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2024 Alberta Condo & Rental Insurance Update

Alberta’s Real Estate Insurance Market Forecast 2024-2025: Navigating Through a Transforming Landscape

As we advance into 2024, the real estate insurance market in Alberta—and indeed across Canada—displays significant transformations influenced by both global challenges and evolving local regulatory frameworks. This article explores what rental and condominium property owners can expect in terms of insurance costs, coverage, and market dynamics over the next two years, taking into account broader trends that could impact their insurance needs.

2024 Alberta Condo & Rental Insurance Key Market Trends

Increased Insurer Competition

Despite the backdrop of a hardening market where insurers are reassessing their portfolios amid various industry challenges, there remains a sense of optimism with an expected increase in competition among insurers into 2025. This trend might lead to more competitive rates and diverse insurance product offerings for property owners. According to BFL Canada, insurers are setting their sights on sustainable long-term growth with a focus on improving performance through careful risk selection and capacity placements​​. Considering the fluctuating market and general trends its always a good idea for policyholders to review their coverage carefully​.

Importance of Accurate Information

Given the rising inflation, which impacts the cost of covering claims, insurers emphasize the need for precise risk data and property valuations. This helps in better assessing and mitigating potential losses, especially in a market where reinsurance rates are also climbing. Property owners must therefore ensure that their coverage details are up-to-date and reflective of current property values to avoid underinsurance, a growing concern in today’s economic environment. BFL highlights the critical importance of providing quality risk information and accurate property valuations to offset inflationary increases​​. Lloyd Sadd underscores the risks of underinsurance as inflation drives up the cost of claims, making it essential for coverage to match the rising costs​1.

Impact of Natural and Cyber Catastrophes

The increasing frequency and severity of catastrophic events, such as wildfires, alongside heightened cyber threats linked to geopolitical tensions, reshape the insurance landscape dramatically. These factors necessitate robust coverage that can address complex claims, recovery processes, and potential cyber-related financial losses. The unpredictability of such events makes it crucial for insurers to accurately predict future risks, which could translate into increased costs for policyholders if not managed carefully. BFL’s2 report on natural catastrophe and severe weather events in Canada causing over $3.1 billion in insured damage in 2023 underscores the magnitude of these challenges​​. Additional insurers specializing in rental real estate and property management also point to the global rise in catastrophic weather events and cyber risks as key disruptors in the insurance market​.

Regional Focus: Alberta

Alberta’s Wildfire and Cybersecurity Readiness

In Alberta, the growing number and severity of wildfires, compounded by the risks of cyber-attacks, highlight the critical need for comprehensive insurance solutions that cover both natural and digital realms. Property owners are advised to review their policies to ensure they encompass adequate provisions for these risks, reflecting the dual threats of physical damage from fires and potential disruptions from cyber incidents.

Legal and Regulatory Updates

Alberta’s New Licensing for Condominium Managers

With new regulations requiring condominium managers in Alberta to be licensed as of October 2023, there is an increased emphasis on professional management and compliance with insurance standards. This change aims to enhance the quality of condominium management, directly impacting insurance practices and policy structures in the sector.

Looking Ahead: Recommendations for Property Owners

Given the evolving insurance landscape, property owners must engage in the renewal process early, providing detailed and accurate documentation. Understanding the implications of regional legal changes and adapting to new insurance market realities will be crucial in securing adequate coverage.

In conclusion, while the market presents numerous challenges, it also offers substantial opportunities for those prepared to adapt. By staying informed and proactive, property owners can not only manage their risks effectively but also leverage these insights to secure optimal insurance coverage in a dynamic market environment.

Commitment to Excellence in Property Management

In 2024, clients under our Emerald Management & Realty Ltd. Master Insurance program experienced minimal increases in insurance premiums, effectively managed by considering property values and current inflation trends. This careful balance reflects Emerald Management & Realty Ltd.’s ongoing commitment to providing outstanding insurance solutions in a challenging market.

