The British Columbia government says it is taking action to address the skyrocketing cost of strata insurance.
On Tuesday, the province announced that will be making regulatory changes and amending the Strata Property Act and Financial Institutions Act in order to bring more transparency to the strata insurance industry.
Among the changes that will be made include “closing loopholes” associated with depreciation reports, eliminating referral fees paid to property managers, and providing strata owners and corporations more support.
Carole James, the province’s minister of finance, said the cost of strata insurance has “skyrocketed” far beyond what would be considered normal. She described the situation is an extremely complex issue that is currently playing out in the private insurance industry, but one that the province is dealing with to help residents during challenging times.
“The current situation is unacceptable,” James said, adding. “Today’s legislation is a step forward to tackling this problem.”
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Regulatory changes and amendments to existing legislation will end the practice of referral fees between insurers or insurance brokers and property managers or other third parties.
They would also establish “clear guidelines” around what strata corporations are required to insure, require strata corporations to inform owners about insurance coverage and provide notice of changes such as increasing deductibles and protect strata unit owners against large lawsuits from strata corporations in situations where the owner was legally responsible for a loss or damage through no fault of their own.
Stratas would also be allowed to use their contingency reserve fund when necessary to pay for unexpected premium increases under the new changes, the province noted.
The province said it also has plans to make further regulatory changes, which would require brokers to disclose commission amounts.
Additional future changes would be designed to strengthen notification requirements to strata corporations of changes to insurance coverage and costs, change the minimum required contributions made by strata unit owners and developers to a strata corporation’s contingency reserve fund and depreciation reporting requirements, including limiting the ability to use existing loopholes in the legislation to avoid completing depreciation reports.
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