November 12, 2018 by Jason Contant
The government of Quebec should take a “wait-and-see” approach to define what is a reasonable or unreasonable deductible for condominium insurance, the Insurance Bureau of Canada (IBC) told Canadian Underwriter last week.
The provincial finance ministry recently held a consultation prior to proposed regulations on condo insurance. Aspects of Bill 141, which changes regulations related to the financial services sector, come into force in principle on June 13, 2019, one year after assent.
Because Bill 141 proposed many changes, “we suggest that we wait and see how the market adjusts to all these changes to see where the issues are,” said Pierre Babinsky, director of communications with IBC. “Then, if there is a need, then go ahead with specific rules that would define what is unreasonable or unreasonable.”
If one condo building performs all the right preventive maintenance and puts together all the right preventive measures, they may prefer to have a higher deductible, Babinsky said. One that may not be as prepared may want to reduce the deductible in case there is an incident. “Insurers should still have the capability to assess the risk discussed with their clients in terms of what is the best package for them regarding the deductible, but also the premium.”
If the government does define a reasonable deductible, IBC suggests dividing it by the number of condo units in a building. For example, a $50,000 deductible for a building could be $500 per unit per owner if there are 100 units. “So, we consider that would be reasonable, especially if you consider with homeowners, who may have a higher deductible in some cases,” Babinsky said. “If they go ahead with that, condominiums would be the only home insurance product that would have such a definition as opposed to commercial, home, any other type of home insurance coverage. We don’t see an urgent need to define that at this point.”
Other positions taken by IBC:
“We’re happy with most of these changes,” Babinsky said. “We feel that it better defines the responsibilities of each stakeholder, including [condo corporations], insurers, etc. Also, this is in addition to all the initiatives the industry has undertaken in Quebec to simplify the claims settlement process. With the new legislation, in addition to what the industry has done to simplify that process, we feel we’re on the right track.”