers' compensation and OSHA 101 reporting courses for managers and supervisors.
We also host two-day OSHA 10-hour general industry training to help certify your employees and provide authorized training on workplace safety.
This document is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. Gregory & Appel is neither a law firm nor a tax advisor; information in all Gregory & Appel materials is meant to be informational and does not constitute legal or tax advice.
Is the Timeshare Property Insurance Market Softening?
An analysis of 2024 early indicators, affirmed what industry experts have been signaling: the commercial property insurance market is indeed softening.
Two compelling examples are from Florida, a state that has been hit the hardest in recent years, as property carriers have been pulling out of the state, while others have been reducing available capacity and/or charging exorbitantly higher premiums:
A large property consisting of seventeen buildings, all with frame construction, reported an 11% reduction year-over-year in premiums
A group of six coastal properties, primarily featuring frame construction, reported a 1% reduction year-over-year in premiums
We have seen that this trend is not isolated – similar patterns are emerging across the industry – indicating a broader market movement. Evidence of this can be seen in a recent win in Nevada, where a large, multi-state property management company renewed its insurance policy flat after two years of rate increases.
This trend comes as a welcomed sign of relief for all after experiencing rate increases for the past four to five years, specifically, absorbing brutal three-digit rate increases, respectively, in the last two years.
Key Factors Influencing the Market
Several pivotal factors are driving this shift towards a softer market, each playing a critical role in reshaping the landscape of commercial property insurance:
Entry of new carriers: The introduction of new insurance carriers into the market injects fresh competition, compelling established players to reassess their pricing strategies to retain and attract clients.
Increased capacity: A surge in underwriting capacity, fueled by both existing insurers and newcomers, allows for more aggressive pricing and policy terms, benefiting policyholders.
Changing carrier appetite: Insurers are diversifying their portfolios, showing an increased willingness to cover different types of risks, including previously underinsured segments.
Organized reinsurance renewal season: This year’s reinsurance renewals have been notably more structured, contributing to retention stability and rate leveling. This is the result of enhanced profitability among reinsurers, as well as an uptick in their capital positions, enabling more competitive reinsurance rates for primary carriers.
Alignment of property valuations: Current valuations are increasingly reflecting today’s construction costs, aiding in the accurate pricing of risks and contributing to market equilibrium.
Taking Advantage of Trends
These key factors are having an impact on the insurance industry, which can have a significant impact on your risk management program. In the video below, see how Gregory & Appel's expert risk advisors are uniquely suited to represent you in the marketplace. Their creativity in creating coverages to help you manage risks is vital – and they can help secure the right coverage for your unique needs.
Who Stands to Benefit?
In this evolving market, certain properties are poised to see better-than-normal returns:
Non-catastrophe (Non-CAT) properties: Locations outside high-risk zones for natural disasters can expect more favorable terms.
Higher-rated construction: Properties built with fire-resistant materials as opposed to frame construction are deemed a lower risk, attracting better rates.
Low-loss properties: Buildings with minimal or no claims history are likely to be rewarded with lower premiums.
Corrected valuation properties: Those that have addressed and overcame previous undervaluation issues stand to benefit from more accurate and potentially favorable insurance terms.
Industry class considerations: The nature of your business and the associated risk profile could also influence the insurance terms and rates you receive.
Trends to Watch
As the market continues to adjust, timeshare HOAs and property managers should keep a close eye on several key areas:
Ongoing Reinsurance Renewals
The outcomes of recent and upcoming treaty renewals will be critical in determining if the early trend towards a softer market holds. As these are renewed or renegotiated, we'll see trends in the availability of reinsurance and pricing adjustments.
What is Reinsurance?
In simple terms, reinsurance is a way for insurance companies to protect themselves from large financial losses. When an insurance company sells policies to individuals or businesses, it takes on the risk of having to pay out claims if certain events occur, such as accidents, disasters, or other covered incidents.
Reinsurance is like insurance for insurance companies. Instead of shouldering all the risk themselves, insurance companies can transfer some of that risk to other companies known as reinsurers.
In exchange for a premium, the reinsurer agrees to share in the financial responsibility of paying claims. This helps the original insurance company manage its exposure to large losses and ensures that it has the financial capacity to fulfill its obligations to policyholders.
