Insurance Renewals & Market Insights for 2019

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With the ever-changing nature of global insurance markets and the unfortunate increase in severity and frequency of weather-related catastrophes ‘helping’ continue the trend of rising premium costs, the world of insurance is an ever more complicated and expensive one for strata councils to navigate. We take this opportunity early in the new year to pass along some general information to keep you and our clients informed on the renewal process along with some Market Insights from an industry expert to hopefully help make some more sense of this very significant and mandatory operating cost.

Many clients are very comfortable with the service they have experienced and the coverage being provided by their existing policy, with this feeling usually forged by experiencing a significant loss and therefore having that coverage tested. That being said, Property Managers are often requested to solicit quotations for comparison and we make our best efforts to this end when so directed. There are a limited number of players that provide solid strata corporation-specific policies and they are further restricted by the available insurance underwriters in the marketplace (unless they act as their own underwriter), so the ability to gather multiple quotes is not always a given.

When we are able to get competitive quotes we are most often requested to summarize the major points of each policy.  These include the various coverages offered, potential exclusions, related deductibles, premium cost, and more.  We’re often asked to provide a recommendation to the Strata Council based on this comparison.  Please note that Stratawest does not offer any opinion or evaluation on the merits of the programs of insurance brokers.

From many years of experience with the most common and ‘battle-tested’ policies in the industry, we can state that we are generally comfortable with the respective policy wording of those ‘known’ policies and that the issues we experience on claims with those policies are relatively minor. However, we are not insurance experts and the actual policy wordings from insurance firms are several hundred pages long.  Many Strata Councils look at the Insurance Declaration page (usually one or two pages) to compare policies, because that is the only easily digestible document. We know from experience, though, that it’s in the full wordings that a policy will be deemed to be sufficient or not. We simply cannot tell a strata council all the ways in which one policy might be deficient (or superior, for that matter) compared to another.  Furthermore, strata councils are often of the view that “insurance is insurance is insurance” and this is not the case. The truth is, in fact, a fair bit more nuanced and we can say with certainty that making the decision based solely on cost is not a good, long term strategy. While this is often true in other aspects of Strata Corporation governance, rarely is it as important as with insurance. The policies are extremely complicated and there is simply no way to compare them ‘apples to apples’, or for us to be certain that an unfamiliar policy will not leave you exposed (and potentially out of pocket for far more than any savings on the actual premium cost in the event a loss is not covered). To get a review from an independent expert is something that would cost several thousand dollars, so obviously not many strata corporations go that route.

With respect to timing, unfortunately the nature of getting insurance quotes and facilitating renewal is always later in the game than we would prefer. The Strata Council commonly feels that they are very much under the gun to make a decision and proceed with binding a policy before the current one expires.  This is true.  Insurance brokers and underwriters will wait until the latest possible moment to ensure that their policy is both as accurate as possible and, presumably, as profitable to them.  While this is out of our direct control, we will continue to be as proactive and pushy as possible to get the information in front of our clients as early as possible prior to renewal.

2019 Insurance Market Insights – 2019

With thanks to BFL Canada for their permission to share their information, please click here for more detail and insight on this topic including local and global reasons underpinning the rise of property insurance premiums in the province.