Tighten strata insurance rules, B.C. urged
Condo owners’ association makes pitch to government on controlling soaring premiums
The organization representing owners of 240,000 B.C. condo units asked the province on Wednesday to tighten the rules for strata corporations to help bring soaring insurance premium costs under control.
The Condominium Home Owners Association of B.C. said the law in B.C., unlike that in many provinces, allows strata to avoid updating depreciation reports, with approval of three-quarters of unit owners. These reports detail a building’s projected maintenance, repair and replacement costs over a 30-year time frame.
The association’s executive director, Tony Gioventu, said his organization had found a “significant number” of the condo buildings — that are struggling to even get insurance — had exempted themselves from updating depreciation reports.
“In most provinces, you could not do that,” he said. “And it always comes back to an economic crisis for those communities. They don’t plan, they don’t fund, they don’t maintain and repair. And now, they’re faced with the most gruesome of all, they can’t insure.”
The association’s report also suggests the province should introduce minimum funding levels for strata corporations. Many strata, in an attempt to keep monthly fees low, fail to allocate enough money for maintenance and emergencies, Gioventu said. Gioventu said his group’s research also found what he called a worrisome trend: Some strata are dipping into contingency reserve funds to pay for sudden insurance hikes, as a way to avoid increasing monthly strata fees too much. This means the strata has less money available for needed maintenance, which can lead to problems in the future. The report also urges the province to require more transparency and disclosure around commissions and fees paid to strata managers, brokers and other agents. The problem of soaring insurance premiums is complex and solutions won’t be quick or easy, but Gioventu said believes both the B.C. NDP government and Liberal Opposition are treating it as priority.
“They’re looking at it quite seriously because they do understand this has a huge financial impact, both on consumers and on the province.”
The Condominium Home Owners Association report comes after four months of work reviewing more than 1,000 survey responses and 500 submissions from strata corporations. The association found condo owners in “every corner of the province” were suffering from insurance woes this year, including soaring premium and deductible costs, and, in some cases, trouble finding appropriate building coverage, Gioventu said.
Nearly one in five respondents said their premiums had increased more than 100 per cent in a single year.
“Insurance problems are just as serious in Cranbrook and Nelson and Prince George and Port McNeill and Victoria as they are in Metro Vancouver,” he said.
In recent months, the associations representing insurance providers and brokers have made recommendations for how the B.C. government should address the problem.
Wednesday’s report comes a day after the release of a report from the B.C. Financial Services Authority, the Crown agency that regulates insurance companies. It describes the province’s strata insurance market as “unhealthy.”
After that report, B.C. Finance Minister Carole James announced her B.C. NDP government would bring in new legislation this summer “as a first step to help tackle this problem,” but she did not say what that might look like.
The Authority’s report on Tuesday said strata insurance premiums in Metro Vancouver had increased an average of 50 per cent this year and rose 40 per cent provincewide, which both government and industry representatives called unacceptable.