A Look Inside the Reinsurance Market
Positive trends kept pace on 4/1 as foreign markets mimicked the January 1 reinsurance renewals in the U.S. Japan saw pricing flat to slightly down, while South Korea, China and India saw increased competition for catastrophe business.
What It Means
Optimism is growing heading into midyear that reinsurers are exhibiting a returning appetite for property catastrophe business, which signals an increasing return to a softer market.
The 28 billion-dollar disaster events events from 2023 include:
1 winter storm event
1 wildfire event
1 drought and heat wave event
4 flooding events
2 tornado events
2 tropical storms
17 severe weather/hail events
In this map, you can see the distribution of the 28 billion-dollar weather events in 2023. Source: NOAA/NCEI
Severe Convective Storms
These storms, characterized by tornadoes, hail and severe wind, contributed to over $50 billion in losses in 2023. Their frequency and impact remain a significant concern.
Wildfires and Other Risks
The scale of wildfire damage, alongside potential political and socio-economic shifts, will influence the market’s trajectory.
Planning Takeaways
As the commercial property insurance market softens, it presents both opportunities and challenges. By understanding the drivers behind this trend and staying alert to ongoing changes, insureds and insurance professionals can navigate the market more effectively, securing favorable terms while adequately protecting an insured’s assets.
As 2024 unfolds, adapting to these dynamics will be key to leveraging the softening market to your advantage.
Learn More About Risk Management for Destination Properties
This content is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. Gregory & Appel is neither a law firm nor a tax advisor; information in all Gregory & Appel materials is meant to be informational and does not constitute legal or tax advice.
How Timeshare Associations Can Navigate Rising Insurance Premiums
Timeshare associations and property managers have already noticed the big changes sweeping through what was once a fairly predictable and stable insurance market. Across the country, resorts are plagued by skyrocketing premiums.
Understanding the Transformation
The disruptions affecting timeshare associations are being met with an intense overhaul of risk assessment models, an increased demand for comprehensive property inspections and a greater focus and emphasis on detailed underwriting.
Many changes came unannounced to timeshare association board members, and property managers and have upended longstanding perceptions and practices within the insurance procurement process.
Navigating New Challenges
This market shift has implications reaching far beyond numbers on a spreadsheet; it’s having a real impact on communities and business operations.
One striking example is the withdrawal of key coastal insurance programs from states like Florida, which has historically been reliant on such coverage. Seeing coastal programs start to exclude states like Florida, a state that boasts 8,436 coastal miles and is home to 1.5 million condos, and you can see the severity of what is taking place.
To fully grasp these changes, it’s important to recognize some of the concerns related to the current state of property insurance. The initial signs of the hardening market were showing in 2022, with a notable increase in claim frequency signaling a shift to more stringent conditions. Fast forward to 2023 – rate hikes reminiscent of a decade’s worth of increases condensed into a few months.
The American Property Casualty Insurance Association corroborated these observations when highlighting a significant jump in net underwriting losses from $3.8 billion in 2021 to $26.5 billion in 2022.
This paints a clear picture – insurance companies spent more than they made from premiums.
Effectively navigating this insurance environment requires a deep understanding of individual properties. Things like exemplary housekeeping, good maintenance, advanced security measures and recent upgrades are key. Making sure property details are up to date with an accurate Statement of Values is crucial for getting accurate insurance quotes.
While insurers are often willing to consider new business submissions well before renewal dates, decision-making often remains prolonged, and updates can be expected even at the last possible moment. Initiating the process well in advance of any renewal deadlines is critical. There is no such thing as too early, even if immediately following a recent policy renewal.
Finding the Right Guide
In these challenging times, selecting of an experienced and knowledgeable insurance broker could not be more important. You need a partner that works as an extension of your own team, committed to finding the best solutions for you, who can help you optimize your risk management program.
It’s not just about getting a bunch of quotes; it’s about finding someone who really knows the ins and outs of this complex market and can build the best program. You need a partner who works as an extension of your own team, committed to finding the best solutions for you.
It takes an unwavering commitment of insurance professionals to serve as trusted advisors and advocates – to understand the intricacies of each resort’s insurance requirements and work tirelessly to achieve the most advantageous outcomes for each property.
When existing approaches fall short, generating more questions than answers, expert guidance is needed. The objective is to take control and formulate a winning strategy, making renewals less puzzling and more empowering.
Learn More About Risk Management for Destination Properties
This content is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. Gregory & Appel is neither a law firm nor a tax advisor; information in all Gregory & Appel materials is meant to be informational and does not constitute legal or tax advice.