As a locally owned and operated property management company located in Calgary, Alberta, Emerald Management & Realty Ltd. remains dedicated to assisting clients in navigating the complexities of the insurance market, ensuring optimal coverage at competitive prices. The evolving landscape of insurance, characterized by rising premiums and narrower coverage options, poses significant challenges to investment property owners and condominium boards. In response, our team continually updates its market knowledge to devise effective risk management and loss prevention strategies.

Over its 50-year history, Emerald Management & Realty Ltd. has cultivated strong partnerships with leading insurance brokers who possess an in-depth understanding of the market. These relationships, combined with proactive measures such as enhanced property inspections and educational initiatives on maintenance and upgrades, help mitigate risks and control insurance costs.

The cornerstone of our approach is the customized master insurance program, tailored for the managed properties. This program leverages Emerald’s substantial industry experience and buying power to secure preferred rates and comprehensive coverage for our valued clients. Even in the face of the industry’s ongoing challenges, our focus in 2024 has been on securing favourable corporate rates, manageable deductibles, and efficient claims management.

By staying informed and proactive about changing market conditions, Emerald Management & Realty Ltd. helps clients position their properties for success, reinforcing our commitment to delivering the highest level of service and support. To discover more about how Emerald Management & Realty Ltd. can support your investment objectives in this dynamic insurance market, please contact our team today.

2024 Alberta Condo & Rental Insurance Update

1 (Lloyd Sadd)​

2 (BFL Canada)

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Managing Insurance Costs for Investment Properties: Tips for Positioning Your Property in the Face of Rising Premiums

As the Canadian real estate market continues to evolve, so does the importance of insurance for property owners, condominium boards, and managers. The insurance market has undergone significant changes in the past couple of years, which continues to have a significant impact on the real estate industry.

Current Insurance Market Conditions

The insurance market in Canada is facing a number of challenges, which have led to significant increases in premiums for property owners, condominium boards, and property managers. These challenges include an increase in natural disasters globally and in Canada, such as wildfires and floods, as well as an increase in claims related to water damage, mold, and asbestos. In addition, the insurance industry is also facing increased costs related to reinsurance, which is insurance that insurance companies purchase to protect themselves from large losses.

These challenges continue to present as a hardening of the insurance market, which means that insurance companies are becoming more selective about the risks and the types of investment properties they are willing to insure. As a result, property owners, condominium boards, and managers are finding it more difficult to obtain insurance coverage, and premiums are increasing significantly.

Challenges for the Industry

Natural Disasters — One of the biggest challenges facing the insurance industry is the increasing frequency and severity of natural disasters. In recent years, Canada has experienced several catastrophic events, such as: the Fort McMurray wildfires in 2016 and the flooding in Ontario and Quebec in 2019. These events have led to significant losses for insurance companies and have made it more difficult for them to offer coverage in high-risk areas.

Reinsurance — Another challenge for the industry is the increasing costs of reinsurance. Reinsurance is becoming more expensive as insurance companies are facing more significant losses from natural disasters and other catastrophic events. As a result, insurance companies are passing these costs onto property owners and managers in the form of higher premiums.

Inflation — Inflation is also having a significant impact on the real estate insurance market. Inflation refers to the general increase in prices of goods and services over time, which can lead to a decrease in the purchasing power of money. As inflation has increased, the cost of repairing or rebuilding damaged property also increases, which is another challenged directly impacting the cost of insurance. This is because insurance companies must pay out more money to cover the increased costs of materials and labor associated with repairs and rebuilding. As a result, insurance premiums tend to increase in response to inflation.

In addition, inflation and current market conditions are also impacting the value of property. As the cost of goods and services increases, the value of property may also increase. This can lead to higher property values and replacement costs, which can further increase insurance premiums. Furthermore, inflation can also impact the investment potential of real estate. As inflation increases, the value of money decreases, which can make real estate investments more attractive as a hedge against inflation. This increased demand for real estate can also impact the insurance market, as insurers may face increased competition for coverage in certain areas.

