The B.C. government is moving to end referral fees, provide more transparency and close loopholes in a bid to address sky-rocketing strata insurance fees.
Finance Minister Carole James introduced the legislation on Tuesday as a “first step” to address the challenge many condo owners are facing in the wake of ever-climbing property values and excessive exposure to earthquake risk.
“This is an extremely complex issue playing out in the private insurance industry, but that doesn’t lessen our government’s commitment to doing what we can to make the situation better,” James said.
B.C.’s condo owners have struggled under an average cost increase of around 40 per cent over the past year, according to an interim report presented to the province last week by the industry’s regulator.
Insurers are incurring losses mostly from minor claims, particularly those resulting from water damage, poor building maintenance and initial construction quality issues, said the BC Financial Services Authority, whose final report is expected in the fall.
The government aims to end the charging of referral fees between insurers or insurance brokers and property managers or other third parties, as well as require the disclosure of commissions.
“We heard the commissions could have been up to 20 per cent of the cost,” James said. “That is a very large amount and by disclosing that, we believe it will create competition.”
The policy would also lay out what strata corporations are required and not required to insure, and have strata corporations inform homeowners about any policy changes, such as higher deductibles.
About 1.5 million residents in B.C. live in strata properties, which can range from under $1 million to more than $200 million in insured value.
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