With a little preparation, however, it is possible to minimize pain at your next renewal, or even to reduce your premiums and improve your coverage terms. But to do that, you must understand the current insurance market and the system that agents and carriers must deal with to secure quotes.
Challenges in the Insurance Marketplace
Property insurance has seen the most dramatic increase in premiums and the imposition of restrictive coverage terms, not to mention the withdrawal of carriersfrom certain geographic areas, along with the unwillingness of some carriers to offer coverage to timeshare resorts.
Gathering Quotes for Your Vacation Property
In the past, it was assumed that involving two, three, or even four agents on your behalf to gather insurance quotes would secure the best results. That approach is actually the least effective way to manage your renewal in today’s market, and here's why.
Resort properties in coastal areas, or areas susceptible to flood, earthquake, or wildfires, are considered undesirable by most carriers, who have limited capacity for risks of this type. Just a few years ago, a single carrier might have been willing to offer $20 million or more in property coverage limit, but today it requires the stacking, or towering, of multiple carriers to build that kind of limit. When multiple agents get involved, the limited number of carriers becomes so diluted that it’s difficult for any agent to build a complete and competitive program.
The most effective approach is to select one agent and give them full access to the market. That way, they'll be able to arrange carriers in their most competitive position to build the best available program. Much like a jigsaw puzzle, the proper placement of carriers is critical to a comprehensive and competitive program.
Choosing the Right Agent
The agent can be selected through an RFP process, or through interviews or referrals. Just be sure that you are comfortable with the agent’s knowledge of timeshares, the lineup of carriers they can access and the scope of services they offer. Because of the unique insurance exposures involved with timeshare properties and the expertise required to build a property program in today’s market, the number of qualified agents is surprisingly small.
The direct involvement of the management company and/or HOA is critical to a successful renewal. They will need to provide a great deal of information to the agent. The more information the underwriter has about a risk, the more comfortable they are, and the more willing they will be to offer higher limits, improved terms, lower deductibles and competitive rates.
As an example, Gregory & Appel recently won a bid on a group of thirteen destination properties, most of which were in a hurricane-prone area. Prior to binding coverage, however, we performed an inspection of all the properties and uncovered several positive wind-mitigation features of the various buildings, along with formal policies and procedures that the insurance underwriters were not aware of.
The carriers viewed this information very favorably and reduced their overall property premium by 20%. The additional information increased their comfort level, and their willingness to offer more competitive pricing. Among the items of information an agent will need for the bidding process are the following:
Five years of loss information
Statement of property values (limits for buildings, contents and business interruption)
Construction details of the buildings (age, type of construction, square footage, updates on roof, wiring and plumbing)
Protective features of the building(s) (automatic sprinkler system, impact glass, etc.)
Copies of formal policies, procedures, disaster preparedness plans, etc.
In addition to the underwriting details the management company or HOA needs to provide, they will also need to have an open mind. Be prepared to consider alternate deductibles, policy limits and other creative approaches your agent might suggest to reduce premiums.
It’s also helpful to show a willingness to incorporate a carrier’s recommendations for physical changes to the property or amendments or additions to formal policies and procedures. The demonstration of cooperation can have a substantial impact on the carrier’s perception of your property, which can translate to better pricing and coverage.
Why You Should Expect Last-Minute Negotiations
One last word of caution: in today’s market, it is not unusual for you to be waiting until the last second to get your quotes. That’s because the remaining viable property carriers are swamped with submissions, and they don’t get serious about evaluating your property until the renewal date is near. That can be stressful and inconvenient for an HOA board to deal with.
At Gregory & Appel, our approach is to secure an indication from the carriers a month prior to the renewal date, which we communicate to our client as a worst-case scenario. We continue to negotiate with the carriers or involve new ones to improve terms all the way to the last minute, providing the client with weekly or even daily updates. Those last-minute negotiations almost always produce significant savings for our clients. Be sure that your agent takes advantage of the carrier’s willingness to negotiate at the last minute.
This is a difficult insurance market right now, so it is especially important that you use the bidding process to your advantage. Your preparation and involvement will help you secure the best possible outcome.
Learn More About Risk Management for Destination Properties
This content is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. Gregory & Appel is neither a law firm nor a tax advisor; information in all Gregory & Appel materials is meant to be informational and does not constitute legal or tax advice.
