Kelowna: (778) 738-0234 | Penticton: (778) 646-2106 info@inspirepm.com

The BC Government announced today that they are taking the “first steps” needed to address the complex issues that have led to the current insurance crisis which is leaving many buildings uninsured or only insured after as much as an 800% increase.

Changes proposed in the legislation tabled today include:

  • mandatory disclosure of commissions earned by insurance brokers,
  • Stop referral fees between insurers or insurance brokers and property managers or “other third parties.”

Inspire Property Management supports both of these proposed changes.

The disclosure of the commission insurance broker’s earn may not directly impact costs. But, the additional transparency may help strata councils to better under their insurance costs. At a minimum, this additional transparency will allow strata council’s to make better informed decisions. At most, this change may bring to light brokers who recommend one insurer over another in bad faith- if one pays the broker 20% commission and the other pays 15% for instance.

Eliminating the ability for insurance brokers or insurers to pay strata managers a referral fee is a welcomed change. For example, for a strata client we recently began working with in Penticton, the previous strata management company had in place arrangements that would have seen them been paid $8,900 from the insurance broker when the strata renewed their policy. If that strata manager referred that client to that same insurance broker broker for the first time, the management company would have been paid $14,240! To be clear, this practice is lawful provided that the kickback, or formula for determining the kickback, is disclosed by the strata manager to the strata client.

Inspire Property Management has never participated in the practice of receiving referral fees. We prefer instead to avoid conflicts of interest that may influence our recommendations for insurance brokers, or any other service.  Our position is that the service provider that can afford to pay a kickback, should instead give our client a better price. In that way, our recommendations will be based on quality of service and price- not the shady deals we have made with the service providers.

Other changes proposed in this legislation includes:

  • Set out “clear guidelines” for what stratas need to insure.
  • Require strata corporations to inform owners about their insurance coverage, any policy changes — including increasing deductibles — and allow the strata to dip into its contingency fund to pay for “unexpected” premium increases.
  • Protect unit owners within the strata from “large” lawsuits from the strata “if the owner was legally responsible for a loss or damage, but through no fault of their own.”

Read more here: https://www.cbc.ca/news/canada/british-columbia/bc-strata-insurance-1.5624051