Strata Insurance Update
TAGS: Strata Insurance
For several months, BCREA and other stakeholders have drawn the government’s attention to significant increases in the cost of strata property insurance in BC. This is a complex issue and, while it can’t be solved quickly, actions are underway.
Initial research findings
The BC Financial Services Authority (BCFSA), BC’s financial services regulator, published a brief interim report in June on the causes of significant increases in strata insurance. These are some of the key findings:
- Looking at both large and small stratas, premiums have risen on average by approximately 40 per cent across the province over the past year while deductibles have increased up to triple-digits over the same period.
- Price pressures will continue and there is not enough capacity in the strata insurance market to support future expected demand.
- Insurers are incurring losses mostly from minor claims due to poor building maintenance practices, initial construction quality issues, building material changes and rising replacement costs.
The BCFSA is consulting with stakeholders – including BCREA – and plans to publish its final report in the fall.
During the summer session, BC MLAs passed the following legislative amendments as the first step to address strata insurance concerns:
- Add insurance information to the Form B Information Certificate (recommended by BCREA).
- Strengthen notification requirements by insurers to strata corporations of changes to insurance coverage and costs, or an intent not to renew (recommended by BCREA).
- Require strata corporations to inform owners about insurance coverage and provide notice of any policy changes, including increasing deductibles (recommended by BCREA).
- End the practice of referral fees between insurers or insurance brokers and property managers or other third parties, and require brokers to disclose the amount of their commission.
- Set out clear guidelines for what strata corporations are required to insure to help strata councils make informed decisions.
- Allow stratas to use their contingency reserve fund when necessary to pay for unexpected premium increases.
- Protect strata unit owners against large lawsuits from strata corporations if the owner was legally responsible for a loss or damage, but through no fault of their own.
- Identify when stratas are not required to get full insurance coverage.
- Strengthen depreciation reporting requirements.
- Change the minimum required contributions made by strata unit owners and developers to a strata corporation’s contingency reserve fund.
Most of the changes will take effect by regulation, and BCREA looks forward to opportunities to provide input. In the meantime, resources are available from the Condominium Home Owners Association of British Columbia and the BC Government.
To subscribe to receive BCREA publications such as this one, or to update your email address or current subscriptions, click here.
What we do
Popular tags within Advocacy
Popular posts from BCREA
Housing Market Update – May 2023May 16, 2023
Mortgage Rate ForecastMar 22, 2023