But by understanding the factors at play, and by implementing strategies to mitigate risks; timeshares, resorts and destination properties can navigate this storm (pun intended) and ensure a sustainable future.
Premiums Likely to Remain High
As senior risk advisor Matt Stauffer explains, "I have been closely monitoring the insurance industry’s evolving landscape. The rise in premiums is driven by the growing frequency and severity of natural disasters and climate change."
28 weather-related disasters occurred between January 1 and December 31, 2023. Image credit: NOAA/NCEI.
Unfortunately, destination properties like timeshares and vacation rentals located in picturesque areas, often find themselves susceptible to natural disasters including hurricanes, floods and wildfires. These events are becoming more common – and more costly – in recent years. As of September 10, 2024, the United States has experienced 20 weather or climate disaster events this year causing losses exceeding $1 billion. This does not include events that have occurred for which the total impact has not yet been seen, such as damaging Midwest flooding in late June, or tropical storms in the fall.
Many destination properties are situated along coastlines, making them particularly vulnerable to hurricanes and sea-level rise. Additionally, the devastating wildfires in California and Hawaii in recent years serve as stark reminders of the risks posed by a changing climate.
Several factors are converging to create what can only be described as a perfect storm for the timeshare industry. These include:
Inland locations pose their own challenges, including wildfires, droughts and inland flooding. The escalating costs associated with rebuilding and repairing properties are inevitably passed on to the consumer through higher insurance premiums. Midway through 2023, the U.S. has experienced nine confirmed weather/climate disaster events – wildfires and tornadoes — with losses exceeding the $1 billion mark.
Regulatory Changes
Governments and regulatory bodies are tightening their grip on the insurance industry. Stricter building codes aimed at mitigating the effects of natural disasters, and increased capital requirements for insurers, are driving up costs. These regulatory changes are translating into higher premiums for timeshare owners.
As timeshare resorts embrace technology to enhance customer experiences, they also expose themselves to cyber risks. Data breaches and cyber attacks can result in significant financial losses and reputational damage. Insurers are factoring in these risks, and again, this is reflected in the premiums.
How Destination Properties Can Navigate the Insurance Market
Implementing robust risk management practices is essential. They include ensuring that properties are built to withstand natural disasters, employing cybersecurity measures and training staff to deal effectively with emergencies.
If possible, developers should consider diversifying the locations of their timeshare properties to spread the risk. Not only can this help mitigate the risk of a single storm or catastrophic event impacting multiple properties, it also empowers timeshare management companies to potentially negotiate better terms with insurers.
Engaging with Insurers
Timeshare resort boards of directors and managers should actively engage with insurers to understand how they evaluate risks related to natural disasters and climate change. By demonstrating a commitment to resilience and effective risk management, resorts may have the opportunity to negotiate more favorable insurance terms.
Final Thoughts
The timeshare industry is sailing into choppy waters with the expected rise in insurance premiums in 2024 and beyond. However, by understanding the factors at play and implementing strategies to mitigate risks, timeshare resorts can navigate this storm and ensure a sustainable future. In these uncertain times, we cannot stress enough the importance of proactive measures.
Learn More About Risk Management for Destination Properties
This content is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. Gregory & Appel is neither a law firm nor a tax advisor; information in all Gregory & Appel materials is meant to be informational and does not constitute legal or tax advice.
Homeowners associations (HOAs) serve as the backbone of community living, ensuring order, resource management and protection of collective interests. At the heart of these associations are HOA board members, entrusted with pivotal responsibilities that shape community governance. This guide offers a detailed look at the complex duties and obligations essential to their roles.
Educational Foundation
The journey of an HOA board member begins with a commitment to continuous learning and comprehensive understanding. Beyond familiarity with governing documents, board members dive into historical viewpoints, evolving legal frameworks and state statutes governing community associations.
HOA board membership entails a perpetual quest for knowledge and collaboration. Staying abreast of legal developments, best practices and emerging trends is crucial.
Legal counsel serves as an indispensable ally, providing insights and strategic guidance to navigate regulatory complexities. Collaboration with legal experts, financial advisors, insurance partners and industry professionals fosters informed decision-making and proactive risk mitigation.
Maintenance and Financial Planning
Central to effective HOA management is the delicate balance between maintaining communal infrastructure and prudent financial stewardship. Board members shoulder the responsibility of prioritizing maintenance tasks, allocating financial resources and safeguarding the long-term financial health of the association.
