as insurance companies struggle to keep up with claims from global disasters, condo owners everywhere are bearing the brunt of the financial burden—and Whistler is no exception.
"It's been over the past 12 months when we've seen the largest increase," explained Beau Craig, manager partner at Whistler Resort Management (WRM), which manages more than 200 local strata corporations.
"The strata market is not traditionally a very profitable one from an insurance perspective, so a lot of insurance companies are pulling out of the market completely and the ones who are staying are increasing their rates significantly to make their money back."
Craig added that he's seen insurance rates spike anywhere from 40 to 200 per cent a year, a cost that has been translated into higher condo or strata fees.
(To read more about how rising insurance costs could affect individual condo owners, click here)
"The problem is there's no choice, because these strata properties mandate that you have to have insurance," he noted. "Imagine if ICBC rates went up 200 per cent. You have to get insurance, you have to have it, so you're kind of handcuffed."
With several insurance companies exiting B.C's real estate market, the remaining insurers have typically taken a smaller piece of the liability pie, Craig said.
"The thing is, with strata insurance or any insurance, really, you don't have one insurance company. There are several insurance companies that are involved in each policy, and so insurance companies that were taking a 60-per-cent stake in a strata, for example, if they are staying in the market, they are reducing their potential liability on that property somewhere down to 15, 20 per cent," he said. So where insurance policies used to have four or five different insurers on it, now they have 15, 16 different insurance companies involved."
Warning of the potential for a condo market collapse province-wide, the Condominium and Homeowners Association of B.C. has reported that it's not only buildings having to pay more for coverage—some are being denied altogether, which puts buyers at risk of losing their financing and adds barriers to owners looking to sell their homes.
Craig said he hasn't run into any cases locally of properties without full coverage, but he did acknowledge "it's quite possible that could happen" this year.
"We've been trying to be as proactive as we can be with the FireSmart program to try and entice insurers to continue staying in our market and not pull out," he added. "[We're doing] everything we possibly can to reduce the amount of claims and reduce the losses."
Condominiums are a significant piece of Whistler's housing market, with medium-density developments accounting for around 70 per cent of all real-estate transactions locally, estimated Pat Kelly, president of the Whistler Real Estate Co. Rising rates could have a serious ripple effect in Whistler's market, but with few alternatives in the same price range as a typical condo, Kelly believes prospective buyers may have no choice but to swallow the added costs.
"The challenge is price point. A single-family [home] is two to three times as much as condominiums and townhouses, on average," he said. "If your purchase or ownership is dictated by value, there isn't any way to get away from the insurance. If you don't have insurance, you can't get a mortgage.
"The idea that if you live in a condo it will be cheaper than owning a house in terms of ongoing maintenance, security and upkeep, I'm not sure you should think that way."
B.C. finance minister Carole James said last month that the province is working with the B.C. Financial Service Authority to monitor the situation. The Insurance Brokers Association of B.C. has called on Victoria to make reforms to legislation, including adding a standard definition of a strata unit to the Strata Property Act. These changes could help stabilize B.C's condo insurance market, but the organization acknowledged in a press release that they won't "directly address the rising strata-building premiums and deductibles."
"The only way this is going to change is when insurance companies start making money again and the market changes so there are more insurers than there are places to insure, so they're fighting for business," added Craig. "That is not happening right now. It's the complete opposite."
