The province announced today how it's taking action to help stratas better mitigate the rising costs of insurance. (Supplied by the Province of British Columbia)
The province says it’s taking steps to help stratas better mitigate the rising costs of insurance.
They include bringing more transparency to the strata insurance industry, closing loopholes related to depreciation reports, ending referral fees paid to property managers, and 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,” finance minister Carole James said.
“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.”
Through amendments to the Strata Property Act and Financial Institutions Act, as well as associated regulatory changes, the B.C. government promises to:
- end the practice of referral fees between insurers or insurance brokers and property managers or other third parties;
- set out clear guidelines for what strata corporations are required to insure to help strata councils make informed decisions on their insurance policies;
- require 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
- protect 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 [province added that this legislation “also paves the way” for it 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 per cent; 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.
“We understand the difficulty people living in stratas face when they experience a large increase in insurance costs or have challenges finding insurance at all,” said housing minister Selina Robinson.
“This legislation is a first step to help strata corporations now as we continue to work on this complex issue. I look forward to the BC Financial Services Authority’s final report in the fall, which will help identify further actions( that) government can take to support people living in strata properties.”
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; and
- 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 the BC Financial Services Authority in the fall, to determine what further changes it can make to help lower strata insurance costs for people.