Provincial government introduces bill to help with soaring strata insurance costs

The BC government is taking its first steps to mitigate soaring strata insurance costs by introducing a bill to amend the Strata Property Act and Financial Institutions Act. 

The government wants to make the strata insurance industry more transparent, close depreciation report loopholes, and end referral fees paid to property managers, while giving strata councils more tools to deal with insurance. 

If passed, the changes will: 

• end the practice of referral fees between insurers or insurance brokers and property managers or other third parties; 
• set out clear guidelines for what strata corporations are required to insure to help strata councils make informed decisions on their insurance policies; 
• require strata corporations to inform owners about insurance coverage, provide notice of any policy changes, including increasing deductibles, and allow stratas to use their contingency reserve funds when necessary to pay for unexpected premium increases – this was recommended by the Real Estate Board of Greater Vancouver (REBGV) and the BC Real Estate Association (BCREA); and 
• protect strata unit owners against large lawsuits from strata corporations if the owner was legally responsible for a loss or damage, but through no fault of their own. 

The new legislation will also give the government the ability to: 

• identify when stratas are not required to get full insurance coverage; 
• strengthen depreciation reporting requirements, including limiting the ability to use existing loopholes in the legislation to avoid completing depreciation reports; 
• change the minimum required contributions made by strata unit owners and developers to a strata corporation’s contingency reserve fund; 
• require brokers to disclose the amount of their commission, which has been reported to be at times in excess of 20%; 
• strengthen notification requirements to strata corporations of changes to insurance coverage and costs, or an intent not to renew – this was recommended by REBGV and BCREA; and  
• amend the Form B Information Certificate – this was recommended by REBGV and BCREA. 

Consultation with REALTORS® 

The government specifically named BCREA, which represents Realtors across the province, as a key stakeholder in the creation of the new legislation. 

Since February, Realtors have made recommendations to the provincial government to help deal with rising insurance costs. 

BC Financial Services Authority report

The BC Financial Services Authority (BCFSA) found strata insurance premiums rose by approximately 40 per cent, with deductibles seeing triple digit increases over last year across the province according to their interim report released on June 16. 

These increases are having a widespread impact on BC – nearly one in three British Columbians live in a strata property. 

We’ll provide more information on this report in the coming weeks. 

Changes to strata regulation 

An addition to the Strata Property Regulation (BC Reg. 43/2000), made through an Order in Council on May 29, 2020, may make life easier for strata corporations grappling with sky-high insurance premiums. 

Strata corporations can now fund insurance premiums from their contingency reserve funds without a three-quarters approval vote. 

Read more. 

REALTOR® recommendations 

Your Board worked with the BC Real Estate Association, and the other 10 boards in the province, to develop recommendations for the BC government that, if implemented, would help deal with the issue: 

Short-term recommendations: 

1. Amend the Form B Information Certificate to require proof of insurance, including premiums, deductibles, coverage and expiry date. 
2. Work with the insurance sector to put measures into place that assure all strata corporations are able to obtain insurance coverage, for as long as the difficult market conditions last. 
3. Engage with insurers so they continue to provide coverage to strata corporations. 
4. Amend the Strata Property Act to require a strata corporation to inform owners and tenants of any material change in insurance coverage, including an increase in any deductible, as soon as feasible. 
5. Require insurers to provide strata corporations with notices 60 days before their policies expire or will be cancelled. 

Long-term recommendations:  

1. Encourage the provincial insurance regulator, the BCFSA, to make public the data and information it is gathering from insurance companies to better understand the current climate of expensive strata insurance. 
2. Encourage the BCFSA to foster a robust, economically viable market that attracts insurance providers. 
3. Develop mandatory education for strata council members. 
4. Either create a new organization – modeled on the Condominium Authority of Ontario – to enforce the Strata Property Act, including providing mandatory training and creating best practices for strata councils, or assign this role to the Ministry of Municipal Affairs and Housing. 

Why are insurance rates increasing? 

Strata building insurance premiums are increasing for a variety of reasons, according to the insurance industry. These include an increase in the number of claims, in the cost of repairs and rebuilding, and in the growing number of strata developments. Many strata buildings date back to the 1970s and ’80s and strata owners may be reluctant to undertake major system upgrades until problems occur. 

What's the impact on the housing market? 

The most affordable homes in Metro Vancouver are strata units. Drastically increasing insurance rates negatively affects housing affordability. 

As well, some strata corporations are struggling to find insurers willing to cover their building, making them non-compliant with the Strata Property Act. This means these units can no longer be bought or sold. 

This is adding uncertainty and risk into the market and the economy at large. 

Watch our latest Innovation Series video with Mortgage Broker Angela Calla

Our new Innovation Series of videos is aimed at helping REALTORS® discover new practices, tools, and knowledge.

