VANCOUVER -- The province announced the "first steps" of its plan to address B.C.'s rising strata insurance rates Tuesday morning.
The changes are meant to bring transparency to the industry, close loopholes surrounding depreciation reports and help strata owners and corporations more information when it comes to making decisions, the province says.
Rising strata insurance rates are a major financial pressure during what is 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," James said.
She said the province first became aware of "significant shifts" in insurance premiums late last year, that went "well beyond any kind of normal market corrections."
Following the first phase of an examination into the industry, James said the reasons for the "skyrocketing" prices are complicated, but the results are not.
"The current situation is unacceptable, and there is no quick fix for this problem," she said.
Announcing the initial steps in a plan to address that problem, James said the NDP government will be looking to amend the Strata Property Act and Financial Institutions Act.
Legislation tabled Tuesday includes a prohibition of referral fees between insurers or brokers and property managers, or other third parties.
B.C.'s finance and housing ministers said the changes will set clear guidelines for what strata corporations are required to do to help condo boards make informed decisions about insurance.
Corporations will also be required to let owners know about insurance coverage, provide notice of policy changes, and let stratas use their contingency reserve fund (CRF) to pay for unexpected increases, if needed.
And ministers James and Selina Robinson claim the amendments will protect owners against lawsuits from strata corporations if they are legally responsible for loss or damage, "but through no fault of their own."
The ministry says these four changes will lead to further updates to B.C.'s regulations:
- identifying when strats are not required to have full insurance coverage;
- strengthening depreciation reporting requirements (including a limit to use of loopholes to avoid these reports);
- changing the minimum required contributions made by owners and developers to the CRF;
- strengthening notification requirements of changes to insurance coverage and costs; and
- requiring brokers to disclose their commission.
The ministry says those commissions have been reported to be higher than 20 per cent in some cases.
The above list of changes won't be implemented until the province has consulted with strata community stakeholders, the ministers said.
Among the groups being asked to weigh in are the Condominium Home Owners Association of B.C., Insurance Brokers Association of B.C., Insurance Bureau of Canada, Real Estate Council of B.C. and the B.C. Real Estate Association.
An interim report from the B.C. Financial Services Authority, which described the province's strata insurance market as "unhealthy" will also be considered in the consultation period. That report, which was completed at the direction of the finance minister, can be read online.
A final version is expected in the fall.
More than 1.5 million British Columbians live in strata housing, the province said.
When it comes to what exactly is behind the increased premiums, the BCFSA says it's a combination of provincial, national and global factors ranging from property value to earthquake risk.
Written by Kendra Mangione