Climate change is hammering condo owners in British Columbia.
Over the last year some condo owners have watched their insurance premiums soar by 400 per cent. Some condos have become uninsurable. Insurers are refusing coverage.
“The government's really going to have to step in and do something,” said Chris Stepchuk, Managing Broker and Co-Owner of Fort Park Property Management & Real Estate.
Stepchuk manages properties across the Lower Mainland.
"We've got a few buildings that just right now can't seem to get insurance. They've been dumped essentially and are in a real bind,” said Stepchuk.
“They have to have insurance for their mortgages, the strata property act says they have to have insurance, they won't be able to sell or buy or really do anything without insurance,” explained Stepchuk.
Experts say climate change is partly to blame for the spike. Recent natural disasters have led to massive payouts.
That financial risk has, in some cases, made being in the insurance industry unappealing and unprofitable.It was around this time last year that Munich Re, one of the world's largest re-insurers, warned that climate change could make insurance unaffordable for most homeowners. The company's chief climatologist, Ernst Rauch, told The Guardian:
“If the risk from wildfires, flooding, storms, or hail is increasing, then the only sustainable option we have is to adjust our risk prices accordingly. In the long run it might become a social issue,” he said after Munich Re published a report into climate change’s impact on wildfires. “Affordability is so critical [because] some people on low and average incomes in some regions will no longer be able to buy insurance.”Most people entering the housing market require mortgage financing. Mortgage lenders want the protection of property insurance. No insurance, no mortgage loan. No mortgage loan, no home buyer. Remove enough prospective buyers from the market and property values fall, in some places precipitously. That sends owners streaming to their elected representatives, demanding relief.
The US eastern seaboard is an example of what comes next. As private insurers leave the market, the government steps in. Today in hurricane prone regions that falls to FEMA, the Federal Emergency Measures Agency.
When FEMA began writing homeowner policies it tried to set premiums close to historic levels. Then FEMA found itself in the same jam that drove private insurers out. It was paying catastrophic loss claims on the same property, over and over and over. There were anecdotal examples of some people recovering the value of their home five times. Some homes never were fully repaired before the next devastating storm hit.
FEMA thought it should be on a self-financing or break even basis. Then those homeowners discovered that would mean a huge increase in their insurance premiums. Cue the indignant howling. It didn't help that the fury was disproportionately coming from red states. Republicans, fearing a backlash at the polls, scrapped the pay-as-you-go idea and the problem is still unresolved last I checked.
I'll bet plenty of those outraged homeowners don't even accept the reality of climate change. Like Trump's base they probably figure it's all a hoax. I read an interview with a southern real estate agent. She had inherited the family ante-bellum mansion on one of the Carolina barrier islands. Her insurance bill was going up $1,500 a month. She wanted to unload the place but feared she would get little for it because that insurance premium was money that otherwise would have gone into mortgage financing. She set to howling.
That's the thing with the modern carbon economy. It might be dandy for the fossil fuel industry and its political minions but somebody has to pay. And neither Jason Kenney nor Justin Trudeau will be coming to the rescue. Their money has another purpose - fossil fuel subsidies.
What's going on today in Vancouver condos is just another climate change impact, one that's as real and hard as concrete. And no $30 per ton carbon tax will make the slightest difference.