Insurance premiums at some Alberta condominiums have gone up dramatically in the last year, prompting concern from condo owners who have to pick up the tab on the bills.
Ryan Chernesky owns two units in a condo in Fort McMurray. Chernesky, who is on the condo board, said last year’s premium on the condo building was approximately $51,000.
The insurer would not renew and only two other companies were willing to take the risk, he said. The lowest quote was approximately $402,000 – an increase of 690 per cent.
READ MORE: Auto insurance premiums going up in 2020 for many Alberta drivers
“We’re facing a real crisis right now because our condo fees are going up a lot simply because insurance has gone up dramatically,” he said.
Chernesky said he has never seen such a significant insurance premium hike.
“We’ve been told by the insurance companies that it’s to do with the 2016 wildfire and there is an increased risk associated now and various other reasons on a more global scale,” he said.
READ MORE: 900 insurance claims unresolved 2 years after Fort McMurray wildfire
The Calgary man said the hike is unsustainable long term, adding it equates to an additional $311 per month in condo fees.
“The owners are not going to be able to afford it and ultimately it’s going to end up in a wave of foreclosure if we can’t resolve the issue,” Chernesky said.
The Insurance Bureau of Canada said unlike auto insurance, there is no cap for condo insurance premiums and insurers do not need to apply for a rate increase because it isn’t government mandated.
Ryan Hall bought a condo in Calgary last year. The insurance premium at his condo building is going up from roughly $41,000 to $55,000, a jump of approximately 33 per cent.
Hall said that increase will trickle down to condo owners, who will have to pay approximately $15 a month more in their condo fees.
“It definitely is concerning just in terms of other rates that are going up in other areas,” he said.
“It’s not going to make it unsustainable. It’s just, in a climate where inflation is going up as a whole and incomes are stagnating and sometimes going down, it really makes me question… how it’s going to affect me maybe five or 10 years from now.”
Robert Noce, a lawyer who specializes in condominium law at Miller Thomson LLP, said he is hearing from some clients about the premium increases. Noce said there may be several reasons why these hikes are happening now, such as the Fort McMurray wildfire, major fires in Edmonton and other insurance claims like a slip-and-fall and water damage.
READ MORE: Sufficient insurance key to recovery in the event of environmental disasters
“When you factor that all in, I think, over time, insurance companies are now looking at trying to improve their bottom line,” he said.
“Insurance companies have had to pay out huge insurance proceeds to compensate owners with respect to these losses. As a result, insurance companies are trying to get back some of that money and obviously to cover their costs.”
Celyeste Power, a vice president for the Insurance Bureau of Canada, said insurance companies are being careful about the risks they underwrite due to recent financial losses.
Power said Alberta has had “significant catastrophic loss events” in the last few years, such as the 2016 Fort McMurray wildfire and the 2013 Calgary flood, and that IBC is seeing an increase in frequency and severity of weather-related losses across the country.
READ MORE: How the 2013 Calgary flood forced an insurance industry rethink: ‘It changed everything’
“We are working with all levels of government and stakeholders to communicate the factors affecting the issue of insurance availability and affordability. The industry is taking this issue very seriously. Insurance Bureau of Canada is forming a national taskforce in an effort to examine and respond to these concerns in the market,” Power said in a statement.
Treasury Minister Travis Toews said the province is aware of challenges with insurance rate hikes that condo corporations have experienced.
“Service Alberta is looking into it. Right now, we’re communicating with insurance providers that they provide every possible solution to their insured to ensure they’re mitigating these premium increases wherever possible,” he said.
The province’s Condo Property Act states condo boards must have insurance on the building.
IBC recommends shopping around with numerous insurance providers to review options for your premiums.