Fort McMurray condo owners left in the lurch after insurance company drops building

Lougheed Estates in Fort McMurray, Alta.
Lougheed Estates in Fort McMurray, Alta. Supplied to Global News

A condo complex in Fort McMurray has been left without building insurance after it was rejected by numerous companies due to previous claims.

Lougheed Estates is a 227-unit building in the north area of Fort McMurray that was built in 2006 and is currently worth about $80.5 million.

But after several claims over the past five years, including the Fort McMurray wildfires in 2016 and several other water-related issues, the building was dropped by its insurance providers on Dec. 31, 2019.

“My phone starts at 7 o’clock in the morning and goes until 11 o’clock at night,” said broker Kathy Bowers with Fort Management Ltd, which manages the building.

“We are still actively working on it. We haven’t given up and we’re trying.”

Bowers said that Fort Management worked right up until the last minute to try to find a replacement insurer once it was notified the previous one wouldn’t be renewing, but in the end, it was rejected by every company it approached.

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“[These companies say,] ‘We already know that they have a history of claims, so we’re not even going to look at it,’ So that’s the position that it’s put us in.”

Bowers said that Fort Management has been managing the condo building for about a year, and since then, it has been working to prevent other major issues: hiring an on-site manager to check pipes and mitigate risks, as well as hiring an HVAC company to monitor equipment.

“This is what we’ve put in place to make sure that it doesn’t happen again,” Bowers said. “So I’m going to bat for them [the condo owners] but they [insurance companies] don’t want to hear it because they don’t want to take on something that has previous claims.”

READ MORE: Insurance premiums jump as much as 700% at some Alberta condo buildings

Bowers said in total, the Fort McMurray fire and two water main breaks led to $2.4 million in claims for building. About half was for the fire, and the other half for the two water incidents.

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She added that the management company is ramping up on working with owners to make sure they’re diligent when it comes to repairs within their units and reporting any incidents. A water break in 2018 began within a single unit where the owner had been away.

“I have been spending a lot of time educating condo owners [on] what their responsibilities are as well, because everybody is affected,” Bowers said.
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Bowers said that owners have been instructed to contact their personal insurance companies to increase their coverage, but for some, that isn’t appearing to be an easy task.

Owners feel deadlocked

“I don’t have insurance because none of the insurance companies actually accepted my request,” said James Beck, who bought several units when the building was first built to use as rental properties. “I don’t have personal, and also the building is not insured, so we are in a deadlock.”

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Beck said that he is struggling to find tenants, and couldn’t find buyers for any of his units when he tried to sell them several years ago.

“I’m really frustrated. I don’t know what to do — the condo fees have increased and there’s no insurance and no tenants.”

READ MORE: New rules mean Alberta condo owners could be on the hook for $50,000 in deductible costs

Beck added that he bought his units for over $400,000 in 2006, but couldn’t sell them for a price in the $100s when he listed them.

“Even that low, I wanted to just get rid of it, I could not sell,” Beck said.

“The government has to kick in and help the owners,” said Beck.

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Alberta government: It’s a “difficult situation”

Fort McMurray-Wood Buffalo MLA Tany Yao told Global News that he’s been following this issue and has been working to make sure the government is aware of the ongoing problems.

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“Our constituents have been very active to make sure I’m aware of the situation,” said Yao. “We did make Department of Finance aware of the issue a long while ago, and they have also been encouraging the insurance industry to find a solution.”

Jerrica Goodwin, a spokesperson for the Alberta government’s Treasury Board and Finance, said in a statement that the province recognizes the “serious and critical” nature of this situation.

“Government reached out to the Insurance Bureau of Canada (IBC) asking them to work collaboratively and find solutions for condominium owners,” the statement said. “We were pleased to learn IBC announced they are hiring a risk manager to assist condominium corporations to access insurance and look forward to that individual being in place quickly to begin this important work.

“We understand this is a difficult situation and are continuing to connect with industry partners towards a resolution.”

IBC had announced the decision to employ a risk manager on Jan. 7. It said then that the manager would be hired “early this year.”

“We recognize the seriousness of the issues facing a number of condominium corporations in Alberta, especially in Fort McMurray, and want to help all stakeholders find solutions,” said Celyeste Power, vice-president of western Canada for IBC.

The risk manager will work with condo corporations to provide advice on how claims history, building materials and location can affect insurance.

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“We understand this is an incredibly stressful situation for Albertans in the affected condos,” Power said. “We do not want to see any Albertan lose their home or have difficulty paying their bills.”

Rob de Pruis, IBC’s director of consumer and industry relations, said Wednesday that it’s a bigger issue than people might realize.

“When we think about Fort McMurray, many of the condo corporations there were built decades ago,” de Pruis said. “They’re built out of wood frames in a boreal forest. And many of these condo corporations are built in flood hazard areas as well.”

He added that vacancies in the building can also increase risk, and that local and global extreme weather events are putting pressure on the insurance companies.

READ MORE: Sufficient insurance key to recovery in the event of environmental disasters

“Alberta has been home to seven out of the 11 costliest insured events in our nation’s history,” said de Pruis. “The biggest one being right in Fort McMurray.”

de Pruis said that IBC has heard of the specific issues Lougheed Estates is facing, and added that the recruitment process has begun for the risk management position, with hopes it will be filled by February.

“It’s very, very rare for a corporation to not be able to obtain the necessary insurance,” said de Pruis. “Extremely rare.”