NDP targets condo insurance crisis
Summer legislation the ‘first step’ toward tackling soaring premiums
B.C.’s strata insurance market is unhealthy and it isn’t meeting the needs of British Columbians, a government report said Tuesday.
It said strata insurance premiums in Metro Vancouver have increased an average of 50 per cent over the past year and rose 40 per cent provincewide, which both government and industry representatives called unacceptable. Yet, the report said, those averages might underestimate the problem facing condo owners.
After the release of the report by the B.C. Financial Services Authority, Finance Minister Carole James told Postmedia that her NDP government plans to introduce legislation this summer “as a first step to help tackle this problem.” A representative of her ministry would not elaborate what that might include — such as amending rules governing strata councils — but did say the government cannot regulate insurance rates.
Despite the pledge of action from James and the authority’s plan to continue investigating the problem for a final report this fall, no quick fix is expected.
Insurance representatives and homeowners associations said the report provided insight into an area where very little data was available.
However, some say, the findings may not paint a clear picture of the crisis facing large, multi-storey, multi-unit buildings, the largest segment of the condo market, especially in Metro.
The averages in the report factor in all B.C. strata corporations, including smaller, ground-oriented housing types like duplexes, triplexes and row houses, said Frank Chong, the authority’s vice-president.
But large buildings, especially highrises, tend to have recorded higher increases in premiums and deductibles, Chong said, adding those increases are also influenced by building size, building age and claims history.
Chong said he couldn’t provide the dollar value of the average insurance premium increase, but his agency will be making more information public later in the year.
Large condo buildings, especially towers with more than 25 units, are probably facing average increases far higher than 40-50 per cent, said Tony Gioventu, executive director of the Condominium Home Owners Association of B.C.
While duplexes, triplexes, and quadplexes make up about a third of B.C.’s strata corporations, they represent less than 10 per cent of the condo units in the province, Gioventu said, and those housing types haven’t had the same large insurance cost increases this year.
Most of B.C.’s strata units, he said, are in larger condos buildings, many of which have reported premium increases of 300 per cent or more this year.
Gioventu applauded the Financial Services Authority for doing “a huge amount of work” to fill an important gap by collecting the data. However, he said, including duplexes and triplexes in the averages “totally slams the bell curve down. It doesn’t give a real reporting of what’s happening in any of the higher density, multi-family buildings.”
Multi-unit developments have been hit over the past six months with massive premium increases, big jumps in deductibles, accompanying sharp rises in strata fees and — in some cases — an inability to get full or even partial coverage.
The Opposition Liberals, who had been urging the NDP government to act on this issue before the legislature was suspended in March by the pandemic, renewed that call following the report’s release. In a letter to B.C. Premier John Horgan, the Liberals outlined six immediate actions the government could take, including temporarily allowing strata owners facing “extraordinary” insurance cost increases to defer some of their property taxes.
The Insurance Bureau of Canada, a national industry association, had previously estimated the average strata premium increase in B.C. was around 30-35 per cent, a level they described in February as “too high.”
On Tuesday, Rob de Pruis, the bureau’s director of consumer and industry relations for Western Canada, called the report “a clear call to action for the B.C. government to work with stakeholders to address spiralling claims costs that are driving up premiums.”
Chuck Byrne, executive director of the Insurance Brokers Association of B.C., said his group, which represents Canada’s private insurers, has “definitely downplayed” the size of this problem.
“I would think ‘unhealthy’ is a bit of an understatement. ... I’d call it a crisis, flat out.”