The insurance market in BC continues to be a roller coaster, and strata owners may find it particularly challenging to obtain complete coverage in several areas in the Province.
Why? Insurance companies are being tested this year with reinsurance renewal costs. Reinsurance is essentially insurance for insurance companies. It protects against catastrophic losses to help insurance companies remain solvent after a significant catastrophe such as an earthquake, severe flooding, wildfire, or other major events. For example, Hurricane Ian forced an estimated $50-$60 billion in claims to the insurance industry. The result is that the cost of reinsurance has skyrocketed in 2023, and insurance companies will pass it down to consumers through higher rates and deductibles.
Each region of BC has different potential loss exposures that have been prevalent in the last few years. Flooding and wildfires have already been experienced in specific areas causing catastrophic damage and substantial claims payments by insurance companies.
Even though there has not been a significant seismic event, earthquake risk exposure, specifically on Vancouver Island, is quickly becoming the most challenging coverage to obtain. It is already well documented that few insurance companies are willing to write any new business in the region due to the earthquake exposure. Many Insurers, both domestic and syndicates from London, are pulling capacity out completely. Ongoing demand for coverage and a dearth of suppliers will increase rates and likely earthquake deductibles in the 15%-20% range.
The increased Earthquake deductibles will also trickle down to disrupt Personal Condominium policies. These policies will typically extend to cover the application of an earthquake deductible under the Loss Assessment extension. If the strata deductible increases, each owner’s assessed portion of the deductible also increases. Many insurers are capping the limit they are willing to insure for an Earthquake deductible. This limit leaves a gap in the coverage that unit owners must make up on their own. Strata Owners must review their condominium policy to confirm that the limits provided are adequate to cover the potential deductible assessment.
SeaFirst will continue to monitor the insurance market and provide the best advice available to protect our clients. We Got You!
About the Author
Shawn is one of the Managing Partners at SeaFirst Insurance and looks after our Commercial Lines.
He has an extensive insurance career and was President of the Insurance Brokers Association of BC.
Clients can always count on him to answer tough insurance questions and provide solid advice.