Insurers are insuring themselves rather than the people they are insuring
– by Suzan Law –
I know many family members and friends who live in condos. I own a condo myself. I am a low-income owner of a property which has been my home for 30 years. My adult children, who are now renting, are hoping to one day own a home themselves. Buying into a strata is the only feasible way for them to do so, but it is becoming increasingly unaffordable these days.
You might know at least a handful of people who also reside in condos. This issue of increasing strata insurance cost will ripple through to all of us when landlords try to make up for their added costs by charging more in condo fees, making our houses and homes in BC even less affordable. After digging around, here is what I found:
- premium increases: 40-750%
- deductible increases: $50,000-$800,000. e.g., deductible for new Brentwood Towers: $250,000
- over 10,000 strata corps in B.C. are affected
- price pressure will continue
- insurance categories will change adding to premium costs
- currently only 3 main strata insurers
- insurers are not obligated to provide insurance to us
- insurers’ rates are self-determined and unregulated
- insurers can exit the market freely.
Stop the FIRE
Now is the best time for compassionate defiance. Call for government to step up and reliably regulate. The Finance, Insurance and Real Estate (FIRE) industries & government have a role to play to return the strata insurance market to a healthy state. Let’s pressure our government to stop unaffordable housing and stop the shocking strata insurance cost increases!
The term “FIRE industries” was coined by Michael Hudson, a renown economist, professor and government financial consultant. He clearly explains the game played by global financial powers, and tells us that our struggle for people-focused public policy is being overwhelmed by corporate interests. We need to beware of monopolies and be proactive in creating people-focused options. There is so much more our governments and leaders can do. There is much each of us can do as people of BC.
Effects of the increases
In particular, the increases affect fixed-low-income owners whose singular property is their home. The increase also affects investor-owners, landlords and tenants.
Mental and physical health are affected due to fear regarding unstable and unsustainable increases of premiums and deductibles; being rejected for strata insurance renewal; going with less than 100 percent coverage or with more than one insurer; being given short term coverage at high rates; and the possibility of bankruptcy. Other concerning issues include:
- One or a combination of strata fee increases, large special levy or borrowing against contingency funds.
- Responsibility for cost of losses or damages on the shoulders of owners.
- Risk of another claim: payment plans can be frightening.
- Forced to sell: bargaining power is down resulting in lower priced sale (good news for developers and those who stand to gain).
- Hard sell / foreclosure: when your property is refused insurance renewal.
- Limited choices to buy after selling: Strata insurance costs hikes and pressure will affect all stratas corporations.
- Displacement of families to far off regions: senior owners who are not investor-owners will be hardest hit.
(Sourced from conversations with strata lot owners)
Ban Best Term Pricing (BTP). BTP is when a number of insurers are in a contract. “Standard” contracts state that quotes are conditional and based on each insurer receiving the same terms, not different terms and premiums set by each insurer, or the average. This is price fixing or bid rigging to the highest rate!
Until banned, demand full transparency that details insurer underwriting percentage and that allows examination of schedules (with full client disclosure) to see details of what each of the best term companies are doing to drive the price up.
BTP practise is unacceptable, and what our government does will show us whether they are focusing on the people or on corporate greed, power and self interest.
“Standard” contracts need to be examined by independent lawyers who are working for the people.
Insurers need to be regulated so they insure strata corporations at 100 percent, especially with multiple insurers.
Commissions for brokers and underwriters must not be based on premium costs. These create conflicts of interests.
Cap all premiums & deductibles. Pressure government to take prompt action especially on this versus prolonged consultations/reviews.
Property Amendment Act legislated to define “standard unit”. Clarity to all parties will help insurers gain confidence in pricing their policies.
Humane $50,000 cap on loss/damage assessment coverage.
Lower costs of materials and construction: Give incentives to local, sustainability-driven companies. Elevated costs of real estate and construction drives strata insurance premiums and deductibles up.
Increase minimum building standards, including those for materials used, appliances and fixtures.
Bring on liveable wages. When insurance and real estate costs are lower, businesses have more room to spend. Overall Happiness Index goes up.
Bring in advocacy: especially for lower income home owners and senior owners (independent of Condo Home Owners Association).
Consult with the lot owners and tenants i.e., the people affected. Pressure our province to consult with more than the “Strata Community Stakeholders” who are associations, bureaus and offices of the insurance, mortgage and real estate industries.
Share this article and connect
Talk to at least five people about the points made here. Send this to your family and friends over the internet. If you come up with new points or questions, let us know. To build our community of shared insurance concerns/solution, send your name and contact information to firstname.lastname@example.org (subject heading: Strata Insurance). Phone or text 778-820-0477.