The B.C. government says it will eliminate referral fees between insurance brokers and property managers in an effort to address rising strata insurance rates across B.C.
Government proposed a number of legislative amendments and regulatory changes on Tuesday to address an issue caused by market forces, and the rising cost of catastrophes, claims and construction.
"The rising cost of strata insurance is a major financial pressure facing thousands of British Columbians during an already challenging time," said B.C. Minister of Finance Carole James in a news release.
"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.”
In addition to ending the practice of referrals fees between insurers or brokers and property managers, the province intends to clarify what strata corporations are required to insure, require that strata corporations inform owners about insurance policy changes and allow stratas to use contingency reserve funds to pay for unexpected increases to strata premiums.
Government also plans to protect unit owners from large lawsuits brought by strata corporations in instances where owners are legally responsible for losses or damages “through no fault of their own.”
The above amendments to B.C.’s Strata Property Act and Financial Institutions Act will pave the way for a number of regulatory changes, such as requiring brokers to disclose their commission amounts, changing the minimum required contributions to contingency reserve funds and strengthening depreciation reporting requirements.
The latter includes limiting a loophole in provincial legislation that allows strata corporations to avoid completing depreciation reports. At present, corporations can vote to waive and defer their legal requirement to complete a report.
In March, the Condominium Home Owners Association of BC told BIV some owners had experienced strata premium increases of between 300% and 600%.
More than 1.5 million British Columbians live in strata housing, according to the province.
An interim report on B.C.'s strata insurance market published earlier this month by the BC Financial Services Authority (BCFSA) found that premiums have risen on average by approximately 40% over the past year – and by 50% in Metro Vancouver. Deductibles have increased by up to triple digits.
The authority cites many complex and underlying factors for the increases, from rising property values, to earthquake risk. It also noted that price pressure will continue.
A full report from the BCFSA is expected this fall.