Rising market values — As highlighted by the impact of inflation, the market value of real estate investment properties and condominium corporations is also impacting the cost of insurance in several ways.  In this current climate, as the market value of a property increases, so does its replacement cost, which is the amount of money required to rebuild or replace the property in the event of a loss. As a result, insurance companies may charge higher premiums to cover the increased replacement cost of the property.  The market value of real estate investment properties can impact the cost of insurance in several ways, including replacement cost, location, property characteristics, type of property, and market conditions.

Secondly, the location and characteristics of the property can also impact the cost of insurance. For example, if a property is in an area with a higher risk of natural disasters or crime, the insurance premiums may be higher.   Similarly, if a property has certain features that increase the risk of loss, such as an outdated electrical system or a lack of fire safety measures, the insurance premiums may also be higher. 

Thirdly, the type of real estate investment property or condominium property can impact the cost of insurance. For example, a multi-unit residential building may have higher insurance premiums than a single-family home due to the increased risk of liability claims and the need for additional coverage. 

According to a recent articles on their websites, Lloyd Sadd, BFL and HUB International recommend that investment property owners should prepare for continued increases in insurance premiums in 2023 due to ongoing challenges in the insurance market. They note that increased claims related to natural disasters and other events are driving up insurance costs, and that insurance companies are becoming more selective about the risks they are willing to insure.

Overall, all these challenges are impacting the cost of insurance for real estate investment properties and condominium corporations.  This is further impacted with the decreased competition and appetite by insurers to provide coverage and capacity.  Combined, these challenges continue to have a significant impact on the real estate insurance market by increasing the cost of insurance premiums and impacting the value of property. Property owners should be aware of the potential impact of inflation on the insurance market and work with experienced insurance brokers to navigate these challenges.

Future Forecasts

Insurance companies are predicting that the challenges facing the industry will continue in the coming years. In a recent report, the Insurance Bureau of Canada (IBC) stated that climate change is expected to increase the frequency and severity of natural disasters, which will lead to higher insurance costs for property owners and managers. The IBC also noted that insurance companies are likely to become more selective about the risks they are willing to insure, which will make it more difficult for some property owners to obtain coverage.

In addition, the IBC noted that insurance companies are likely to continue to increase premiums to offset the increasing costs of reinsurance. This could lead to significant increases in premiums for property owners and managers in the coming years.

Tips to Manage the Impact

Despite past indications from Insurers that the market is softening, the insurance market in Canada continues to face significant challenges, which are having a significant impact on the real estate industry.

Property owners and managers are finding it more difficult to obtain insurance coverage, and premiums are increasing significantly. Insurance companies are predicting that these challenges will continue in the coming years, which means that property owners and managers will need to be prepared for higher insurance costs.

There are several tips an investment property owner can do to position their property and help minimize the impact of increased insurance premiums:

  1. Implement Risk Mitigation Strategies: Property owners should implement risk mitigation strategies to reduce the likelihood of claims. This may include regular maintenance of the property, inspection programs, implementing preventative maintenance strategies and starting to accrue for the replacement of depreciating capital items (i.e.) roofs, electrical, plumbing related items, etc., Education of tenants and residents is also key.  Especially around the importance of tenant insurance and ensuring that tenants are aware of emergency procedures.
  2. Build relationships: It’s important to build relationships with your insurance broker to understand what the Insurers are doing and how best to position your property for the best coverage at the best rates.
  3. Increase Deductibles: Increasing deductibles can lower insurance premiums. Property owners should consider increasing their deductibles to offset the impact of increased premiums. Gone are the days of using your insurance policy as a bank.  Property insurance isn’t a right and management of claims needs to be considered on how it could impact future coverages.
  4. Invest in Property Upgrades: Upgrading the property can reduce the risk of claims and lower insurance premiums. For example, upgrading plumbing and electrical systems can reduce the likelihood of water damage and fire damage, respectively.  Reviewing the useful life of items in the property is important.  Re-investment into the property pays off from an insurance perspective as it helps to reduce the risk of claims, as well as preserves and improves the equity in your real estate asset. 
  5. Consult with a Professional: It’s important for property owners to consult with a professional, such as an insurance broker or real estate lawyer, or property management company to understand their insurance options and legal obligations. A professional can help property owners navigate the insurance market and ensure they have adequate coverage at a fair price.