As custodians of homeowners' collective interests, board members are bound by a fiduciary duty to act with unwavering integrity, transparency and diligence. Upholding ethical standards and fostering inclusive decision making processes are imperative for building trust within the community.
Risk Management and Insurance
In an ever-evolving landscape loaded with potential liabilities, risk management assumes paramount importance in HOA governance. Board members must adopt a proactive approach to identify, assess and mitigate risks, safeguarding homeowner interests and protecting the association from legal liabilities.
Adequate insurance coverage, including Directors and Officers Liability insurance, offers a vital safety net.
Governance's Role in Risk Prevention
Board members who grasp governing documents are better equipped to prevent potential Directors and Officers (D&O) claims. D&O insurance is a form of liability insurance that protects individuals from personal losses if they are sued as a result of serving as a director or an officer of a business or other type of organization, such as a timeshare HOA. It can also help cover the legal fees and other costs the organization may incur as a result of such a lawsuit.
Board members can be held personally liable for their management decisions or actions taken in their capacity as directors of the association. Since they are responsible for making decisions that affect the timeshare and its owners, there is an inherent risk of disputes, allegations of mismanagement, or breach of fiduciary duties.
D&O insurance is designed to protect board members from legal liability and financial loss should they be wrongfully sued for actions taken within the scope of their board duties, ensuring that they will not be personally out of pocket for legal defenses or potential settlements related to their board activities.
Prioritizing collective welfare and selflessly serving communities lay the foundation for effective risk prevention and governance.
Embracing Collaboration
Effective risk management and governance rely on collaboration among board members. Embracing educational opportunities and seeking expert guidance empower board members to make informed decisions and navigate governance complexities with confidence.
Best Practices
Do:
Understand your role
Influence rather than manipulate
Manage expectations
Prioritize effective communication
Continuously improve your skills
Read, understand and follow your governing documents (CC&Rs, by laws, articles of incorporation, rules and regulations, resolutions)
Create a Code of Ethics
Don't:
Display unprofessional behavior
Vehemently disagree with board decisions
Engage in self-serving operations
Allow political influences
Breach confidentiality
Conduct disorderly meetings
Neglect policy adherence
Misplace priorities
Industry Standards
In this section, we'll cover five significant industry standards for which effective destination property and timeshare boards must have a strategy.
Education
It's imperative for HOAs to establish a comprehensive orientation program for new directors and officers, complemented by ongoing education initiatives. Directors and officers must possess a deep understanding of not only the HOA's operational history but also the intricate details of the resort property's past, including any legal challenges it has faced.
Given the dynamic nature of factual and legal conditions impacting HOAs, continuous education is paramount. Directors and officers must stay abreast of evolving regulations and industry best practices to effectively fulfiII their duties. It's essential to recognize that directors and officers may face personal liability for wrongful conduct, irrespective of their tenure. Therefore, comprehensive education ensures they are fully informed about all property activities and potential risks, mitigating the likelihood of legal liabilities.
Adhering to Association Bylaws and State Legislation
Each board member must familiarize themselves with the specific sections of state law applicable to HOAs, ensuring strict adherence to regulations governing condominium associations, if applicable.
Additionally, board members must faithfully adhere to the governing documents of the association, recognizing them as legally binding contracts among homeowners. While conflicts between governing documents and state statutes may arise, adherence to both is nonnegotiable.
In situations where conflicts occur, seeking professional assistance is prudent to navigate complex legal nuances and ensure compliance with all relevant regulations.
Implementation and Application of Regulations
The board has a duty to uniformly enforce governing documents against owners and residents, maintaining the integrity of the community's regulations.
However, it's crucial to recognize that certain actions may not clearly violate governing documents, necessitating the board's discretion in interpretation.
To supplement enforcement efforts, the board must adopt comprehensive rules and regulations, providing clarity and guidance to residents. Enforcement actions should prioritize encouraging compliance rather than punitive measures, with legal action reserved as a last resort. By fostering a culture of proactive compliance and transparent communication, the board can effectively uphold community standards while minimizing potential legal liabilities.
Advocating for the Collective Interests of Homeowners
As stewards of homeowner interests, the board is responsible for addressing matters that impact the community, including claims against developers, tax relief and property rights negotiations.
