A provincial government announcement of changes to strata insurance regulations won’t prevent big rate hikes in the future.
That was the assessment of residents of two Langley condo projects that have been rocked by huge insurance cost increases.
READ MORE: Insurance shock for Langley condo owners
On Sunday, Sept. 13, the the province announced changes to the Financial Institutions Act that “will help address the rising cost of strata insurance in B.C. and bring further transparency to the industry.”
Taking effect Nov. 1, the amendments will require insurers or insurance agents to provide 30 days advance notice directly to strata corporations of their intention to not renew an insurance policy or of any material changes to the policy.
Insurance agents will be required to disclose their commission amount, or a reasonable estimate, to strata corporations. Insurers who fail to do so face penalties of up to $25,000 for an individual or $50,000 for a corporation.
Effective immediately, referral fees to strata property managers from strata insurance transactions are prohibited.
The changes will mean more transparency, yes, but the new rules won’t prevent more big insurance price hikes in the future, said Rob Parker, president of the strata council in the 95-unit Prestwick townhouse complex in Langley’s Willoughby Heights.
In March, Prestwick residents were given just three days notice their premium would nearly triple, rising from $88,000, to $250,000. and while they managed to get a 30-day extension, they were unable to find a better deal.
It could happen again, under the new rules, Parker warned.
“What does that do to stop the insurance company from coming back with [an increase of] $300,000?”
“I don’t why the government can’t figure something out,” Parker commented.
“There needs to be more competition.”
A similar review came from Kevin Froese, who lives in the 181-unit Yorkson Creek complex in Langley near 208th Street and 80th Avenue.
Yorkson Creek took a financial hit in December when they learned their deductible would climb from $5,000 to $250,000 for water damage and sewer backup losses.
At the same time, they were told the strata’s insurance premium was going to rise from $97,000 to $371,000.
Froese said about all the changes will do is ensure stratas will get bad news about their insurance a little sooner in the future
“All it does, is we get to know a month in advance that we’re going to be scorched,” Froese observed.
What is needed, he believes, are measure that tackle the key issue of insurance industry practices that allow such huge price hikes.
The amendments followed an interim report released by the B.C. Financial Services Authority (BCFSA) in June that found minor claims, many from water damage in new construction or due to a lack of maintenance, have made strata insurance unprofitable for insurance companies.
That issue, Froese said, does not apply to the well-built strata where he lives.
Parker made the same point about Prestwick, which is about two years old, has never filed a claim, and is unlikely to suffer severe fire damage, in his opinion.
“We’re a block away from the fire hall,” Parker noted