Our latest video features Mortgage Broker Angela Calla. In part one of our conversation with Angela, she discusses how the COVID-19 pandemic is changing the mortgage market and gives you advice you can share with your clients today.

If you missed it, click here to watch our first Innovation Series video featuring the Ethics Guy® Kim Spencer. Get Kim’s five tips to help you position your business to thrive during and after the COVID-19 pandemic.

We’ll share more videos in our Innovation Series, featuring different guest speakers, in the weeks ahead!

Earn PDP hours with our mobile audio PDP courses

We’re creating a series of mobile audio PDP courses (previously referred to as audiobooks) that qualify for self-directed PDP hours for members. The first of these courses is Business Etiquette for REALTORS®, featuring the Ethics Guy® Kim Spencer and interviews with some top REALTORS® from the Lower Mainland.

This hour-long mobile audio PDP course highlights best practices to follow in your interactions with clients and other members. Learn how to deal with conflict and get tips on providing outstanding service to your clients.

Here’s some of the feedback we’ve received from members who’ve completed Business Etiquette for REALTORS®:

"Fantastic course and fun to listen to. The different snippets from various professionals broke up the content and made it more enjoyable to work through all the material. Great job putting this together.”

• “Loved this format and method of instruction.”
• “Great course. Should be mandatory for licensing and pre-licensing.”
• “Great and informative way to enjoy a cup of coffee and morning sunrise :)”
• “Very well presented course by Kim and all colleagues who spoke.”

What’s a mobile audio PDP course?

It’s a new format for PDP that we’re pioneering with our partner, ProDio. It functions like an online course that you can listen to anytime, anywhere. You’ll be presented with a series of modules and a quiz at the end to help reinforce what you’ve learned.

If you’re busy, you can listen for a few minutes at a time between appointments. If you have time, you can complete the full hour in one listening session.  

You’ll receive one self-directed PDP hour for completing this course.

How do I access the course?

Our mobile audio PDP courses are best experienced on ProDio’s free app (search for “ProDio” in the Apple App and Google Play stores). You can also access them online. The course costs $39.99 plus tax.

Preferred web browsers are Google Chrome and Safari. You may experience technical issues using old or unsupported browsers like Internet Explorer.

To learn more about Business Etiquette for REALTORS®, or to register, visit the ProDio web page.

We’ll release more of these courses soon. Stay tuned!

What radon gas and Chernobyl have in common

If you’ve not yet watched Chernobyl, the TV series about the 1986 nuclear power plant accident in Chernobyl, Ukraine, you should. But maybe not if you don’t sleep well at night, because it scared the dickens out of me at 2 a.m.  

And, to think there’s the Columbia Generating Station nuclear power plant about 540 kilometres south of us near Richland, Washington State. I don’t doubt it’s a much better design and is staffed by engineers who don’t have a death wish, so I hope you’re not mopping your brow too much about the risk

Still, the word “radiation” or any similar sounding word—such as “radon”—should make us all pay attention. Especially if these words are connected with the place we call home.  

Think back to your high school chemistry class. Remember the periodic table? I never could figure that thing out. I mean, adding up the symbols to get the right answer was a vain hope for me. I had a teacher who used to look at me and growl, “Spencer, there’s no hope for you. This is so easy, a baboon could do it, so why can’t you?” This, at the same time as he was patting a chalkboard duster onto my head. He was also an absolute dead shot with a piece of chalk. He’d spin around from writing on the board and fling chalk with deadly accuracy at any boy who displeased him. I was a regular target.  

Back to the periodic table: You may recall the symbol “U,” for uranium. If you were paying attention, you’ll probably remember that it makes a practice of shooting off particles all over the place. Except you can’t see, feel, or hear them. But your body’s cells can, apparently. The particles just zip right on through you, causing damage to cells in their wake. What a pleasant thought. Who needs a flashlight? We all glow in the dark, apparently.  

If you’d been one of the Chernobyl residents nearby, or the poor benighted firefighters or plant workers when the reactor exploded, the chemistry discussion wouldn’t have been at all theoretical. Many poor, tragic souls lost their lives then, with more dying years afterward as a result of the accident. So, you’ll be pleased to know that radon gas isn’t even remotely as big an issue as the radiation given off from the accident at Chernobyl. 

But radon gas is, according to Health Canada, a health risk. Long-term exposure to high levels of radon gas can lead to health problems, including lung cancer. I know, you’re thinking, “Well, you have to die of something,” as smokers used to say. Or, maybe, “What’s next? Drywall dust that gives you throat cancer?” (Well, now that you mention it…) I’m probably making too light of radon gas, but that’s only to get your attention. 

A few months back, and after a long period of lobbying, the BC Real Estate Association (BCREA), Health Canada, and its provincial counterpart convinced BCREA’s Standard Forms Committee that it should add a radon gas question to the property disclosure statement. I’m sure, for a short while, you were collectively scratching your heads, wondering how to advise your clients on that new question, when they asked you, for example, “How do I know if my property has radon gas?” “Who does that kind of testing?” “How much does it cost?” “How long does it take?” “If there is radon gas, what can be done about it?” and “Is there a radon gas subject clause?”  

