‘FIRST STEPS’ FALL SHORT
Little relief in condo crisis
The New Democrats purported to ride to the rescue Tuesday of owners and residents hammered by soaring insurance premiums on strata properties.
“We do absolutely understand the difficulty that people living in strata are facing when dealing with significant increases in insurance costs, or in some cases, not being able to find insurance at all,” Housing Minister Selina Robinson declared in announcing legislation to address the admitted crisis.
Granted, a recent report from the B.C. Financial Services Authority (BCFSA) warned there were no quick fixes and did not offer even longer-term ones.
“We know there isn’t a simple solution to solving the challenges facing the B.C. strata insurance market,” Robinson said. “But that doesn’t mean we shouldn’t take the steps that we can.”
The result was Bill 14, described by Robinson as “first steps” in dealing with a problem that, by her admission, threatens to cost some people their homes.
“These amendments tabled today, combined with the regulatory changes to come, will together help strata corporations better mitigate the rising costs of insurance by bringing more transparency, by closing loopholes related to depreciation reports, by taking action to end referral fees paid to property managers, and giving strata owners and corporations the tools that they need.”
But as Robinson acknowledged with the passing reference to the “regulatory changes to come,” the main impact was not in the way the bill would amend legislation, but the power it would give to the cabinet to make regulations down the road.
Nine of the bill’s 16 sections simply give the cabinet the power to make regulations at some unspecified date in the future. Five others, though more specific, are also subject to cabinet authorization before they take effect, suggesting they may be on hold pending consultation with stakeholders.
Only two sections would take effect immediately, once passed by the legislature and given royal assent. One is a provision clarifying the obligation of strata corporations to “obtain and maintain the required insurance.”
The other would require strata corporations “to inform owners and tenants as soon as feasible of any material change in insurance coverage.”
Overall the bill was underwhelming, particularly in terms of offering relief to strata owners and tenants being whacked with sky’s-the-limit premium increases.
The BCFSA reported average increases of up to 50 per cent, in an interim report last week to Finance Minister Carole James.
But the averaging grossly understated the much higher increases sustained by multi-unit condo buildings, that have for months been reporting much higher increases.
The financial authority also reported that the B.C. strata market had been branded internationally as a major risk, leading insurers to refuse to cover some properties and other companies to avoid B.C. altogether.
Still, in a late-morning media conference after the bill was tabled, Robinson and James both tried to persuade reporters that the bill offered genuine relief on both premiums and risk.
Asked for an example of how it would reduce risk, Robinson referred to the obligation to do depreciation reports on strata properties.
“When you don’t do a depreciation report, you don’t know the risks. If we make regulatory changes that would allow us to make some different requirements, this will help reduce the risk. When you know exactly the shape that a building is in, when you understand what lies ahead, in terms of what needs to be invested to maintain a building, then you’re going to be able to get insurance at a lower rate.”
Potentially, yes. But as the reporter noted, the government was not actually tightening the requirements on depreciation reports, only giving the cabinet the power to do so after consulting with strata owners and councils.
“We’re going to give ourselves the authority to do that,” Robinson conceded. “That’s the work that we’re going to take on, over the summer, to bring it in by regulatory means.”
Pressed on direct financial relief on premiums, both ministers pointed to a measure that, once enacted, would prohibit the payment of finder’s fees for lining up insurance companies with particular strata properties.
The provision is subject to cabinet approval, but James insisted it would be enacted “immediately” once the legislation passes.
“We strongly encourage insurance brokers to pass those cost savings on to strata corporations,” she added. But she was unable to point to any legal requirement for them to do so.
Meanwhile the crisis continues. The financial services authority warned last week that “the situation has not yet stabilized. Many strata can expect to face further pricing pressures as well as the risk of not being able to obtain full coverage.”
With that, the authority announced it would take the summer and into the fall to consult stakeholders on possible solutions. Now it would appear that the cabinet intends to join the authority in reviewing, consulting and holding off further action until the fall.
“These changes, how much will they affect what owners are paying?” asked one reporter in the media conference Tuesday. “How soon are people going to be able to save some money?”
“I want to go back, again, to the challenges and the complexity of this issue,” James replied.
“This isn’t a quick fix for the pressures that people are facing. It is going to take some time to address the challenges in the market.”
But with respect for the finance minister, time is what many strata owners and tenants do not have.
This isn’t a quick fix ... It is going to take some time to address the challenges in the market.