Should you worry? Where are we headed? Is there a crisis coming?
by Vincent Baart on February 13, 2020
It’s all over the news in 2020: Condo insurance across Western Canada is going through a big transition. Premiums are doubling, deductibles are growing exponentially, and in some cases, buildings are being flat-out denied insurance coverage.
Yes, some of this is happening. No, it’s not the beginning of a crisis… and here’s why:
The insurance industry is going through changes across all sectors and trying to manage increases in claim numbers and damages payouts. This is not unique to condos… ICBC and private healthcare are all facing shifts. Managing risk, and figuring out how to effectively transfer risk is at the heart of the insurance business, and has been since the first insurance groups were created in the 1300’s for merchant ships. The industry will adapt and change, because, let’s face it, there is a lot of money to be made!
Another reason I feel this is just a temporary blip is because Real Estate is the single largest issue on British Columbian’s minds. In our two biggest cities, condos make up 50% of the real estate market, are the easiest way to create more housing, and are the most affordable option for most buyers. Housing was the main political issue in BC in the last election and is the cornerstone of all government platforms, both provincially and municipally. Both levels of government are pushing hard to regulate real estate and make it affordable. If the insurance industry can’t work out a solution, the government will likely step in and intervene.
And finally, if the insurance industry and the government both fail to stabilize this hiccup, I can see a future where the strata owners of BC would work together to create their own private insurance fund.
Case in point; in 1936, with the automobile industry growing like crazy and a lot of people facing the newfound risk of underinsured vehicles, a San Antonio bureaucrat named Leo and his wife, Lillian (with their own money) formed a small insurance company to sell automobile insurance to their fellow government employees. This idea probably seemed crazy at the time, but it grew into the second largest insurance company in the United States. Along with having the coolest mascot in the biz, they provide insurance to millions of Americans. You may have heard of it? GEICO was formed on the same concept.
Yes, 2020 will be an interesting year for strata communities and a busy one for the insurance industry, but just like water soaking through the ceiling of your condo, money always finds a way.
External Articles which are helping to fan the flames of panic 😉