Editor’s Note: A previous version of this story incorrectly identified BFL as the insurer. In fact, BFL is the insurance broker. Global News regrets the error.
The president of another Lower Mainland strata council is speaking out after getting served with a sky-high hike to his building’s insurance.
Mike Pauls lives in a year-old 26-storey building on Gladwin Road in Abbotsford — a structure so new, it doesn’t even show up in Google Street View.
In 2019, the building paid a $66,000 premium through insurance broker BFL. Last month, the strata council got its bill for 2020: A whopping 780 per cent increase to a premium of $588,000.
“Our jaws kind of dropped to the floor,” said Pauls.
“We were really concerned about that because it was going to be not only a big increase in our budget, but it was going to significantly impact the people here.
“I can understand if we need to do building improvements or things like that, but we don’t have to, it’s a brand new building.”
That hike would have meant a one-time special levy of about $3,000 per unit, along with an increase in monthly strata fees from about $300 to $600 on average.
The building features concrete construction and has all the latest safety measures.
The explanation strata council got for the increase was there were fewer underwriters willing to share in the risk over covering the $79 million building, so the cost to get full coverage from the remaining underwriters was going up.
Reeling, the council instructed its building manager to go back to BFL and try for a better deal.
BFL came back with a new offer: a $241,000 premium, but with reduced insurance coverage.
BFL did not respond to a request for comment Monday, but on Tuesday said it had previously advised the Gladwin property’s council that it was looking for ways to bring down the building’s premium costs.
BFL said as a broker it does not set insurance rates, but instead works to find the best rate for its clients. However, it said it has been seeing insurance rates increase for many different sectors, including the apartment, strata and condo sector.
“The most significant challenge has been the lack of available property insurance capacity,” said Vital Adam, vice-president of corporate communications in an email.
“Despite our efforts as an independent insurance broker, poor global and local industry performance has led many insurance companies to stop insuring this class of business altogether due to a deteriorating loss experience or alternatively to greatly restrict their involvement in this class of business.
“This has led to many corporations receiving significant increases to both premiums and deductibles with some properties proving difficult to find full replacement value coverage.”
Pauls’ building is the latest to speak up after being hit with a shocking insurance increase. Owners in a three-year-old Langley building told Global News last week that they were facing a premium hike from $97,000 to $371,000, and a deductible hike from $5,000 to $250,000.
Rob de Pruis, director of consumer and industry relations with the Insurance Bureau of Canada (IBC), said risk assessments are specific to individual buildings, and that such hikes may be predicated on an increased risk of flood or earthquake.
“Those types of coverage for those types of exposures could be significantly increased based on information from that,” he said.
“There could be many other factors as well, things like the vacancy rate of a particular property.”
But he noted that the Canadian insurance industry as a whole is also facing financial headwinds, particularly as flood, fire and disaster claims skyrocket.
“What we have been seeing is that there has been a very significant increase in the frequency and severity of severe weather across the country,” said de Pruis.
“Insurers used to pay out on average annually about $500M annually for severe weather losses. In the past few years that number has increased to well over a billion dollars annually for severe weather losses.”
Pauls said whatever the reason is, the new costs being borne by average homeowners, many who are on fixed incomes, are unreasonable, and that it is time for the government to step in.
He said his council has penned a letter that it plans to send to local, provincial and federal politicians demanding action.
“This is going to happen to a lot of other strata properties, be it in the Lower Mainland or the rest of British Columbia,” he said. “I don’t think that’s right.
“The government needs to get involved in this, investigate what’s happening and what solutions there are that can stop this from getting bigger than it is already.”
B.C. Minister of Municipal Affairs and Housing Selina Robinson declined an interview request.
In a statement, a ministry spokesperson said the rising cost of strata insurance is being felt across Canada, and that the province “continues to engage with the private insurance industry to determine how, in the face of climate challenge, British Columbians can continue to access affordable insurance coverage.”
It also referred stratas who are having trouble finding an insurance broker to the IBC.
In the meantime, even with the $240,000 premium for 2020, Pauls and his neighbours will be stuck paying a special levy and increased strata fees.
“Going forward, we can’t live that way,” said Pauls.
“I would like to hope that people feel the same way as me that they’re concerned, they’re shocked, and they’d like something done about it.”
Comments