Vancouver Strata Insurance Rates Changes

By
Amy Leong

July 28, 2020

In June 2020, the Province of British Columbia announced new changes to the strata insurance industry that will help fix soaring strata housing insurance rates.

In 2020, British Columbians were faced with a daunting new challenge: hikes in insurance rates for strata housing. Until now, there has been a lack of action taken on this issue due to only a few providers offering soaring deductible insurance. However, in June 2020, the Province of British Columbia announced new changes to the strata insurance industry resulting in the following positive notes:

  • Increasing transparency on strata insurance policy
  • Closing loopholes related to depreciation reports
  • Ending referral fees paid to strata property managers
  • Giving strata owners and corporations the tools they need to do their part

“The rising cost of strata insurance is a major financial pressure facing thousands of British Columbians during an already challenging time,” said Carole James, Minister of Finance. “This is an extremely complex issue playing out in the private insurance industry, but that doesn’t lessen our government’s commitment to doing what we can to make the situation better. Everyone has a role to play in returning the market to balance and today our government is taking a first step, with the understanding that we will take further action as needed.”

In addition, the British Columbia Provincial Government announced that they have made amendments to the Strata Property Act and Financial Institutions Act. These changes include:

  • Ending the practice of referral fees between insurers or insurance brokers and strata property managers or other third parties;
  • Setting out clear guidelines for what strata corporations are required to insure to help strata councils make informed decisions on their insurance policies;
  • Requiring strata corporations to inform owners about insurance coverage, provide notice of any policy changes, including increasing deductibles, and allow stratas to use their contingency reserve fund when necessary to pay for unexpected premium increases; and
  • Protecting strata unit owners against large lawsuits from strata corporations if the owner was legally responsible for a loss or damage, but through no fault of their own.

The legislation also paves the way for government to make further regulatory changes to:

  • Identify when stratas are not required to get full insurance coverage;
  • Strengthen depreciation reporting requirements, including limiting the ability to use existing loopholes in the legislation to avoid completing depreciation reports;
  • Change the minimum required contributions made by strata unit owners and developers to a strata corporation’s contingency reserve fund;
  • Require brokers to disclose the amount of their commission, which has been reported to be at times in excess of 20%; and
  • Strengthen notification requirements to strata corporations of changes to insurance coverage and costs, or an intent not to renew.

These regulatory changes will be made after further consultation with strata community stakeholders. Government’s actions were guided in part by input from key stakeholders, including:

  • Condominium Home Owners Association of BC;
  • Vancouver Island Strata Owners Association;
  • Insurance Brokers Association of BC;
  • Insurance Bureau of Canada;
  • Insurance Council of BC;
  • Office of the Superintendent of Real Estate;
  • Real Estate Council of BC;
  • Mortgage Brokers Association of BC
  • BC Real Estate Association;
  • The interim report of the BC Financial Services Authority

The Ministry of Municipal Affairs and Housing and the Ministry of Finance will also review the final report from BC Financial Services Authority in Fall 2020 to determine what further changes government can make to help lower strata insurance costs for people. These changes are amazing news for the 1.5 million people that live in strata housing within British Columbia. In a recent report, strata housing premiums rose close to 40% on average on a year over year basis. Over the summer, the BCFSA will engage with industry stakeholders, including strata management organizations, strata owner associations, insurance industry representatives and insurance brokers to validate and add to its findings.