The B.C. government is making changes to strata property and financial rules to deal with the soaring cost of insurance for multi-family buildings.
Amendments introduced in the B.C. legislature June 23 would require strata corporations to inform owners about insurance coverage, including increased deductibles, and allow strata councils to use their contingency funds to pay for unexpected insurance increases.
Municipal Affairs and Housing Minister Selina Robinson proposed the changes after its new regulator reviewed the insurance situation. The B.C. Financial Services Authority (BCFSA) reported June 16 that strata insurance costs in B.C. have increased an average of 40 per cent, and some deductibles have more than doubled in the past year.
Robinson and Finance Minister Carole James said the changes will end the practice of referral fees paid by insurers or brokers to property managers, and set clear guidelines for what strata corporations are required to insure.
Robinson said the changes will close “loopholes” in the regulations that have allowed strata depreciation reports to be avoided, and change the minimum required contributions from strata unit owners and developers to a strata corporation contingency fund.
The BCFSA found that minor claims, many from water damage in new construction or due to a lack of maintenance, have made strata insurance unprofitable for insurance companies. Earthquake risk in B.C. has also prompted insurers to reduce the amount of coverage they provide.
James and Robinson emphasized that the changes are a first step in dealing with a situation seen internationally.
“People realize there isn’t a quick fix,” James said.