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BFL Canada and Magnum York Insurance Seminar

In early March, we invited our condo boards in Calgary to come out and hear the latest on insurance renewals. The insurance industry worldwide has been reacting to a perfect storm of too much risk and too many claims; it’s made them unprofitable in their property insurance business.

Thanks to our friends at BFL Canada for their research and partnership.

For every $1 collected in premiums, insurance companies paid $1.67 in claims.

Based on our partner BFL Canada’s data from 2018 (3-year cumulative data), for every $1 insurance companies collected on premiums for condominium buildings, they paid on average $1.67 for claims.

From this, you can calculate a 3-year “loss ratio.” In the above example, the 3-year average loss ratio for claims was 167%.

Type of construction (and where) impacts premiums

The type of construction of condominiums had different average loss ratios.

  • Concrete buildings were 130%.
  • Wood frame townhouses were also 130%.
  • Wood frame apartment buildings had an incredible loss ratio of 240%.

The location of buildings is also an important factor in premium calculations. A wood-frame apartment building in a flood zone, for example, could experience a huge increase in premiums. In some cases, buildings are getting lucky they can even get insurance at all.

How did the condominium insurance industry get so out-of-control?

The main factors for this trend of insurance premium increases are a combination of more disasters, more risks, ageing buildings AND more claims that are more expensive. Consider:

  • 1 in 3 condos will have a claim
  • Claims are always greater than $50K
  • 54% of losses claimed are over $100K

There have been stories in the condo insurance industry of buildings that have a loss ratio of 1000%. In other words, for every $1 the insurance company collected for a premium, they paid out $10 in claims. These types of buildings will have a tough time getting any insurance at all, especially if they are wood frame construction in a risky area, such as a flood zone.

Residential realty is being abandoned by some insurers

Sadly, because of the high risk in insuring residential realty, several insurers are deciding not to bother.

This is creating a “Less Supply and Higher Demand” situation with insurers for condo buildings.

  • Fewer insurers
  • Companies that remain are insuring fewer buildings
  • More buildings are being built
  • Larger buildings are being built
  • Replacement costs are increasing

What is the insurance premium impact for condo owners?

Because of Less Supply / High Demand scenario for insurers, condo owners can expect:

  • Higher rates and deductibles
  • Less insurable properties
  • Bottlenecks in the insurance market

How does the insurance brokerage process work?

A broker doesn’t work for a single insurance company; their job is to get the best possible deal for you from a wide range of insurance companies that carry insurance for your type of property.

BFL Canada put together this great video about how the brokerage process works.

Comments (2)

  • Lise Gaudet Reply

    We are a 21 unit Condominium in Lac La Biche Ab.
    We are being told by our insurance broker that our insurance company may not insure us because we have Poly B plumbing pipes. They made it quite clear that we will need to replace these pipes despite not having had a claim in 20 years. Is there any options that your company can offer us? The cost to replace and repair would deplete our Capital Reserve Fund.
    Please feel free to call me Treasurer of the Board of Directors
    Thank you

    November 25, 2021
    • Jessica Davies Reply

      Hi Lisa,

      Thank you for your question. Since we don't manage your property, we aren't at liberty to provide advice without all the details. We recommend speaking with your property manager, or if you are self-managed and are interested in Magnum York, we would be happy to chat with you about the services we offer. You can request a proposal here: For privacy reasons, I have removed your phone number from the comment.

      Thank you,

      November 25, 2021

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