BC NEW STRATA INSURANCE RULES
The tale of woe surrounding Strata insurance in BC is well known due to extensive reporting. In a nutshell, insurance rates for strata complexes have increased enormously over the past 3 years – in many cases, by several hundred percent. These increases are passed on to residents through large increases in strata fees, causing significant financial hardship for many. Some complexes have not even been able to get full replacement cost strata insurance, as required by law! A number of causes have been identified: many insurers have left the province citing unprofitability and the remaining insurers have hiked their premiums; the misleadingly named “best pricing”, which offers all insurers who are cooperating to insure a complex the HIGHEST premium rate quoted by any of them; and incentives paid to strata property managers by insurance companies (which inevitably leads to conflict of interest accusations). In response, the BC Provincial government has enacted some new rules:
- Effective November 1, insurers will be required to provide strata corporations with 30 days’ notice if they will not renew, or if they plan to materially change, an insurance policy.
- The province has also banned strata property managers from receiving referral fees related to insurance transactions effective immediately.
- Strata insurance agents will also be required to disclose their commission amount, or a reasonable estimate, to strata corporations. Failing to meet these requirements can result in penalties of up to $25,000 for an individual or $50,000 for a corporation.
These changes will bring further transparency to BC strata insurance market and help strata corporations maintain their financial sustainability by providing them the information they need to make informed decisions about their insurance needs.