Amendments to governing documents, easements and property insurance must be meticulously managed by the board on behalf of the association and its members. By prioritizing transparency, accountability, and advocacy, the board can effectively safeguard the collective interests of homeowners while promoting the long-term sustainability of the community.
Recordkeeping Practices
While the board makes decisions on behalf of homeowners, it's essential to recognize that the association belongs to the homeowners themselves, who have a right to full transparency and access to information.
The board must maintain detailed records encompassing various aspects of HOA governance, including governing documents, meeting minutes, financial records and insurance policies. These records should be readily accessible to homeowners for proper review and consistent with applicable legal requirements.
By prioritizing transparency and accountability in recordkeeping practices, the board can foster trust and confidence among homeowners while mitigating potential legal risks. Homeowners should have reasonable access to these books and records for a proper purpose and consistent with the requirements of applicable law.
HOA board members play a pivotal role in shaping the future of their communities. Through continuous learning, collaboration, and unwavering dedication, they navigate governance complexities with confidence, ensuring the prosperity, cohesion and wellbeing of the communities they serve.
How to Prevent D&O Claims
Unlike many other types of insurance, D&O claims are largely preventable. By following the practices outlined in this article, the HOA and its board members can significantly reduce the risk of a claim or be well prepared to defend against one if it arises.
Learn More About Risk Management for Destination Properties
This content is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. Gregory & Appel is neither a law firm nor a tax advisor; information in all Gregory & Appel materials is meant to be informational and does not constitute legal or tax advice.
Your employee handbook is an important document. Not only does it help employees understand company policies, promote solid company-employee communication and set a consistent standard of expectations, but it can also have serious legal ramifications.
In many employment lawsuits, your handbook will be a key piece of evidence that can either protect your company or provide ammunition for the employee (or former employee) who is suing you. It is vital that your handbook is thorough, up to date, legally compliant, understandable and readily available to all employees.
It is also wise to make employees sign a form stating they received and reviewed the employee handbook, so that they cannot later claim during a lawsuit that they were unaware of a particular policy.
The following areas are examples of common legal mistakes employers make with their employee handbook.
Changing Laws and Requirements
It is vital that you update your handbook regularly to comply with new and changing laws, both federal and state. In addition, you should provide employees with all handbook updates (or notify them if the handbook is published online). For significant legal changes, you may want to have employees sign another document acknowledging that they are aware of the altered policy. In addition, it is a good idea to have a disclaimer that the handbook may change at any time.
Employee Rights
Many handbooks make the mistake of outlining employer rights but glossing over the rights of employees. Some employers fear that including employee rights will encourage more employees to file lawsuits, but omitting them leaves you open to significant legal liability.
Employment Relationship
Your handbook needs to be explicit about the at-will employment relationship – that the employer and the employee have the right to terminate employment at any time, with or without cause. Also, be sure you don’t have other policies that undermine this one, such as probationary periods (which can sound like employment is guaranteed for at least as long as the period) or progressive discipline policies (which may not clarify that an employee may be terminated at any time).
Exempt or Non-Exempt Classification
Wage, hour and overtime complaints are among the most common legal actions taken by employees or former employees. Be sure your handbook is clear in the distinction of exempt and non-exempt, and that all employees are classified properly.
Also make sure that your overtime policy complies with state and federal laws. For instance, if you have a policy stating that overtime must be approved, you cannot mandate that unapproved overtime will not be paid – you are legally required to pay it. You can, however, otherwise discipline employees for violating such a policy.
Computer Usage
Your handbook must make clear that the company owns its computers, email and all data, and that nothing on a computer is private. You should also have clear policies if your employees have other electronic company devices.
Follow Through
Providing a comprehensive, compliant handbook is only the first step – your company must always follow through with the policies outlined. For instance, if your handbook discusses a specific procedure for conducting performance reviews, it is important that you follow it.
Because employee handbooks are so important, consider having legal counsel review yours periodically to help keep your company out of legal trouble.
This content is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. Gregory & Appel is neither a law firm nor a tax advisor; information in all Gregory & Appel materials is meant to be informational and does not constitute legal or tax advice.
In a group benefits captive, employers retain the risk of providing certain benefits for employees such as health insurance, life insurance, disability insurance and retirement plans. Instead of paying premium dollars to a traditional insurance carrier, they contribute money into a fund which is used to pay out claims. This often lowers costs, offers more flexibility in benefits offerings and offers access to risk management and decision-making tools that organizations otherwise may not have access to.
