Government begins regulating strata insurance
Rising strata insurance costs continue to affect many of BC’s 1.5 million strata owners, who may also face major financial pressures due to the COVID-19 pandemic.
To help return the strata insurance market to balance, the Ministry of Finance announced amendments to the Strata Property Act and Financial Institutions Act, as well as associated regulatory changes on June 23, 2020 through Bill14 – 2020, Municipal Affairs and Housing Statutes Amendment Act (No. 2), 2020.
The government will:
- end referral fees between insurers or insurance brokers and strata property managers or other third parties;
- develop clear guidelines for what strata corporations are required to insure so that strata councils can make informed decisions on their insurance policies;
- require strata corporations to inform owners about insurance coverage, provide notice of policy changes, including increasing deductibles, and allow stratas to use their contingency reserve fund when necessary to pay for unexpected premium increases; and
- protect strata unit owners against large lawsuits from strata corporations if the owner was legally responsible for a loss or damage, but through no fault of their own.
Future regulatory changes
The new amendments pave the way for the government to make further regulatory changes to:
- identify when stratas aren’t required to get full insurance coverage;
- strengthen depreciation reporting requirements, including limiting the ability to use loopholes in the legislation to avoid completing depreciation reports; and
- change the minimum required contributions made by strata unit owners and developers to a strata corporation’s contingency reserve fund.
Future amendments will also:
- require brokers to disclose the amount of their commission; and
- strengthen notification requirements to strata corporations of changes to insurance coverage and costs, or an intent not to renew.
The government has promised any future regulatory changes will be made only after strata community stakeholders are consulted.
BC Financial Services Authority (BCFSA) report coming
The BCFSA will issue a final report sometime in the fall.
The report is expected to help identify further actions government can take to support strata property owners.
Government’s actions were guided in part by input from key stakeholders, including:
- Condominium Home Owners Association of BC
- Insurance Brokers Association of BC
- Insurance Bureau of Canada
- Insurance Council of BC
- Mortgage Brokers Association of BC
- Office of the Superintendent of Real Estate
- Real Estate Council of BC
- BC Real Estate Association
- Vancouver Island Strata Owners Association
- the interim report of the BC Financial Services Authority.
Read the government news release on Bill 14.