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.
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
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