By implementing these strategies and taking proactive steps to mitigate risks, investment property owners can position their property to help minimize the impact of increased insurance premiums and reduce their overall insurance costs.

Commitment to Navigating the Challenges of the Insurance Market

As a property management company locally owned and operated out of Calgary, Emerald Management & Realty Ltd. is committed to helping their clients navigate the challenges of the insurance market and find the best coverage options at the best price. They understand the impact that rising premiums and reduced coverage options can have on investment property owners and condominium boards and are working to stay up to date on the latest market conditions and trends.

Emerald Management & Realty Ltd. has developed strong relationships over its 50-year history in the property management industry and remains committed to building relationships with experienced insurance brokers who have a deep understanding of the insurance market and can help clients find the coverage they need at a fair price. They are also working closely with their clients to develop risk management and loss prevention strategies, and are re-looking at ways to improve on inspections, education of residents in areas such as regular maintenance and upgrades, to mitigate risk and reduce insurance costs.

The team at Emerald Management & Realty Ltd., is proud of their master insurance program that has been customized for the properties under management.  With 50 years of property management service, they continue to leverage their buying power and proven track record to obtain best in class preferred rates and robust coverage for valued clients and property owners.  As highlighted in 2021 and 2022, the insurance market continues to be incredibly challenging for the real estate sector.  Emerald’s focus in 2023 remains on advocating for low corporate rates, reasonable deductible levels, and prompt claims management in the event of an approved claim. A large part of their process includes our focus on achieving stability and retaining loyal insurers for our stakeholders on our program.

By staying informed about the changing market conditions and working proactively to manage risk and reduce costs, Emerald Management & Realty Ltd. is helping their clients position their properties for success in the face of the challenges of the insurance market. They are committed to providing the highest level of service and support to their clients and helping them achieve their investment goals.  To learn more about how Emerald Management & Realty Ltd. can help you achieve your investment goals and outcomes in this current insurance market, contact their team today!

Additional Resources

Looking for more resources on the topic of insurance market conditions and additional insights on the impact on the real estate market as well as strategies for managing rising insurance costs, visit:

  1. “Real Estate Insights” by Lloyd Sadd Navacord Insurance Brokers
  2. “Insurance Services Market Insights 2023 by BFL Canda
  3. “The Hardening Insurance Market: What You Need to Know” by HUB International. 
  4. “How the Hardening Insurance Market is Affecting Real Estate” by Insurance Business Canada
  5. “The Insurance Market and Its Impact on Real Estate Investment” by National Real Estate Investor
  6. “Insurance Market Hardening, Rising Rates Impact Real Estate” by GlobeSt.
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Emerald Insights: Fall & Winter Newsletter 2022/2023

The season of falling leaves, pumpkin spice lattes and football is almost behind us. Now the focus is on pulling out our winter jackets, boots, and changing our winter tires to brace ourselves for all the winter season promises to bring.

This Fall & Winter 2022/2023 Issue of Emerald Insight’s has been delivered to all of our valued residents and board members to  provide valuable information pertaining to their homes.  Emerald Management & Realty Ltd’s goal is that these winter procedures and tips will help conserve energy, avoid unnecessary insurance claims and prevent costly winter repairs.

Emerald Management & Realty Ltd. is a family owned and operated Property Management Company & Condominium Management company located in Calgary with 50 years of experience. Emerald provides a myriad of property management and rental property services for tenants, property owners, homeowner associations, and condominium corporations.  Contact Emerald Management & Realty Ltd. today!  We’d love to learn more about your property management goals and how we can help! 

