B.C. insurers have agreed to end “best terms pricing,” a practice that has contributed to skyrocketing condo insurance rates by year’s end.
Best terms pricing developed when multiple insurers would each agree to submit their own bid to carry a portion of the total risk related to insuring a strata property — but the final premium paid by strata owners would usually be based on the highest of those bids, even if the majority of quotes were lower.
The practice led to higher rates for as many as 94 per cent of strata properties, according to data collected by the B.C. Financial Services Authority.
B.C. Finance Minister Selina Robinson said rising strata insurance premiums have been a growing concern for many British Columbians and eliminating best terms pricing is a step towards a healthier insurance market.
“This is a very complex issue with many factors contributing to rising premiums, and I look forward to receiving BCFSA’s final report and reviewing its findings so that we can continue to work towards viable solutions to this problem impacting many residents in British Columbia,” Robinson said in a statement.
Back in September, the B.C. government unveiled regulatory changes that aimed to bring greater transparency to the province’s strata insurance market.
As of Nov. 1, insurers or their agents need to give strata corporations 30-days notice of an intention to renew or materially change a policy.
“This change ensures strata corporations have advanced warning of cost increases and has time to seek other insurance options if desired,” said the Ministry of Finance in a media release.
Insurance agents are also required to disclose their commissions, with penalties of up to $25,000 for individuals and $50,000 for companies that fail to do so.
The ministry also banned referral fees to strata property managers from insurance deals.
— With files from Simon Little and The Canadian Press