Important Insurance Updates & Legislation Changes


As noted in recent media reports, the Province has announced (and is enacting) a number of legislative measures that the government intends to mitigate the dramatic increase in insurance premium costs and related deductibles being borne by Strata Corporations since approximately November of last year. We have written about these sudden and significant increases on a number of occasions and recommend the following blog posts for background reading:

You can find the full text of the announcement at the Government’s website.

There are a number of important changes the Government has announced (at least in part), which include:

  • Prohibiting insurance firms from paying “referral fees” to Strata Managers for the placement of policies (Stratawest has proudly never accepted any such compensation and we are unaffected by this change);
  • Requiring insurance brokers to disclose commissions earned for placing policies;
  • Requiring more notification to clients of renewals and any risk that insurers might deny coverage;
  • Unspecified changes regarding the preparation of Depreciation Reports (presumably to make opting out of them more difficult, based on the language used in the government’s release);
  • Increased requirements for disclosures to Owners of material changes to Strata Corporation insurance policies;
  • Protecting strata unit owners “against large lawsuits from strata corporations if the owner was legally responsible for a loss or damage, but through no fault of their own”.

We are generally supportive of these measures, though like any legislative agenda the details will be critical. This is especially true when it comes to limiting a Strata Corporation’s ability to sue to collect a valid (and potentially very substantial) chargeback to a single owner for what will otherwise now be the expense of the entire ownership to financially endure.

To expand on an important point made above, Stratawest Management has never once been paid any fees or commissions by any insurance brokerage for the placement of insurance for properties in our portfolio. In fact, we have long advocated for referral fees for Strata Managers from insurers to be prohibited as it seems self-evident that doing so compromises a Manager’s ability to provide unbiased advice when Strata Councils are deliberating insurance renewals. It also creates a very uneven competitive market for delivering our actual professional services (strata management, not insurance experts) with some firms making incredible amounts of money from these programs.  We are glad to see that referral fees will be prohibited and hope that the Government ensures compliance throughout the industry while preventing the work-arounds already in place.  BFL Canada, a major insurance broker, prepared this letter to confirm that Stratawest has never collected referral fees- a fact we know that our clients appreciate.

We are hopeful that these announcements will indeed lead to some relief for Strata Owners struggling with rapidly increasing insurance premiums, though we note with a dose of realism that in their announcements the Government repeatedly stated how difficult and complex a problem Strata Owners are facing.  No individual legislated change will immediately reduce premiums being paid and it will take time for these measures to have any effect.  In the meantime, Strata Councils will need to continue to work toward increasing budget allocations for insurance (on top of the many financial pressures being faced by Owners during COVID-19) to ensure that your properties maintain adequate levels of insurance in the event of a catastrophic loss.