Do I Have to Start My Own Captive?
Incorporating your own, single-parent captive insurance company (formed by one company for the sole purpose of retaining the risks of that organization, its subsidiaries and affiliated companies) is an option, and one that many large companies have already taken advantage of.
For mid-sized companies, a group captive is often a better fit. It allows them access to the benefits of captive ownership without having to fulfill the logistical challenges of running an insurance company. They also are able to diversify their risks by pooling similar risks with other trusted organizations that have similarly attractive loss histories.
There are existing group captives that welcome new members, as long as they are able to fulfill their requirements. The criteria depends on the captive, but generally speaking, they are looking for organizations with a good loss history and a similar commitment to risk management and claims management.
What's the Difference Between a Captive and Self-Insuring?
The main difference is in structure, and the way that each option is organized and regulated.
When an organization self-insures, it is contributing money into a savings account which is used to pay out claims.
An employee benefits captive is a formally-licensed insurance company, formed to pay out claims for its member organizations. While the concept is similar to self-insuring, the organization (or organizations) establish a separate insurance entity.
Why Join a Captive?
An employee benefits captive can offer a faster return than a commercial insurance captive: many companies begin seeing returns after only 18 months, compared to the typical five-year period for commercial insurance captives.
Additional advantages include:
Increased visibility into health plan performance
More control over plan design
Clinical outreach options
Transparent vendor compensation
Increased control over risk
Fewer regulations
Lower administrative costs
Compared to self-funding, a group medical captive can help organizations looking to gain affordable stop-loss protection against the high cost of ongoing and catastrophic claims. When multiple organizations join together to retain similar risks, they are able to gain better protection against unpredictable claims volume instead of relying entirely on their stop-loss.
While both self-insuring and a captive arrangement give employers have greater control over plan design, a captive can offer additional flexibility and access to benefits that meet the unique needs of their workforce.
What Benefits Can Fit Within a Captive?
Depending on the captive, the following risks may be a fit for a group employee benefits captive:
Medical stop-loss
Health claims
Wellness / wellbeing programs
Dental
Vision
Because each captive is designed by its member-owners, it depends on the group and which risks they prefer to fit within the captive versus self-insuring or transferring to a traditional insurer.
A captive will also use some of the premium dollars to purchase stop-loss coverage, transferring a portion of the captive's risk associated with large medical claims to a reinsurer, while still providing coverage for smaller (frequent) claims through the captive.
What Are the Benefits of an Employee Benefits Captive?
Risk pooling – as mentioned above, when organizations pool risk, they are less vulnerable to individual high cost claims.
Additional resources – in a captive arrangement, organizations have access to additional resources that help resolve claims and contain costs, such as:
Care coordination services
Surgical / imaging bundling solutions
Medicare advocacy programs
COBRA advocacy programs
Prescription drug consortium
Specialty prescription management
Fair premiums and stable renewals – average increases in stop-loss renewals can range from 7-9%, and can even max out as high as a 30% increase after unusually challenging claims years. A captive can stabilize these increases.
Access to data & insights – captives share insights from their analytics, offering valuable insights into the way employees are using their benefits and how your money is being spent. This can help inform future decisions about plan design.
No new laser at renewal – carriers can assign a higher specific deductible (a laser) to an individual with a known medical condition or an expectation of high claims. This additional risk is retained by the employer in exchanged for lower premiums, and if those claims do not materialize, the plan can benefit. A captive can eliminate the option for the carrier to carve out a potential claimant from the stop-loss policy, giving their employer the peace of mind of knowing they won't be financially responsible for their medical expenses.
How Do I Get Started With a Captive?
If you are interested in learning more about employee benefits captives, understand that establishing and operating a captive requires expertise in insurance management. Employers who are considering this approach should consult with a knowledgeable broker who can provide expert consultation and guidance through the complexities of starting or joining a benefits captive.
This content is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. Gregory & Appel is neither a law firm nor a tax advisor; information in all Gregory & Appel materials is meant to be informational and does not constitute legal or tax advice.
Risk Retention Groups vs. Captives - What's the Difference?
What is a Risk Retention Group?
A risk retention group (RRG) is a method of alternative risk transfer available in the United States, regulated under the Liability Risk Retention Act (LRRA).
