VICTORIA, B.C. – The Government of British Columbia is taking a step to help stratas better moderate the rising cost in insurance.
Some steps include bringing more clarity to the strata insurance industry, closing loopholes in relation to depreciation reports, ending referral fees paid to property managers, and giving strata owners and corporations the tools they need to do their part.
Carole James, Minister of Finance states “The rising cost of strata insurance is a major financial pressure facing thousands of British Columbians during an already challenging time. 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 the first step, with the understanding that we will take further action as needed.”
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The Government, with associated regulatory changes as well as the amendments made to the Strata Property Act and Financial Institutions, should:
- end the practice of referral fees between insurers or insurance brokers and property managers or other third parties.
- set out clear guidelines for what strata corporations are required to get insured to help the strata councils make informed decisions and what their insurance policies are.
- strata corporation are required to inform owners about insurance coverage, provide notice of any changes to policy which includes increasing deductibles, and allow stratas to use their contingency reserve fund when it’s necessary to pay for unexpected premium increases.
- protect strata unit owners against any large lawsuits from any strata corporations if the owner was legally responsible for any loss or damage but through no fault of their own.
The legislation would also pave the way for the government to make further regulatory changes with the following:
- to identify when stratas aren’t required to get full insurance coverage
- to strengthen a slump in reporting requirements, which includes limiting the ability to use any existing loopholes in the legislation to avoid said reports.
- change the minimum required contribution which is made by strata unit owners and developers to a strata corporation’s contingency reserve fund.
- require any brokers to disclose the amount of their commission, which can be reported to be at times in excess of 20%
- help to strengthen notifications to strata corporations of changes to insurance coverage, costs and, any intent to not renew.
The Ministry of Municipal Affairs and Housing and the Ministry of Finance will review the final report from BC Financial Services Authority in the fall. After, they will determine what further changes the government should make to help lower the strata insurance costs for people.
Currently, over 1.5 million people in B.C. live in strata housing.