What are the issues impacting strata insurance?
BC strata corporations are facing uncertain and challenging times. COVID-19 has had a devastating financial impact and business owners continue to face new risks and costs. When it comes to strata insurance, many strata corporations are seeing their premiums rise and may be finding it increasingly difficult to get the appropriate insurance to meet their needs in certain circumstances.
There are many factors that are contributing to the challenges BC Strata insurance is facing:
· Claims costs continue to rise especially resulting from water damages.
· Some insurers have concerns that some strata corporation may use the insurance for the benefits of strata maintenance. As a result, claims costs continue to rise due to factors such as the cost to repair buildings after an insured event.
· The increasing severity and frequency of extreme weather events is contributing to rising claims costs. In the past 10 years, insured losses due to flooding, wildfires and storms have averaged $1.9 billion a year. This year, intense storms and flooding have already resulted in insured losses of $2 billion across Canada as of September 2020.
· The current economic environment has also disrupted the insurance industry. Insurers generate income through investments to ensure they have enough money to pay claims to their policyholders. With record low interest rates and a decline in investment income, many insurers have had to increase premiums to ensure claims are covered.
· Some strata insurers withdrew from the markets of British Columbia over past years.