An RRG is a state-chartered liability insurance company, formed for the purpose of providing coverage for members within the same industry or facing similar risks with shared insurance needs. Once it receives a license, it can operate in all 50 states.
These licensed companies share liability risks and exposures similar to a captive (and, in fact, could be considered a form of captive).
A Brief History of Risk Retention Groups
In 1981, U.S. Congress passed legislation (LRRA) allowing for the formation of risk retention groups for the purposes of retaining product liability risks. Five years later, they passed the Federal Risk Retention Act (RRA), expanding the coverages allowed within RRGs to include a wider variety of liability exposures.
Differences Between Risk Retention Groups and Captive Insurance
You may recognize some similarities between RRGs and captive insurance, and the truth is, there are far more similarities than differences. Here are a few key factors that distinguish RRGs from captives:
Domicile – a captive insurance company can be formed and regulated (domiciled) in a wide variety of locations all over the world, whereas a risk retention group must be domiciled in the United States.
Legal structure – an RRG is regulated under the LRRA, and must be licensed in at least one state; a captive is regulated under insurance laws specific to the jurisdiction in which it is domiciled (these can be overseas or in certain U.S. states).
Purpose – an RRG is typically formed to provide liability coverage to their members, who are focusing on a specific line of insurance or within a defined industry. A captive could be used for a wider range of risks including property, casualty and even employee benefits.
Ownership – an RRG is required to be owned by its members, whereas captives have varying methods of ownership. While many captives are also owned by their members, within some organizational structures such as rented captives, association captives or trade captives, they may be owned by a separate group.
The Benefits of Risk Retention Groups vs. Traditional Insurance
RRGs provide an alternative to traditional insurance options by enabling businesses to have more control over their insurance coverage and costs. By pooling risks between members who share similar liabilities, members of an RRG can collectively manage risk. Here are a few examples of how that benefits members:
More control over insurance programs – members of a risk retention group have a voice in how their insurance programs are structured, meaning they can influence the coverages, terms and conditions, limits and deductibles that best fit their needs.
Leverage and access to reinsurance – RRGs often have more collective leverage and purchasing power with reinsurers. As a group, they can gain direct access to reinsurance markets, purchasing reinsurance to help manage risks and provide long-term financial stability.
Long-term stability with pricing – owners have the ability to predict pricing more accurately because with larger risk pool than just their own exposures, losses are easier to forecast. Premiums are based on their actual loss history (and a prediction of future losses), instead of being subject to volatile market factors in the traditional market.
Potential return of dividends for good loss experience – in an RRG, there is potential for owners to receive an annual dividend in years when claims (and other expenses) are below projections. Traditional insurance, of course, does not offer this opportunity.
What Types of Risks Fit Best in Risk Retention Groups?
Risk retention groups are most commonly formed as risk-bearing entities for writing liability insurance, and are used by similar organizations facing similar risks. However, their exact use depends on the needs of the organizations in the risk retention group.
Some examples of common risks covered by RRGs include:
Professional liability – errors & omissions insurance, like legal or medical malpractice
Tech E&O – errors & omissions insurance related to technology-related professions or businesses
Product liability – coverage for liability that arises from the use of a product, such as manufacturing or design defects, or failure to issue warnings for safe use
General liability – such as bodily injury or property damage caused by a member organization's operations
Directors and officers liability – risks arising from an organization's management or decision-making processes
Auto liability – coverage for risks arising from the use of company vehicles, such as bodily injury and property damage
A risk retention group can include a variety of coverages, but is limited to liability coverage. While the above list gives you an idea of the types of risks which are often included, it depends on the organizations, what risks they share and whether there is a shared interest in retaining these risks collectively.
Where Can I Learn More About Captives?
If you are interested in learning more about captives, take a look at this deep dive into the types of captives, the advantages of forming or joining a captive, and what you need to know before considering this alternative risk solution.
Should I Consider a Risk Retention Group?
If your organization has been dealing with hard markets, and you've been seeing your premiums for liability insurance rise in recent years, a risk retention group could be one solution that provides relief from rising insurance costs.
This should not be done as a short-term solution – as with any method of alternative risk, this is a long-term solution. However, if you have spent more on premiums than claims over the last five years, and have liability exposures that could fit into an RRG, you should consider a RRG or captive.
This content is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. Gregory & Appel is neither a law firm nor a tax advisor; information in all Gregory & Appel materials is meant to be informational and does not constitute legal or tax advice.
