With strata insurance rates in B.C. skyrocketing between 50 and 780 per cent, the Insurance Brokers Association of B.C. (IBABC) is proposing changes to provincial legislation to try and ease the pain.
Several condominium buildings across the Lower Mainland and elsewhere in B.C. have seen massive jumps in their insurance premiums and deductibles this year, with experts blaming high property values and the growing risk of climate change-related weather events.
Those increases have left stratas little choice but to shift at least some of the burden to condo owners, who are being put on the hook for their own personal policies and seeing bumps in strata fees.
In a statement Friday, the IBABC proposes two reforms to the province’s Strata Property Act, including a $50,000 cap on upper loss assessments.
The association says the cap, which would be for deductible assessment and non-insured loss assessment, would help owners access “adequate, affordable insurance products to protect their residences” from “potentially unmanageable financial loss.”
The second change, a standard definition of a strata unit, would ensure the basic components of a condo — walls, ceilings, drywall, sub-floor, basic electrical and plumbing — are covered by strata insurance.
Any finished items like carpets, countertops, plumbing fixtures, appliances and upgrades would be the owner’s responsibility to maintain and insure, the IBABC says.
“This clarity would assist with proper insurance-product pricing and start the journey back to stability for the strata insurance market in B.C.,” the statement reads.
“These two recommendations could protect millions of strata unit owners from further risk of losing their homes and likely help mitigate future insurance market cycles.”
The IBABC admits the changes won’t lower insurance rates but could help bring “long-term stability” to the strata insurance market.
Stories of the impacts stratas and owners are seeing from the insurance hikes have been spreading since the start of the new year.
Owners in a three-year-old Langley building told Global News last month that they were facing a premium hike from $97,000 to $371,000, and a deductible hike from $5,000 to $250,000.
A week after that story, an Abbotsford strata council that paid $66,000 last year says its bill for 2020 included a whopping 780 per cent increase to a premium of $588,000.
With more than half of people living in Metro Vancouver residing in strata-controlled properties, the IBABC says such increases are affecting a disproportionate amount of homeowners.
“Now is the time to act to help stabilize the market,” IBABC executive director Chuck Byrne said in a statement. “We all have the consumer’s best interest in mind, and by acting together we can help them through this difficult situation and add long-term clarity and stability to the market.”
Speaking on background, the Ministry of Housing said it is monitoring the situation carefully, noting it’s affecting stratas across Canada and around the world.
“We appreciate the suggestions of the Brokers’ Association, and will continue to have ongoing conversations with those in the condo and insurance sectors about opportunities to improve the Strata Property Act,” the ministry said.
The ministry also encouraged stratas to “take steps to reduce the possibility of insurance claims,” including talking to insurance brokers early about renewing and contacting the Insurance Bureau of Canada if they are having trouble getting insurance.
The IBABC is asking government and key stakeholders to consult with them on the proposed legislative changes. No timeline was given for those talks to take place.