Currently browsing: Insurance


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 

The WHYS of condominium owner insurance

In Episode 2 of our insurance mini-series with Nuera Insurance Inc.,  Lauretta Enders, BA, CPM of Emerald Management & Realty Ltd. speaks with our valued partner to discuss the “whys” and “what fors” when it comes condominium unit owner insurance.

Emerald Management & Realty Ltd. is a licensed condominium management brokerage and trusted to respond with experience and responsive systems. Emerald Management & Realty Ltd. offers a wide range of condominium property management services and rental property management services.  Our primary goal is to offer peace of mind and help condominium boards realize the long-term profitability, a solid governance approach and assist to minimize risk.  Contact us today to find out more about how our team at Emerald Management & Realty Ltd. can help by calling 403-237-8600. 


Condominium Insurance Insights

What is condominium insurance? 

As a condominium unit owner, you have title to your own unit, as well as a share in common (and or managed) property such as the lobby, hallways, parking garage and other amenities. A bare land condominium may have fewer common areas, typically just streets or roadways but can also include managed property such as the roof, exterior siding, and sewer lines. It is important to note that the definition of what is “owned” by the unit owner depends on the condominium and typically outlined in the bylaws and on the condominium plan. 

If you have purchased a condominium unit, the insurance policy you bought might have seemed similar to something like the coverage you might have gotten with a Tenant insurance policy (i.e. Personal contents and liability).    

When it comes to buying condominium owner coverage, it is important to note that coverage is available under two separate and distinct policies: one for the corporation, and one for the unit owner. 

 Having two insurance policies can be confusing but while the two policies are separate in their coverages and wordings, in combination, they may provide all risk coverage for your unit and contents.

Detailed information about what is covered is specific to each Corporation and typically  defined in the Condominium Bylaws.  Your Insurance Broker is the expert with respect  to your personal coverage. Call them and discuss your concerns to make sure you get  the best possible coverage for your protection. 

Tip: Provide your condominium corporation’s insurance policy plus your bylaws to your insurance broker. This helps to make sure you have the proper coverage in place. 

Why do I have to buy condominium unit owners insurance? 

 The Condominium Property Act specifies that condominium corporations are responsible to insure Corporation owned property, and unit owners are responsible to insure their Units and personal property.   

 In addition to the Corporation’s policy, it is especially important that you also have a Condominium Unit Owners Policy in place for your protection. Remember: The Corporation’s policy does not cover your personal contents, liability or in many cases, improvements to your unit. 

 How does this insurance benefit me? 

 Like homeowner’s insurance, a condominium owner’s policy would cover the insured’s personal property and contents, third party liability, and additional living expenses in the event something happens (like a fire or burst water pipe) that prevents them from staying in their home.  

 In addition, condominium owner insurance also protects the unit’s improvements and betterments, deductible costs, the unit itself or a loss assessment on the building should the corporation have no insurance or have inadequate insurance for which that the owner’s policy would normally cover. 

 What is Loss Assessment Coverage? 

 Loss assessment coverage is unique to condominium insurance. Since unit owners share responsibility for common property or elements, this coverage pays your share (up to a stated limit) for a major property or liability loss on common property.  

 Important insurance changes impacting deductibles and loss assessment coverage 

 Effective January 1, 2020, the Condominium Corporation has the power to seek recovery from any Owner where damage has originated from the owner’s unit for the deductible up to a maximum of $50,000 on an insurance claim.  This “absolute liability” means that regardless of whether there was proven negligence or not, the Corporation can hold the Owner liable.  This clause is part of the Condominium Regulations (Section 62.4). 

 For example: 

 If the Corporation’s deductible is $15,000, and there is damage that originates from an owner’s unit, in the amount of $20,000, the Condominium Board has the authority to recover $15,000 from the Owner. 

 Alternatively, if the Board has a $15,000 deductible, but the damages are only $5,000, the Board only has the authority to recover $5,000. 

 In the same regard, if the Corporation has a deductible that is over $50,000 and damages exceed the deductible, the maximum the Board can recover is $50,000. 

 What steps can condominium unit owners take to protect themselves and have the proper condominium unit insurance policy? 

  1. Ask your Condominium Board or Property Manager for a copy of the Corporation’s Insurance  Certificate 
  2. Contact a personal Insurance Broker and provide them with a copy of the corporation’s certificate along with a copy of your condominium bylaws
  3. Confirm that their Unit Owner policy has deductible or loss assessment coverage and how much  they are covered for in the event they are obligated to pay. 
  4. Confirm the amount of the deductible for the Condominium Corporation’s insurance policy(on the corporation’s insurance. 
  5. Confirm that the value of deductible coverage in their Unit Owner policy is at least equivalent to  the value of the Condominium Corporation’s deductible; and 
  6. Pay attention to any notice from the Corporation which changes or increases the amount of the Corporation’s deductible and increase their coverage (to a maximum of $50,000), as required. 
  7. Get written confirmation from your insurance provider that they have deductible coverage for the Corporation’s deductible.
  8. Keep a copy of your policy with your important documents and review coverages annually on receipt of your corporation’s insurance renewal for any changes or coverage updates. 

