The B.C. Government is implementing several changes to help strata owners mitigate the rising costs of insurance.
The Province said that actions include 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,” 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.”
Amendments to the Strata Property Act and Financial Institutions Act and associated regulatory changes include:
- Ending the practice of referral fees between insurers or insurance brokers and 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.
- Requirements for 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.
- Protection for 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 B.C. Government said that the changes pave the way for further changes, after consultations with strata community stakeholders, including:
- Â Identifying when stratas are not required to get full insurance coverage.
- Strengthening 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.
- Requirements for brokers to disclose the amount of their commission, which has been reported to be at times in excess of 20%.
- Strengthening notification requirements to strata corporations of changes to insurance coverage and costs, or an intent not to renew.
“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 Selina Robinson, Minister of Municipal Affairs and Housing. “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 government can take to support people living in strata properties.”
In the fall, the Ministry of Municipal Affairs and Housing and the Ministry of Finance will review the BC Financial Services Authority’s report to determine its course of action into the future.