July 2, 2020 by Canadian Underwriter Staff
Heading into 2020, Chuck Byrne, executive director of the Insurance Brokers Association of British Columbia (IBABC), thought he’d be spending his time preparing local brokers for their public auto insurer’s adoption of a no-fault system in May 2021.
Instead, he’s split his time evenly between two problems: COVID-19 and the strata insurance crisis.
“Things were pretty good until recently,” he says. “We’d had our challenges in 2019, and the hard market obviously comes to mind. But any optimism that existed for 2020 is pretty much toast now with the new world.”
Following a couple of major markets pulling out of western Canadian strata, a decade of underpricing, and a hardening global market, between 35% and 40% of all condo buildings in B.C. have seen increases in premiums and significantly higher deductibles, Byrne says.
“By that I mean, multiple, multiple, multiple times what was charged a year before,” he says. “We’ve got quite a few placed with partial or unfilled portions of coverage limits, and a number of cases where no coverage was offered on renewal. If your building had an $80,000 or $100,000 premium…last year, it’s now $500,000 to $800,000.”
The condo insurance crisis affects tenants just as much as building owners. Through the Strata Property Act, mortgage lenders require condo owners to have full coverage in certain areas. “Finding out your unit is in a building that’s partially insured could put your mortgage renewal in jeopardy or change the terms on it,” Byrne says.
Looking ahead, he expects the situation to worsen in B.C. as the impacts of COVID-19 are felt. “The pandemic will affect the entire P&C industry, including premium, policy and activity levels. We expect that to further deteriorate, which is going to hurt everybody’s bottom line.”