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2022 Property Management Insurance Forecast

Emerald Management & Realty Ltd. is proud of our insurance program that has been customized for the properties we manage.  With close to 50 years of property management service, Emerald has successfully leveraged its buying power and track record to obtain best in class preferred rates and robust coverage for its valued clients and property owners.   As highlighted in 2021, the insurance market has been incredibly challenging for the real estate sector. 

 

2022 Property Management Outlook

As early as 2018, the insurance market started to experience a dramatic shift with reduced capacity creating a “hard market” that our team at Emerald Management & Realty Ltd. continues to navigate for our valued stakeholders.  The “hard market’ experienced since has been characterized with substantial rate and deductible increases, declined renewals along with reduced capacity and/or restrictions on renewals.

The 2022 Q1 predictions made in Q4 of 2021 indicate that the market is to transition and stability to some degree, and the market is now showing signs of this transition with increased capacity and some broader appetite from insurers.  Moving into 2022, the general consensus is that markets are still looking to hold their rates with concerns the 2021 claims results are to some degree artificial due to the impact on activity globally with COVID-19.   This in addition to impact on claims costs due to global inflation and labor challenges still has many cautious.  While the market is transitioning, the outlook on some residential property remains tight especially where  the prior rate was before hard market as insurers are not providing any flexibility for rates below their required system rate.  The main concern is the impact of inflation on claim costs, as this has major effect as could appreciate looking at 15 to 45% increase on claims.

Despite these challenges, the forecast remains positive for real estate investors and condominium corporations.  This is good news as insurance companies continue to advise that market conditions are starting to improve and that there is a return to profitability necessary for the market to soften.1

What to Expect

In this current environment, even though insurers are cautiously optimistic and forecast a softer market in comparison to the past couple of years, they are still forecasting that where there is an increase in rates, mainly due to the impact of inflation on claims costs and capacity restraints, it should be between 5% and 15%.  In addition, it is anticipated that insurance companies will be seeking higher water damage deductibles and even where there is new capacity — it will be limited and expensive.

What are Key Factors Driving Insurance Costs

Key factors that continue to impact insurance rates for rental investment properties and condominium corporations are:

  • Increase in property values
  • Impact and the cost of record-high water and fire claims
  • Cost to insurers have increased from severe weather losses, market disruption and impact of COVID-19
  • Increase of building materials and construction due to disruption of supply chains, labour and inflation
  • New regulations from the national solvency regulation is being monitored as it has the potential of impact insurer capacity and drive up costs.
  • Increased focus on older buildings properties for detailed information on what insurers have identified as risk elements and opt not to renew without upgrades being undertaken.

How to keep property insurance costs down?

As the hard market continues to soften and property owners and condominium corporations adjust to the influences impacting pricing, you can impact insurance costs by2:

  1. Complete preventative maintenance and improvements to buildings and property
  2. Monitor your claims history and take steps to prevent future losses.
  3. Invests in a risk management program and loss prevention planning.

Emerald Management & Realty Ltd. continues to focus on the current insurance environment and taking steps to minimize the impact of this shift on the pricing and coverage term for our clients.  As we head into Q2 of 2022, our team continues to negociate and advocate for our stakeholders. Part of our proprietary process includes our focus on achieving stability and retain loyal insurers for our stakeholders on our program.

Contact our team today to learn more about Emerald Management & Realty Ltd.’s practice and process that includes a program dedicated to achieving: low corporate rates, reasonable deductible levels, prompt claims management, coverage during vacancy, and rental revenue loss coverage in the event of an approved claim. 

The team at Emerald Management & Realty Ltd. is thrilled to share the news that they have received the PLATINUM CommunityVotes Calgary Award for Best Property Management 2021.  This is the 2nd year that the team at Emerald has received this prestigious award. More information about the award can be found under Media. 

 

  1. Lloyd Sadd | The Gap Between Hearing & Seeing (November 2021)
  2. CapriCMW | 2022 Strata Insurance Outlook 
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