In BC 1.5 million people, almost one in three, live in strata condos and townhouses, many of which have been hit by skyrocketing insurance rates that have left residents in financial distress and worried about their futures.
When residents of Anchor Pointe in New Westminster gathered for the Strata’s annual meeting in December 2019, they were stunned to learn their building’s insurance premiums were expected to increase by 40% for 2020. 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% in 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 sufficient. Instead, the premium would be $259,000 this year – more than 3.5 times the cost of last year.
One of the residents had expected strata fees for this two-bedroom unit would be around $480 per month, including building insurance with this year’s anticipated 40% increase. But now, the monthly costs for his unit will need to rise by about $150 to $630 per month!
The strata council is trying to figure out how to cover the massive gap, whether by dipping into the contingency reserve fund or through a one-time assessment to be paid by owners.
It is not clear how many of BC’s 30,000 strata corporations will face similarly skyrocketing insurance costs. Some unit owners worry they won’t be able to renew mortgages without proper building insurance, while others can’t afford hundreds of extra dollars a month in strata fees.
Renters worry increases will be passed onto them or that their landlords will simply sell, forcing them to move.
The Insurance Brokers Association of BC issued a statement urging the provincial government to make reforms to legislation, including adding a standard definition of a strata unit to the Strata Property Act. The finance Minister, Carole James, said her government is ‘working hard’ to have some short-term ideas, but even those are unlikely to offer relief to some.
Earlier this month, the BC government has announced regulatory changes aimed at bringing more transparency to condo insurance premiums. The finance Ministry says effective November 01, 2020 insurers or insurance agents, will be required to give 30 days notice to condo or ‘strata’ corporations if they intend not to renew a policy, or to make any changes. It says that would ensure Strata have advance warning of cost increases in order to seek other insurance options if they wish.
Referral fees to Strata property managers from insurance transactions are also prohibited, effective immediately. The legislative amendments also mean insurance agents will be required to disclose their commission amount, or a reasonable estimate, to the Corporations. Those who fail to meet that requirement face penalties of up to $25,000 for an individual or $50,000 for a corporation.
According to the Government, these changes will provide stability and competition.