British Columbia’s strata insurance issues are “complex,” and there are no simple solutions to the problems, the province’s Financial Services Authority (BCFSA) states in its latest report.
The BCFSA report found that condo insurance premiums in the province saw an average increase of 40%, thanks to factors such as earthquakes, wildfires, and flooding. Risks related to catastrophic events have hurt insurers’ profitability, the report noted, ultimately impacting premiums and deductibles not just in Canada, but across other parts of the globe.
“Claims costs and claims experience have the single biggest influence on premiums and deductibles,” the report said, noting that the increased frequency and cost of claims have also greatly contributed to the surge in strata insurance costs.
Issues involving BC’s strata insurance, particularly when it comes to rising insurance costs, are therefore complex and there are no “simple solutions,” the BCFSA concluded. The regulator called for the BC government to work with stakeholders to address the rising claims costs and to improve the risk management of strata corporations. The BCFSA also warned that consumers should not expect any short- or medium-term relief from further price increases.
The Insurance Bureau of Canada (IBC) praised the BCFSA’s efforts in preparing the report, noting it was an important first step toward improving BC’s insurance market for strata corporations.
“While the insurance market for strata corporations is stabilizing, stratas that continue to make frequent claims or those at higher risk may face challenges,” said IBC Western and Pacific vice president Aaron Sutherland. “We urge the government to bring forward regulations to enact Bill 14, and to adopt best practices from jurisdictions across Canada to help improve the strata insurance market over the long term.”