January 2009 - Jesse Gutierrez
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Real Estate Purchase in a Fractional Ownership has Value, So Protect It.
Jesse Gutierrez, President, ResortCom Interntaional
The world has seen a dramatic slowdown in residential production spurned by a credit market “run amuck” caused by poor analysis of “Value at Risk.” Potential purchasers have realigned their positions and their assessment of what is reasonable value in a vacation or retirement property purchase. Is a second home comparable to an investment or is it a quality of life issue? If the purchase is as an investment then the protection of that asset is an important strategy for the owner. If it is a quality of life issue the retention of the environment that might be exposed to forces that could create a loss of the environment should be provided. Developers selling in a global marketplace should recognize the global risk exposure of their clients and reposition their products to meet the demands of today’s consumers by addressing financing and insurance programs that are providing asset protection to the community manager and the residential owners. A topic that is rarely addressed is the value an insurance program that can reduce risk loss, reduce costs and add value as a marketing tool.
Potential clients have become more educated in evaluating the value of their purchases and risk associated with an international purchase. Developers who are providing a value purchase must consider the risks of that purchase and help the purchaser attain the proper insurance coverage for the loss of property and third party liability. There is value in the purchase of a retirement or vacation property purchase if there is the proper protections to all parties are included and can be documented.
Developers who build internationally have experienced problems in obtaining sophisticated broker representation in Mexico and this has resulted in community developments that are either not insured or insured improperly with policies that do not provide the appropriate coverage to protect all parties. In coastal areas policies placed through insurance markets for catastrophic risk (Hurricane, Flood, Tidal Flow, Earthquake…,) were not properly written or the coverage was either not enough or the deductibles were too high as experienced during Hurricane Wilma in 2005.
The first step in changing the perception of an insurance program is in delivering an insurance program that adds value to both the consumer and developers bottom line. Building customized insurance programs require experienced brokers that understand the Mexican insurance markets capacity, limitations and the role international Insurance markets play.
The second step involves the complexity of the Fractional and Timeshare industry, the developers’ unique product and the client base. Combining these complex components addresses the basics in building an innovative insurance program that would sit at the top 3% of insurance programs delivered in Mexico.
In order to produce an insurance solution that transcends into the marketing of a clients project, we must first identify and address topics of high concern when developing and purchasing products in Mexico.
Developer Concerns
• Catastrophic insurance (Hurricane, Flood, Tidal Flow, Earthquake…,)
• Litigation in Mexico
• Cross border liabilities
• Spanish policy (Properly built and endorsed to respond to risk insured)
• Transparency in insurance costs
• Loss of profits (business income)
• Cost of insurance programs
• What makes my project unique
Clients
• Medical emergencies in Mexico
• Cross border liabilities
• Legal concerns
• Identity Thief
• Political concerns
• Homeowners insurance programs
• Travel assistance
• Language Services
• Cross border health insurance options
• Cost of association dues
Insurance contract solutions address quality of coverage and coverage limits issues and requires knowledge of the insurance contract, market accessibility and a commitment to the geographic market. Delivering a solution that addresses the developer and the clients concerns in a turn-key format not only reduces risk and costs but offers the developer an opportunity to promote a unique selling point to their potential clients.
Integration of an insurance solution into the community association operations reduces potential concerns and fears that potential clients have regarding the purchase of a Fractional or Timeshare in Mexico. A master policy structure that delivers individual limits of coverage to the purchaser is an emerging strategy that the developer can focus on the unique traits of their product that have been enhanced by the insurance marketing tool. As a full service insurance brokerage and risk management firm, Avant delivers custom tailored products to meet the demands of today’s developers and fulfills these concerns.
Jesse Gutierrez
(310) 322-1732 ext. 203
jgutierrez@avantmanagers.com
www.avantmanagers.com