Finance minister says legislation coming to start addressing soaring strata insurance costs
VANCOUVER -- B.C.’s finance minister has told CTV News Vancouver legislation is on the way to address the skyrocketing strata insurance costs owners have been facing, but did not offer any details as to what exactly that will entail.
Carole James referenced the legislation in an emailed statement addressing a newly released interim report from the BC Financial Services Authority, which deemed the state of the provincial strata insurance market "unhealthy."
The report, which was requested by the province, found over the past year, premiums have risen on average by about 40 per cent across B.C., and 50 per cent across Metro Vancouver, while deductibles have increased up to double and triple digits.
“Insurers are incurring losses mostly from minor claims (particularly those resulting from water damage) due to poor building maintenance practices and initial construction quality issues,” the report said, and added “there is not enough capacity in the strata insurance market to support future expected demand.”
Vice-president of the regulatory agency Frank Chong called it a complex issue with no easy solutions.
“We recognize that there is a tremendous amount of pressure exerted as a result of the increase in strata insurance,” Chong said, added the agency gets a lot of questions and complaints from the public. "We believe that obviously that this particular issue will not be going away immediately. There will be continued pressure over the medium term.”
According to the interim report, out of approximately 6000 buildings:
- 54 per cent had a premium increase of less than 30 per cent compared to the previous year
- 31 per cent saw increases of 30 to 50 per cent
- Nine per cent experienced hikes of 50 to 100 per cent
- Six per cent saw increases of over 100 per cent
In a statement, James called the rising costs a "serious issue," and said the Financial Services Authority analysis is providing a "clearer picture" of the factors at play.
“It’s important to recognize that the dynamics driving these increases are playing out in the private insurance industry - government does not set insurance rates or regulate pricing,” James said. “We are reviewing the report now and will be bringing in legislation this summer as a first step to help tackle this problem.”
Abbotsford strata council president Mike Pauls saw a premium increase at his complex that went from just over $60,000 to into the hundreds of thousands.
“We do our due diligence to do all the right things, and put measures in place for safety and security, and to be claims free and still face a whopper of an increase in your insurance premium doesn’t seem very fair,” Pauls said, and noted his building is only a year and a half old. “Floors five through 10 in my building is seniors, assisted living. And we all know seniors are on fixed incomes, right. And how is that fair to them?”
Pauls would like to see caps on potential increases, especially for buildings with no claims.
“I think government needs to take a closer look at this and not leave it to the private sector,” he said.
The opposition called on the province to take "immediate action" to help strata owners, including a temporary tax break on the 4.4 per cent Insurance Premium tax on strata property.
In a press release, opposition critic for housing Todd Stone said the problem is getting worse.
“The government cannot delay action on this issue any longer,” Stone said. “It is time to see the government take real steps to improve this situation and provide much-needed relief for condo and townhome owners around the province.”
In February, Stone introduced a private members bill proposing changes to the Strata Property Act, including a measure to clarify what issues a strata or owner are responsible for.
The BC Financial Services Authority said it will be meeting with stakeholders over the next few months to gather input. A final report is expected sometime in the fall.