1. You likely need to amend the covenants to make that happen.
2. The owners currently have full responsibility for building coverage by paying assessments and having the Association purchase the coverage.
3. I doubt that the Association will lower the Assessment by the amount used to pay for that coverage. Expecting that the Association wouldn't consider that, the Board is effectively raising assessments anyway (because it would cost the member more than they are currently paying).
It sounds like the Board simply doesn't want to increase assessments to pay for the coverage so they consider transferring the responsibility (which really isn't a transfer of responsibility) to be able to say that they kept expenses low. It's a slight of hand type of trick that didn't change anything but might make the board look good.
Most likely, the Board will need to raise assessments to meet the new costs.
The board can minimize the increase by:
1) shopping around - I found insurance brokers obtaining better deals than simply going to the larger companies.
2) Increase deductible - just be sure to adopt a plan so the Association actually has the deductible available if needed.
I suggest that the following be done prior to making decisions.
1) determine what the amount would be per lot for the Association to pay the coverage.
2) Someone should contact their own agent and see what the amount would be to cover their unit on their own.
3) Determine the amount of the assessment that goes to pay the insurance.
4) Figure out the cost savings (if any) to the individual owner
5) Utilize these figures when making the decision.