To its credit, BCREA has responded to these questions by producing a handy FAQ document. Not only does it answer a multitude of questions, it provides links to resources, including those for radon gas testing and remediation experts. On top of that, BCREA has developed some education on radon gas—stay tuned for information on where and when these courses will be available. 

Rolling your eyes, you may be thinking, “This is just what I needed, another material latent defect to worry about.” But honestly, if you have to deal with a property that has elevated levels of radon gas, the cost to do so isn’t even close to the expense of dealing with a leaking underground oil storage tank. Resolving a radon gas issue can usually be done with ventilation, I’m told.  

Brand-new homes must have radon gas air exchange systems built in. And ancient homes like mine are so drafty there’s little chance of a gas build up. But energy-efficient homes, sealed up tightly against drafts without an air exchange system may be an issue where radon gas is prevalent, so keep that in mind (along with all the other stuff that keeps you awake at night). 

Read the FAQs. Take a look at the BC radon potential gas map in that document to learn about the area in which you work. Take the course when it becomes available. Invite a radon gas testing professional to your office sales meeting. While you’re at it, you may even want to read what Google has to say about the unit of measurement for radon gas—a Becquerel: “The concentration of radon in the air is measured in units of picocuries per litre (pCi/L) or becquerels per cubic metre (Bq/m3). One Bq corresponds to one disintegration per second.” Like the periodic table, it has me scratching my head—but maybe you were better in chemistry class than I was! 

Bouquet

Darryl Sjerven, RE/MAX Select Realty, gives two colleagues a bouquet - here’s what Darryl told us:  

“Recently, my partner and I took a listing where the seller had interviewed several other Realtors. After signing with us, our seller contacted the other Realtors and told them of her decision. Upon receiving this note, two of our fellow professionals wrote back, thanked her for the email, and complimented her choice and our abilities. I mention this not to blow our own horn, but rather to say how impressed our client was by this, and how grateful I was for the endorsement. It can be hard in the moment, when we have received disappointing news, but we will never go wrong taking the high road and not burning bridges. This kind of professional behaviour reflects well on ALL of us, and we need more of it. It made Realtors in general look good, and it made the specific individuals involved (myself included) look even better. How we handle ourselves matters, whether there is a paycheque involved or not. I won’t name the two Realtors here, but I do hope they read this, and once this deal is all done I will be contacting them to express my respect and gratitude. Let’s be professionals, and let’s be kind to each other. The Realtor you compete with today is the Realtor you need to cooperate with tomorrow.” 

Thanks for this terrific news, Darryl.  

Property taxes, private insurers, spiking insurance premiums

Property taxes due

Property taxes are due the first week of July. Here’s information on how to reduce and defer taxes.

Read more.

Private insurers aren’t tightening lending standards 

CMHC plans to tighten lending standards for mortgage insurance on July 1, 2020. If your buyers don’t qualify, there are alternatives.

Read more.

Causes of spiking strata insurance premiums

A new interim report summarizes a provincial government investigation into the causes of rising strata insurance premiums. Here are the findings.

Read more.

REBGV’s Vancouver office re-opened in a limited capacity

The REBGV office on Spruce Street in Vancouver has re-opened for a limited number of staff. While the office remains closed to walk-in traffic, members can make appointments for in-person services if needed.

We’ve implemented different safety measures at the office to ensure we’re following all public health orders and guidelines set out by WorkSafeBC.

This includes spacing out staff workstations to ensure physical distancing requirements, installing plexiglass shields, providing hand sanitizer stations throughout the building, and adjusting the office layout to avoid crowding in smaller spaces, such as hallways.

Our Schoolhouse Training Facility in Coquitlam and the classrooms in our Vancouver office remain closed. Our full course complement, however, remains available to you virtually.

Making an appointment to visit our office  

As has been the case since March, you can contact any REBGV staff member today and access any of our services virtually, which eliminates most needs for you to visit the office in the near future. (Click here for our staff and services contact list.)

Should you need to come to the office, please follow these steps:

• Contact the person or department you need to see to set up your appointment. You’ll need to complete a health questionnaire.
• When you come to the office for your appointment, enter from the lobby doors on Spruce Street or via the elevators from the parking garage.
• Please sanitize your hands and proceed immediately to reception to sign in.
• You’ll be required to wear a mask for the duration of your visit. We recommend you bring your own; one will be provided for you if you don’t have one.
• Keep two metres (six feet) of physical distance between yourself and others while in the building. Always read and follow the signage posted around the building.
• When your appointment is finished, please sign out at reception.

If you have questions, please call us at 604-730-3000.