EDMONTON, Jan. 7, 2020 /CNW/ – To address issues that have arisen in the commercial insurance market, and especially in condominium insurance in Alberta, Insurance Bureau of Canada (IBC) will be engaging an expert in risk management to assist those having trouble accessing affordable insurance.
IBC will make the risk manager available to assist condo corporations that are having trouble acquiring insurance. The risk manager will make practical recommendations that will reduce condo corporations’ risk and help improve the availability of insurance. For example, if a condo corporation can’t obtain insurance because of numerous water damage claims, the risk manager will identify that as the obstacle for the condo corporation and advise them on the maintenance required to reduce that risk.
While the commercial insurance market has been hardening globally, there are a number of condominium corporations in Alberta that are feeling the pressures more significantly than others. The IBC risk manager, to be hired early this year, will work closely with the insurance industry, the provincial government and condominium corporations to understand risks facing condos and how they can prioritize actions needed to access much-needed insurance.
“We recognize the seriousness of the issues facing a number of condominium corporations in Alberta, especially in Fort McMurray, and want to help all stakeholders find solutions,” said Celyeste Power, Vice-President, Western, IBC. “Insurance is all about understanding and pricing for risk. Engaging with a risk manager will help those who are having difficulty finding insurance to take steps that will help them get the insurance coverage they need.”
There are about 9,000 condominium corporations across Alberta, and recent media reports suggest at least a handful are having trouble accessing insurance or are seeing increased rates. Being better informed will help condominium boards to examine and respond to these concerns. The risk manager hired by IBC will be able to increase boards’ awareness about how insurers view risks and evaluate properties. The risk manager can also provide advice on how claims history, building materials and location can affect insurance rates.
“We understand this is an incredibly stressful situation for Albertans in the affected condos. We do not want to see any Albertan lose their home or have difficulty paying their bills. We are hopeful that this first step will help inform those affected and improve the situation,” Power added.
This is just one step of many that the insurance industry is taking to address this issue. IBC has brought together industry representatives and key stakeholders to take action and is also working closely with the provincial government.
“It is essential that all stakeholders work together to find common-sense solutions to relieve the pressure in the condominium market right now,” Power concluded.
About Insurance Bureau of Canada
Insurance Bureau of Canada (IBC) is the national industry association representing Canada’s private home, auto and business insurers. Its member companies make up 90% of the property and casualty (P&C) insurance market in Canada. For more than 50 years, IBC has worked with governments across the country to help make affordable home, auto and business insurance available for all Canadians. IBC supports the vision of consumers and governments trusting, valuing and supporting the private P&C insurance industry. It champions key issues and helps educate consumers on how best to protect their homes, cars, businesses and properties.
P&C insurance touches the lives of nearly every Canadian and plays a critical role in keeping businesses safe and the Canadian economy strong. It employs more than 128,000 Canadians, pays $9.4 billion in taxes and has a total premium base of $59.6 billion.
For media releases and more information, visit IBC’s Media Centre at www.ibc.ca. Follow us on Twitter @IBC_West or like us on Facebook. If you have a question about home, auto or business insurance, contact IBC’s Consumer Information Centre at 1-844-2ask-IBC.
If you require more information, IBC spokespeople are available to discuss the details in this media release.
How insurance for condominium corporations works
Tough market conditions have led to companies re-evaluating their risk appetite for writing new business and having more discipline in commercial underwriting. Many insurers across Canada, and in Alberta in particular, have seen more frequent and more severe weather losses, including losses as a result of the 2013 floods in Calgary, the 2016 wildfires in Fort McMurray and the 2019 fires in High Level.
- 7 of Canada’s 11 most-costly insured disaster events have taken place in Alberta, and this has contributed to changes in the way companies underwrite risk and price premiums.
- Several lines of insurance business are currently experiencing high losses. A hardening insurance market – a period where claims payouts have increased – makes insurers less inclined to write new business, making it more difficult for commercial consumers to obtain insurance.
Insurers look at a number of factors to assess risk and price premiums, including the following:
- Type of construction and the materials used in the building’s construction, including whether materials are fire resistant, e.g., wood frame structures are considered higher risk.
- Location of the condo, e.g., buildings located on flood plains pose a greater risk of water damage due to overland flooding, and in the northern parts of Alberta, water damage from burst pipes is more prevalent.
- Multi-unit condos are prone to water damage through accidental overflowing of toilets and bathtubs, as well as burst pipes and supply line failures.
- Claims history, such as repeated water damage claims or multiple other claims, will affect the availability and affordability of insurance coverage.
There are unique risks to consider when insuring condo corporations, including the following:
- Difficult economic conditions have led to higher vacancy rates, which pose significant risks.
- A unit occupied by tenants, as opposed to the unit owner, may not be maintained as adequately and repairs may not happen as quickly.
- Higher tenancy rates can often lead to less oversight from the board of directors, which could lead to irregular maintenance or substandard repairs in the condo building.
What you can do now:
- Talk to your insurance representative about what risk management strategies will help protect your condo. An efficient and effective maintenance program will help to mitigate many of the risks your condo corporation faces.
If you are a condo unit owner:
- Ask your condo corporation about its maintenance strategy and what it is doing to mitigate risks.
- Ask your condo corporation about the condo’s claims history and whether there are maintenance issues that need to be addressed.
- If you have questions about insurance, call IBC’s Consumer Information Centre at 1‑844‑2ask‑IBC for more information.
SOURCE Insurance Bureau of Canada