 Note: Deductible coverage is different from special assessment coverage.  

With close to 50 years of property management experience, Emerald Management & Realty Ltd. is a licensed property management brokerage and trusted to respond with experience and responsive systems. Emerald Management & Realty Ltd. offers a wide range of condominium property management services.  Our primary goal is to offer peace of mind and help condominium boards realize the long-term profitability, a solid governance approach and assist to minimize risk.  Contact us today to find out more about how our team at Emerald Management & Realty Ltd. can help by calling 403-237-8600. 

 


Property Insurance Market Update

The shift in the insurance market that started in 2018 continues to impact condominium corporations and multi-family rental properties across Canada.  Unfortunately, the hardening of the insurance market and aggressive changes by insurance companies continued into 2021 with Covid-19 hitting the insurance industry. 

Like many markets, the insurance market is cyclical.  In the recent past, benefits from a softer market were enjoyed by many in the property management industry. However, the long-term results of rising claims and reduced profitability, further impacted by a world-wide pandemic has the property management industry in a hard market.

Hard Market 101 - Lloyd Sadd Insurance Brokers Ltd.

 

The property and the real estate market are leading the lines of the insurance coverage hardest hit[1] by the hard market cycle.  This is due in part from increases in property claims, water damages, natural catastrophes, and fires.

In addition to the increased claims, the other factors impacting property management & real estate insurance market include:

  • Increase in replacement cost valuations on an average of 7-10%
  • Increase in the number of claims and frequency of claims made by condominium corporations and stratas (“claims inflation”)
  • Repair costs have increased on average of 10%[2]
  • Insurance industry recorded an underwriting loss of $244 million for the period and an overall loss of $5.1 million[3]
  • Historic low interest rates
  • Increase in severity for liability losses (“social inflation”).

Equally important, there has been a decrease in the number of insurance companies in Canada that are willing to insure real estate, especially condominium corporations.  In such cases, capacity is restricted resulting in less insurance supply.  For this reason, the increase demands leads to increased premiums.

Reported increases in the media highlighting higher premium rates and shrinking coverage capacities confirms what we are seeing and hearing from our partners and services providers.  Alberta is not unique as this market is being throughout Canada and the United States.

Emerald Management & Realty Ltd. has been actively working on this year’s insurance renewal for properties.  With many of the leaders in the insurance markets indicating hard market our team has been heavily involved in navigating the current insurance market with our team and master insurance partners to mitigate the financial impact from the changes in the marketplace to achieve the best rates for our clients.  

The following is a snapshot of the strategic marketing undertaken by our team to aggressively respond to adverse market conditions.  Our goal is to mitigate the financial repercussions impacting condominium corporations and multi-family rental dwellings across Canada.  

 

How to get ahead in a hard insurance market?

With insurers struggling to meet demand, there has been an increase in information required.  Many insurers are placing requirements such as the: mandating preventative maintenance programs; replacement of roofs; and even, mandating improvements to boiler & mechanical systems and the replacement of hot water tanks & furnaces. 

Insurers want more robust information, and it is important that you are prepared. It is integral that preventative maintenance programs are in effect and inspections are up-to-date.  Properties need to be well maintained and risk assessments completed.  In situations where the insurer requires replacements or improvements, the time taken and information gathering helps in the long run when it comes to renewal conditions.

Our valued partners at Lloyd Sadd Insurance Brokers Ltd. further recommend that to get the best results in a hard market you need to:

  • Start early
  • Provide a robust renewal submission highlighting your maintenance programs and property management standards
  • Focus on claims mitigation
  • Keep property appraisals up to date
  • Build partnerships and promote loyalty[4]

The early intervention taken by Emerald Management & Realty Ltd., including gathering and preparing information to promote the properties and condominium corporations has been presented and marketed to various insurance companies. Early indications and feedback from the insurers indicate that the process has proven to assist with renewals.  

Further to the current insurance environment, Emerald continues to work on behalf of its clients to minimize the impact of this shift on pricing to maintain the benefits of our insurance program.   We continue to be focused on achieving the advantage of our low corporate rates, reasonable deductible levels, prompt claims management, rental revenue loss coverage, vacancy coverages. 

To discuss the Emerald Management & Realty Ltd. master insurance program advantage and any concerns you have with your current property coverage please contact our team today. 

For more information about the hard insurance market visit:

[1] Hub International 2021 Hard Market Information Bulletin

[2] BFL Canada Insurance Services Inc. Market Insight December 2018

[3] Navacord Hard Market Insights

[4] Lloydsadd Hard Market Insight 2021


1 2 3