Insurance companies are covering more than $100 billion worth of property in B.C., occupied by 1.5 million people. They collected $300 million a year in premiums even before they increased the rates up late last year by 40% on average.
The Investigation
After the insurance industry jacked up premium rates for condo insurance, the BC government began to investigate the reasons for the dramatic increases and they uncovered some serious issues. Some of the industry practices include:
- Referral fees, or kickbacks from insurers to management companies.
- Commission to insurance brokers can be as high as 20%.
On the client-side of the problem, an alarming number of condo owners are skimping on routine maintenance of buildings and “letting the insurance cover it” when there is a leak. In 2018, there were 11,000 separate water-damage claims across BC.
What Is Being Done
What is the government doing to address insurance companies desperately trying to make up their losses, and the abdication of maintenance responsibilities by condo owners?
Here are some of their responses so far:
- A change to allow stratas to use contingency reserves to pay for unexpected premium hikes.
- A move towards putting more emphasis on regular maintenance checks and “depreciation reports” on buildings.
- This week’s legislation promises to eventually “end the practice of referral fees between insurers and property managers or third parties.”
Will Direct Intervention Work
Government officials are still looking for ways to make a difference. Direct intervention into the practices of insurance companies is difficult because there is nothing stopping a company from walking away if the market is not viable.
Too many already have.