November 13, 2020 by Greg Meckbach
The hard market in commercial property coverage for condo corporations is having an impact on individual condo and strata unit owners, new data from LowestRates.ca shows.
Personal property rates for condo unit owners increased 16% year-over-year in both Alberta and B.C., according to the Home Insurance Price Index released Thursday by LowestRates.ca. The condo rate increase was 3% in Ontario.
“Particularly out west, we have heard about the massive issues in condo strata insurance, and it is trickling down to condo unit owners in personal insurance prices,” said Justin Thouin, CEO of LowestRates.ca, in an interview.
LowestRates.ca generates leads from prospective home and auto insurance clients for brokers and direct writers.
Condo corporations may ask that owners use their insurance to cover certain damages, such as if negligence results in a tap being left open and flooding damaging the owner’s condo, as well as multiple units below it, LowestRates.ca noted in a release.
The index released Nov. 12 does not track tenant insurance rates. It does track property insurance rates for owners of homes and condos.
The baseline is set at 100 for the rates during the third quarter of 2019. This means that if the index increases from 100 to 101, prices have increased by roughly 1%. The index is for the lowest rate that consumers were quoted through LowestRates.ca’s quoting engine.
For home insurance, which is personal property insurance for owners of homes other than condos, LowestRates.Ca’s data showed prices in British Columbia increased 6% in 2019 Q3 to 2020 Q3. There was a 1% decrease in Ontario and a 1% increase in Alberta.
Ultimately, the growing cost of extreme weather events will drive home insurance prices up over time, LowestRates.ca suggested.
Regarding condo insurance, LowestRates.ca attributes the increase to a number of factors.
The high price of homes in B.C. and Ontario has generated demand for more condos. This glut of new condos means some may have been built in a rush, using less experienced tradespeople, said Thouin. This in turn leads to more claims because of lower quality workmanship.
“I think the condo insurance market is becoming kind of like the Alberta car insurance market,” said Thouin. “It is problematic, and the industry needs to put its heads together to figure out how to solve that.”
In Alberta auto, a rate cap of 5% was in effect from 2017 through 2019, when the Conservatives were elected to power, replacing the NDP.
In 2018, an Alberta civil servant told Canadian Underwriter the provincial government did not want motorists to see significant auto insurance rate increases while the government works with industry to find a solution. But the rate cap led to an availability problem, with some Alberta auto insurers cancelling broker contracts while it became harder to find non-mandatory coverage.
Feature image via iStock.com/buzbuzzer