A “perfect storm” of local and global factors have combined to create an unhealthy strata insurance market in B.C., that’s unlikely to improve any time soon according to a new B.C. report.
The B.C. Financial Services Authority‘s investigation found strata owners province-wide were seeing average insurance premium increases of about 40 per cent.
The report highlighted a series of factors that must be dealt with before costs will come down.
Those include reducing claims and claims costs, addressing earthquake exposure, improving education and fostering innovation in the market.
“Overall, strata insurance claim costs need to be reduced and show signs of sustained reduction before pricing relief will be felt by strata property owners,” said the BCFSA in a media release.
“This means addressing the root causes of the claims being made. Better education and support need to be provided to strata councils, owners, and property managers as well as builders and developers to better prevent the issues that lead to these claims.”
The regulator said it had already taken steps to eliminate a predatory pricing policy in the industry known as “best terms pricing.”
It said it also planned to work with other Canadian regulators to collect better data and with the provincial government to streamline claims and BC Housing’s Home Warranty Insurance program.
But it said real change would require buy-in from all stakeholders, and potentially include a look at a public insurance system, public-private partnerships or a “made in B.C.” private system.
Condominium Homeowners Association executive director Tony Gioventu said there was little new information in the report.
“It doesn’t really tell us much. There’s no solutions or recommendations, it’s just an update of what we already know,” he said.
“It’s very difficult for the regulator to maybe impose conditions that may be not legislated or new regulations without tipping the edge on the industry. It’s a very delicate balance.”
Gioventu said strict building codes and the high value of B.C. real estate also leave regulators with few options when it comes to insurance pricing.
He said in the long term, B.C. may need to look to an alternative insurance model, including what would amount to an insurance cooperative among provincial condo owners.
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