News articles over the past year have reported that strata insurance premiums and deductibles for many of BC’s 1,500,000 strata unit owners have risen dramatically.
As a result the BC government has required the Financial Services Authority to look into the matter.
The government has announced today that as of November 1, 2020:
1. Strata corporations will get 30 days notice of strata insurance policy changes or decisions not to renew policies; (in some cases, strata councils were finding that policys were not going to be renewed on the last day of the term)
2. Referral fees to strata property managers on insurance transactions will be prohibited immediately (why this was allowed in the first place is unclear);
3. Insurance agents will have disclose their commissions (or an estimate thereof) to the strata corporations (certainly, agents should be disclosing their remuneration to their principals even if that remuneration is paid by a third party).
While these preliminary changes are a small step in the right direction, it is unlikely that they will have much effect on insurance premiums for beleaguered strata owners in BC.
While I am no fan of government intervention in to the private market, if insurance companies cannot or will not provide cost effective insurance coverage to BC strata corporations (with reasonable strata deductibles) then the government has to step in to fill the void with an insurance solution. Perhaps ICBC could extend its car insurance mandate to include insurance of last resort in cases where strata corporations cannot get coverage at an affordable rate (or at all).
Alternatively, the government would have to amend s.149 of the Strata Property Act to permit strata corporations to insure for less than the full replacement cost of strata buildings, common property and fixtures, thus making strata owners effectively “co-insurers.” They would be taking on some of the risk in order to reduce their insurance costs.
While not exactly an ideal situation, it’s still better than having no insurance coverage at all.
©Pazder Law Corporation (2020)
Questions? Call Kenneth Pazder or Melissa Valana (604-682-1509) at Pazder Law Corporation anytime for a free consultation.