What’s happening in BC’s strata insurance market?
The BC Financial Services Authority (BCFSA) found strata insurance premiums rose by approximately 40 per cent, with deductibles seeing triple digit increases over last year across the province according to their interim report released om June 16.
These increases are having a widespread impact on BC – nearly one in three British Columbians live in a strata property.
Changes to strata regulation
An addition to the Strata Property Regulation (BC Reg. 43/2000), made through an Order in Council on May 29, 2020, may make life easier for strata corporations grappling with sky-high insurance premiums.
Strata corporations can now fund insurance premiums from their contingency reserve funds without a three-quarters approval vote.
The Real Estate Board of Greater Vancouver worked with the BC Real Estate Association, and the other 10 real estate boards in the province, to develop recommendations for the BC government that, if implemented, would help deal with the issue.
- Amend the Form B Information Certificate to require proof of insurance, including premiums, deductibles, coverage and expiry date.
- Work with the insurance sector to put measures into place that assure all strata corporations are able to obtain insurance coverage, for as long as the difficult market conditions last.
- Engage with insurers so they continue to provide coverage to strata corporations.
- Amend the Strata Property Act to require a strata corporation to inform owners and tenants of any material change in insurance coverage, including an increase in any deductible, as soon as feasible.
- Require insurers to provide strata corporations with notices 60 days before their policies expire or will be cancelled.
- Encourage the provincial insurance regulator, the BCFSA, to make public the data and information it is gathering from insurance companies to better understand the current climate of expensive strata insurance.
- Encourage the BCFSA to foster a robust, economically viable market that attracts insurance providers.
- Develop mandatory education for strata council members.
- Either create a new organization – modeled on the Condominium Authority of Ontario – to enforce the Strata Property Act, including providing mandatory training and creating best practices for strata councils, or assign this role to the Ministry of Municipal Affairs and Housing.
Why are insurance rates increasing?
Strata building insurance premiums are increasing for a variety of reasons, according to the insurance industry. These include an increase in the number of claims, in the cost of repairs and rebuilding, and in the growing number of strata developments. Many strata buildings date back to the 1970s and ’80s and strata owners may be reluctant to undertake major system upgrades until problems occur.
What's the impact on the housing market?
The most affordable homes in Metro Vancouver are strata units. Drastically increasing insurance rates negatively affect the affordability of this segment of the market.
As well, some strata corporations are struggling to find insurers willing to cover their building, making them non-compliant with the Strata Property Act. This means these units can no longer be bought or sold.
This adds uncertainty and risk into the market and the economy at large.