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How IBC is addressing hard market in condo insurance


January 7, 2020   by Greg Meckbach


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Condo corporations in Alberta that are having trouble finding insurance might be able to get help from the Insurance Bureau of Canada.

IBC announced Tuesday it is “engaging” a risk manager who can make practical recommendations to condominium corporations to reduce their risk. The risk manager has yet to be named, an IBC spokesperson told Canadian Underwriter Tuesday.

In an announcement Tuesday, IBC gave one example of how the new risk manager could help. “If a condo corporation can’t obtain insurance because of numerous water damage claims, the risk manager will identify that as the obstacle for the condo corporation and advise them on the maintenance required to reduce that risk.”

For years, insurers have been competing on price when writing risks for commercial realty, suggested Scott Treasure, CEO of Edmonton-based Treasures Insurance and Risk Management Inc., in an earlier interview with Canadian Underwriter.

The commercial realty market, which includes large condo buildings and multi-unit buildings, is now “at a tough point,” said Treasure, who was not commenting in the context of IBC’s announcement. “It is susceptible to all of the little things that have been challenging property for a while. Water damage in those spaces can be a very big deal. People are stacked up on top of each other so the problems literally cascade.”

IBC said Tuesday a number of condominium corporations in Alberta are feeling the hard market “more significantly than others.”

By hiring a risk manager, IBC aims to increase the awareness of condominium boards about how insurers view risk and evaluate properties.

There are about 9,000 condominium corporations across Alberta. Recent media reports suggest that at least a handful are having trouble accessing insurance or are seeing increased rates, IBC said.

“The reality is, the commercial realty space has been under water in the claims side for a while,” Treasure, a former president of the Insurance Brokers Association of Canada (IBAC), told Canadian Underwriter this past December. He was asked about the hard market in Alberta in general. “The loss ratios in that space are extremely difficult to deal with. So the rate has been below where it should be for a while. So the correction there has been particularly harsh.”

IBC noted Tuesday that multi-unit condos are prone to water damage through accidental overflowing of toilets and bathtubs, as well as burst pipes and supply line failures. Risks that condominium boards should consider are high vacancy rates and the risk of having units occupied by tenants, who may not be as diligent in maintaining the units and getting to repairs.

“Higher tenancy rates can often lead to less oversight from the board of directors, which could lead to irregular maintenance or substandard repairs in the condo building,” IBC said.


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7 Comments » for How IBC is addressing hard market in condo insurance
  1. Joe Stonehouse says:

    -For older condos, get rid of the crane toilets from the 1970’s. Unbelievably they still exist.
    -Don’t allow unit owners to do their own plumbing (dishwashers, water filters, etc.). Hire licensed and insured plumbers.
    -Mandatory replacement of hot water tanks at 10 years old.
    -Two sided sinks with lower middle divider and remove the stopper on one side. Kitchen sinks for some unknown reason do not have overflows like other sinks.
    -Water sensors that trigger shut off. (example -getguardian.com/). These cost about $500 and for a 40 unit building this is $20,000. Cheap considering the water damage claims cost and the unit owners inconvenience.
    -Don’t run dishwashers and washing machines when not in the unit. (if renting advise renters).

  2. jen says:

    AND

    -stop treating policies like their purpose is for maintenance issues that cause small claims
    -require at least 2 members of each board to take educational seminars on condo insurance, maintenance prevention
    -listen to your insurance provider when they pull an inspection and complete the recommendations instead of arguing. if we’re saying you should do an annual survey on the individual water heaters, boilers in each unit don’t come back with “not our responsibility”, demonstrates a lack of awareness and a non willingness to prevent potential problems in the future
    – don’t wait until end of life on those assessments. if the plumbing is ending it’s life span start replacement sooner than later
    – require all tenant/unit owners to have a minimum liability limit of 2 million, once a year request those certificates of insurance to confirm

  3. william hazelton says:

    Reply to the above comment by Jen.
    You offered some interesting points. What I find interesting is that you used a very rare commodity, common sense. Unfortunately, common sense is in short supply in Canada. Nice to see that it is not extinct. Keep these thoughts coming.

  4. william hazelton says:

    Note; my comments that were directed to Jen should also have been directed to Joe Stonehouse. You both made valid points.

  5. Tracy says:

    Hiring a risk manager to help condo corporations sound good in theory, but how helpful are they if the markets aren’t quoting the residential realty at all?

    • Randy Heathcote says:

      From retired owner of a Regina Saskatchewan condominium management company I have been raising the insurance issue for years. The problem is that legislation requires condo corps to insure the entire condo property including units. The many claims come from damages that originally ocurr in units by either accident or lack of maintenance of owner property within the unit. This is more frustrated by the fact that most owners carry insurance on their units and find out, when they have an accident, that their insurer won’t respond as the Corp insurer has to respond. So not only are owners paying for their own unit insurance they are so paying the Corp insurance through the payment of their monthly condo fees. Anyway, if in-unit caused damages are excluded from the condo Corp policy the risk to the condo Corp insurer goes way down to being non existant. Risk management initiatives put on the condo Corp does nothing to minimize owner caused damages and only creates more work for volunteer board members. Legislation must change so that insurers have the ability to extend coverage to condo corps without being exposed to damages caused by in-unit owner caused damages. Now, owners that have claims will be exposed to higher premiums should they have to make claims, and so be it. The situation now is that owners that are responsinle for in-unit damages are asking their neighbors to help pay for their misfortune…this is not right. I have been relaying this message since 1993….is someone prepared to listen now?

  6. Randy Heathcote says:

    Further to my previous posting…I was only referring to the owner being liable for his own caused damages…the condo Corp still has to insure all property in the event of losses related to wind, rain, fire and other named perils such as water line rupture, boiler explosion, etc.

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