The cost of catastrophes, construction, claims and reinsurance has pushed insurance premiums on many British Columbia condominiums through the roof.

While petitions and critics call for government intervention, industry experts say it’s a complex market issue with no easy fix. And for some, it’s about to get worse.

“We saw half of the stratas get hit on December 31, and the other half are going to get hit on April 30,” said Mike Alavi, senior property manager with Korecki Real Estate Services Inc.

The company manages 7,500 strata units across dozens of buildings in the Lower Mainland. Of the strata corporations that have recently renewed their insurance, Alavi said, around 90% saw premium increases of between 50% and 100%.

“I think what we’ve seen is a correction in the market,” Gioventu said. “It’s not like it’s exponentially incorrect, but it’s just that it’s happened all at once.”

CHOA reviewed B.C. insurance premiums dating back to the 1980s and 1990s and found that they are not far off from where they were before industry players began adjusting their rates this past year. Gioventu called it a “bit of a revelation.”

He said on a low-risk building with a good insurance history, an insurance company charges between $0.13 and $0.15 per $100 of insured property. High-risk buildings – ones that are old and poorly maintained – might cost $0.22 per $100 of property.

At that rate, insuring a high-risk property with a replacement value exceeding half a billion dollars – which exists in B.C. – might cost $1.1 million annually. In the event of a total loss, an insurer would be paying out roughly 455 times what it collected in premiums in a given year, meaning – all else equal – the insurer would have had to collect 455 years of insurance premiums to break even on the claim.

Gioventu believes market competition is partly responsible for keeping insurance premiums relatively stagnant over the past several years, despite the fact that buildings have kept aging while property values have increased and risk has grown.

The number of residential strata claims and what they cost has also risen. According to insurance broker BFL Canada, one in three stratas will submit a claim this year. Average losses now cost more than $50,000, and 54% of losses claimed are worth more than $100,000.

READ FULL ARTICLE HERE AT BUSINESS IN VANCOUVER

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