B.C. stratas on edge after reports of soaring insurance premiums
Credit to Author: Dan Fumano| Date: Tue, 11 Feb 2020 03:13:24 +0000
Condos across B.C. could be hit by soaring insurance bills this year, a New Westminster strata council president is warning.
When residents of Anchor Pointe in New Westminster gathered for the strata’s annual meeting in December, they were stunned to learn their building’s insurance premiums were expected to increase by 40 per cent for 2020.
“It was a total shock to everybody,” said strata president Bruce Campbell.
Unfortunately for the 30-year-old tower’s residents, things were about to get worse.
The strata had budgeted for the 110-unit building’s insurance premium to increase by about 40 per cent for 2020 — to $95,000 for the year, up from about $70,000 — but when January rolled round, the strata council learned it would not be close to sufficient. Instead, Campbell said, the premium would be $259,000 this year — more than 3.5 times the cost last year.
Campbell had expected strata fees for his two-bedroom unit would be around $480 a month, including building insurance with this year’s anticipated 40 per cent increase. But now, the monthly costs for his unit will need to rise by about $150, to $630.
The strata council is trying to figure out how to cover the massive gap, Campbell said, whether by dipping into the contingency reserve fund or through a one-time assessment to be paid by owners.
“As a strata council, we have to be the bearer of pretty bad news sometimes,” Campbell said.
Many Anchor Pointe residents, including Campbell and his wife, are on fixed incomes and will struggle to cover the additional costs. Campbell, a 70-year-old retired businessman, wants to enjoy retirement, he said, “but I might have to go back to work.”
It’s not clear how many of B.C.’s 30,000 strata corporations will face similarly skyrocketing insurance costs, but Campbell’s building is not alone. Last month, the Abbotsford News reported a new condo building there was facing a 780 per cent hike in its insurance premium, which would be covered with a one-time levy of $3,000 a unit, along with doubling the monthly strata free to $600.
“I’d describe it as a crisis,” Campbell said. “There’s no other way around it.”
Now, insurance industry associations are responding to reports of soaring condo costs and B.C.’s Finance Minister said Monday the provincial government is monitoring the situation.
Other condo markets, including Toronto and New York, have had increases, said Tony Gioventu, executive director of the Condominium Home Owners’ Association of B.C.. It’s a particularly worrying issue for Metro Vancouver, where about half of households live in strata-titled properties.
Gioventu said that as the insurance for more buildings come up for renewals at different points through the year, the price picture should become clearer.
But in the month of January alone, Gioventu’s organization heard from about 100 B.C. condo buildings either facing “massive” increases in insurance costs or, in some cases, unable to find a company willing to insure the building at all.
Stratas having trouble getting insurance should contact the Insurance Bureau of Canada, a national industry association, the B.C. Ministry of Finance said Monday.
That Bureau announced Monday it was launching a task force to review the issue across Canada, and will meet next month with affected groups in B.C.
These insurance increases are unlikely to hit owners of detached houses, said Rob de Pruis, the Bureau’s director of consumer and industry relations for Western Canada. He said many of the reports his group has received about big cost increases are in buildings with “claims history and maintenance issues.”
Different groups point to different factors for premium increases, including rising global losses from severe weather.
In an emailed statement Monday, B.C. Finance Minister Carole James said that while strata corporations across Canada and elsewhere are facing increased insurance bills, here in B.C., “higher real estate prices and construction costs have contributed to a surge in the cost of insurance coverage.”
“While specific product pricing is a matter for the insurance industry, we are working with the British Columbia Financial Service Authority to monitor the situation carefully and ensure we are doing everything we can to financially protect British Columbians,” said James.
The Insurance Brokers Association of B.C. issued a statement Friday urging the provincial government to make reforms to legislation, including adding a standard definition of a strata unit to the Strata Property Act.
These reforms could help “stabilize” B.C.’s condo insurance market, the agency’s news release said, but the organization “recognizes these changes won’t directly address the rising strata-building premiums and deductibles.”
“This is going to be a long time in fixing,” the B.C. group’s executive director, Chuck Byrne, said Monday. “There’s going to be a lost more angst over it before there’s good news.”
With files from Rob Shaw