Extreme weather events are increasing in frequency and severity across all regions in Canada. In the 2024 Annual Risk Outlook published by the Office of the Superintendent of Financial Institutions (OFSI), climate risk is identified as a key financial systems risk, and there is a growing need for resilience against extreme weather events.
We recently experienced the Category 4 atmospheric river on October 18 to 20, 2024, which led to powerful flooding along the Southern British Columbia coastline. Initial estimates point to more than $110 million in insured damage. Being resilient means being able to deflect under pressure.
For Strata Corporations and its owners, this means ensuring the implementation of rigorous risk management strategies to mitigate damage and protect the strata’s assets. HUB has an entire Risk Services division dedicated to helping property managers and strata councils reduce risk.
If we take a proactive approach to risk management, we are optimistic for the future. 2024 has been a transformative year in the BC strata insurance marketplace! We have seen a steady confidence build in the strata market, and on the back of favourable results in 2023, we are now seeing an increase in capacity. This new capacity comes from both a renewed appetite from existing carriers and new entrants. When new capacity is abundant, there is more competition, which translates to more favourable terms for the strata corporation, both in rating and deductibles. We entered 2024 expecting a softening rate increase, but we are seeing significant rate reductions over 2023.
As always, trying to determine how the upcoming year unfolds will be similarly challenging as there is a mix of local and global factors. While we have seen insurance rates stabilize (and go down) due to reduced claims and increased competition, we must remain dedicated to risk management. We should not get complacent because of falling rates, especially as these “once in 100 years” events are happening more frequently, becoming more severe and costly. As it stands, 2024 has already set a record for catastrophic losses, reaching more than $7.7 billion of insured losses, excluding any losses incurred in the fourth quarter of 2024.
As we look to the future, we encourage all strata council members to build a direct relationship with their broker at HUB International. Understanding insurance, market conditions and its complexities is a critical step in the risk management process and will go a long way toward implementing robust community systems that add to strata corporations’ resilience and financial health.
Sources:
Canadian Underwriter, “Quebec flooding raises 2024 NatCat losses to $7.6 billion,” September 13, 2024.
Statistics Canada, “Insights into the impact of extreme weather trends in Canada on homeowners insurance profitability and consumers,” May 15, 2024.
Insurance Bureau of Canada, “Insured damage from October storms in Southern BC surpass $100 million,” November 15, 2024.
Price Forbes, “Opportunities in a ‘transitioning’ property market,” October 2024.
