Insurance costs for condo and townhouse owners in Langley are stabilizing or dropping, a relief to residents who were hit with staggering cost increases in recent years.
“I actually re-negotiated about eight months into our insurance policy,” said Rob Parker, strata council president at the Prestwick complex on the Willoughby slope area.
That’s brought a welcome relief to residents who were being hammered by a steep increase a little more than a year ago.
In the spring of 2020, even an extension of a month couldn’t help the Prestwick council find a better rate.
That March, they had learned the complex’s premium would rise from $88,000 a year to $250,000. Townhouse owners had to swallow a one-time levy of $600 and a monthly hike in fees of $150.
In late 2019 and early 2020, insurance rates skyrocketed for strata properties across B.C.
According to the B.C. Financial Services Authority (BCFSA) the average premium increase at the start of 2020 was 40 per cent.
READ MORE: A last-minute scramble fails to find better insurance rates for Langley strata owners
In December 2019, residents of a three-year-old 181-unit strata in the Yorkson area learned their insurance 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.
At Abbotsford’s tallest building, the brand-new 26-storey Mahogany Tower, premiums rose by 780 per cent, from $66,000 to $588,000.
Covering the hike was projected to require a one-time levy of $3,000 per unit, as well as doubling the monthly strata free to $600.
But by the end of 2020 and into early 2021, there were signs that the strata insurance shock was easing, and many condos and townhouse complexes are seeing better rates and more options for coverage.
“I think what we’re seeing by and large is stability in the market,” said Aaron Sutherland, vice president with the Insurance Bureau of Canada.
A Deloitte Canada report commissioned by the IBC found as much, with number of changes beginning to bear fruit, include the removal of so-called “best terms pricing” by many insurers.
In some cases, strata complexes would have contracts with multiple insurance companies to cover their annual premiums. Under best terms pricing, all of the insurers were paid the same rate as whichever company issued the highest bid price, thus driving up costs even if only a small percentage of the insurance was actually covered by the highest bidder.
“The industry has certainly moved away from that this year,” Sutherland said, although he says it was not that common before.
The Deloitte report also found that stratas themselves were helping, as under pressure from higher rates they were investing more in risk management practices.
“A lot of this was driven by unsustainable claim trends,” Sutherland said.
A minority of stratas were putting off maintenance, and then claiming insurance when their buildings suffered damage as a result, thus driving up the rates for everyone, he noted.
The provincial government also changed some regulations last year to attempt to cut off the increases.
In September last year, the BCFSA banned the practice of insurers paying referral fees to strata property managers.
Most other regulations focus on disclosure – insurers have to give at least 30 days notice of major changes or a decision not to renew a policy, and insurance agents have to disclose their commission amount. Strata corporations have to inform their owners as soon as possible about changes to insurance coverage.
The Deloitte report noted that insurance rates for properties with a history of damage claims or higher risk may remain high for the near future.
Sutherland noted that the changes have brought more insurance firms back into the B.C. strata market, which has in turn created more competition and helped further lower or stabilize rates.
“There is certainly still work to be done,” Sutherland said.
At the Prestwick complex, Parker said premiums are down by $90,000 this year and residents are saving an average of about $80 a month compared to last year.
“I still think it’s higher than it ever should be,” he said, but residents are happy with the positive change.
He said there still aren’t that many insurers to choose from, and no one really knows what will happen in the market to come.
He noted that Prestwick’s residents were paying for other people’s problems – the complex had never filed an insurance claim.
Have a story tip? Email: matthew.claxton@langleyadvancetimes.com
