On June 23rd, the BC Government announced its first steps to address the dramatically increasing insurance costs that many strata corporations are facing. These steps will be achieved through amendments to the Strata Property Act and Financial Institutions Act, as well as associated regulatory changes. Many of these changes will take time to implement due to their complexity.
We at Proline welcome government involvement in helping to address these challenges for our strata communities and believe that many of the measures could be useful in helping strata corporations deal with what has become a significant issue. One element of the governmental response that appears prominently in news coverage is the issue of referrals and commissions to strata brokerages. This is not a widespread practice in the industry, though we understand that it is the practice of a small number of brokerages. It has never been our practice, as we believe that benefiting financially from strata corporation insurance would limit our ability to operate with the best interest of the strata corporation in mind. If you would like to confirm that we do not collect referrals or commissions with the insurance broker for your strata corporation, please reach out directly to your strata’s insurance broker.
Other governmental actions to address the current insurance situation include:
- Setting out clear guidelines for what strata corporations are required to insure to help strata councils make informed decisions on their insurance policies.
- Requiring strata corporations to inform owners about insurance coverage, provide notice of any policy changes, including increasing deductibles, and allowing strata corporations to use their contingency reserve fund when necessary to pay for unexpected premium increases.
- Protecting unit owners against large lawsuits from strata corporations if the owner was legally responsible for a loss or damage, but it occurred through no fault of their own.
The legislation also creates opportunities for the government to make further changes such as strengthening depreciation reporting requirements and limiting the ability to avoid completing depreciation reports, as well as increasing the minimum required contributions to the strata’s contingency reserve fund. There is also potential to require insurance brokers to disclose the amount of their commission and provide increased notification to strata corporations of changes to insurance coverage and costs.
To read the full government news release, go to https://news.gov.bc.ca/releases/2020FIN0033-001143.
Click here for CHOA’s Information Release regarding these changes.