Bethany Scott smiles outside her condo along the Road to Nowhere in Iqaluit. Her insurance broker said insurance companies are being scared out of town by structural fires and the effects of climate change. (Photo by Thomas Rohner)

Iqaluit condo owners see insurance premiums soar

“We were told we were lucky to get insurance at all”

By Thomas Rohner
Special to Nunatsiaq News

Condominium owners in Iqaluit say a sharp increase in insurance costs have forced them to the brink—and if recent trends continue, they will be squeezed out of homeownership.

That, in turn, would make Iqaluit’s housing crisis, including for the under-housed, even worse, officials say.

“We were told we were lucky to get insurance at all,” said condo owner Bethany Scott.

“If we didn’t get insurance, what would happen to our mortgages?”

Tracey Oram, another Iqaluit condo owner, said her condo board is in the same boat. She said insurance companies were so scared to give her insurance that, now, her condo board can’t afford a new claim.

“We have a policy that we can’t afford and that we can’t afford to use. So we have a policy that’s no good to us,” Oram said.

Condo owners in Canada need two different kinds of insurance: a residential policy that covers the contents of their unit, and a commercial policy that covers the whole building.

It’s the commercial coverage that has seen a sharp increase across Canada in recent years.

Oram, the treasurer of her condo board, said that when she bought her condo in 2016 the commercial insurance was about $18,000 for 10 units. Her condo board has had one claim since then, Oram said. This year, after months of scrambling to find multiple companies willing to share the risk of the policy, the cost is just over $50,000. That’s an increase of 178 per cent in five years.

Condo fees have had to increase to cover the added expense, with some owners in Oram’s building paying nearly $800 per month on top of their mortgage and residential insurance.

“Our broker basically told us companies are trying to get out of the North….. I would like to feel like we’re not backed into a corner and forced to have one company and no options,” Oram said.

The Royal Bank of Canada told Nunatsiaq News that it sold its Nunavut insurance business to Aviva Canada a few years ago.

“I love my neighbours. It’s a quiet building, very respectful. And it’s nice having your own home, knowing that you’re investing in yourself,” said Oram.

Condo fires, like the one that claimed half of this condo on the lower Plateau, are likely contributing to the sharp increase in commerical condo insurance in Iqaluit. Condo owners say their premiums have more than doubled in the past few years. (Photo by Thomas Rohner)

Scott, also the treasurer of her condo board, told a similar story. In 2015, commercial insurance cost about $25,000 for 23 units. This year the cost is just over $60,000, Scott said. That’s an increase of 140 per cent in six years.

“It was $15,000 more than the quote we got, so we didn’t even raise our condo fees enough,” Scott said, adding her condo board has also had one claim in the last five years.

“It’s really unfortunate because developers in Iqaluit are putting up condos. We’re all being funnelled into this homeownership model, and the insurers are like, you’re too risky.”

Scott said she rents out a room from time to time, but with increased costs she’s having to charge more and more—pushing rent in Iqaluit, already among the highest in the country, even higher.

Scott said she loves her home—there’s a friendly vibe among her neighbours, who range from single-income families to retired government officials.

“Someone needs to advocate for us,” she said.

At the moment, there does not appear to be any advocacy for condo owners facing this issue on the local, territorial or national level.

Iqaluit Mayor Kenny Bell said this issue wasn’t on his radar until now.

“That’s obviously really scary, if you can’t get insurance for your home,” Bell said.

The mayor said that, since condo owners tend to be first-time home-buyers or single-income households, they play an important role on the housing continuum.

The housing continuum is widely accepted as the best approach to any community’s housing needs. The idea is that all levels of housing—from emergency to transitional and public housing to rentals and homeownership—are equally important in order to serve an entire community’s housing needs. Any negative change to one level of the continuum puts more stress on the other levels.

“Housing is a huge issue here, there’s a major lack of housing. So any time we can provide lower-cost units for people starting out, that’s really important,” Bell said.

Some professionals making $100,000 a year are couch surfing or unable to afford the increasing rents, Bell said. That puts those who are most vulnerable for housing at even greater risk, as it pushes them further outside the market, he added.

And if lower-cost homeownership is squeezed in Iqaluit, that means less tax revenue for the city and even more challenges for the Government of Nunavut’s efforts to move employees out of staff housing, said Bell.

“The GN just tried selling a whole bunch of condos and they weren’t really successful—maybe this is why.”

Despite multiple media requests to three different GN departments, the government was only able to provide limited information.

The government “is aware of an increase in condo insurance premiums for Nunavut residents and residents across Canada,” the Nunavut Housing Corp. said in an email.

“Condos may offer an alternative affordable type of homeownership to Nunavummiut.”

First-time homebuyers and single-income households may soon have even fewer housing options in Iqaluit, as some condo owners consider selling their units in the wake of sharp insurance cost increases. (Photo by Thomas Rohner)

In its most recent annual report, the NHC said the private housing market in Nunavut is “extremely limited,” contributing to more than half of the territory’s population being housed in public housing.

“To ensure sufficient affordable housing … there needs to be a diversity of housing options—a continuum of housing from emergency shelter to homeownership,” the report said.

The NHC and the Justice Department, which administers the Condominium Act, declined interview requests.

Nunavut’s Finance Department administers the Nunavut Insurance Act, which includes provisions for regulating group insurance in Nunavut.

But the department did not respond to a request for an interview.

“Insurance regulators will continue paying close attention to this issue,” the department said in an email.

On the national level, the Canada Mortgage and Housing Corp. is a publicly funded arms-length government agency whose mandate includes the promotion of affordability and choice in the housing continuum.

The CMHC said that it too is aware of the sharp increase in commercial condo insurance across the country but does not have enough data to comment.

Instead, the CHMC directed Nunatsiaq News to the Insurance Bureau of Canada.

The IBC is a national agency advocating on behalf of the home, car and business insurance industry—not on behalf of the public. It represents about 90 per cent of the industry.

A spokesperson for the IBC said it doesn’t have data specific to Iqaluit, but severe weather events and other effects of climate change are resulting in more insurance claims across the country than ever before.

Between 1983 and 1990, the industry saw 14 insurance catastrophes related to severe weather, the IBC said. The insurance industry defines a weather catastrophe as a single event causing at least $25 million of damage. But between 2011 and 2019, that number rose to 93 catastrophes. Similarly, the value of claims went from $500 million per year between 1983 and 2008 to $1.5 billion per year between 2009 and 2018.

Since the idea of insurance is that many pay for the few, insurance premiums have gone up around the country, the IBC said.

And in Iqaluit, the cost of shipping up building materials during sealift, or even flying them up during the winter, adds even more expense, said the IBC.

When asked what condo owners in Iqaluit can do to reduce their risk of severe-weather-related claims, the IBC suggested limited options of proactive prevention.

“When there’s a large rain or snow storm, not having your windows open—that’s preventable…. If snow-load is an issue, they can make sure if they’re doing repairs and maintenance that they’re thinking about snow loads in the future as well,” the IBC said.

Insurance companies make money by charging premiums and by investing their profits, said the spokesperson. When claims are paid out, this is where the money comes from.

2018 saw the lowest return on investments in 16 years, the IBC said, at 4.6 per cent of their equity.

According to the IBC, the industry invested $117 billion in 2018. So its return on investments would have been $5.4 billion.

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(8) Comments:

  1. Posted by Polar Express on

    Free Market Capitalism sucks when it doesn’t work to your advantage, doesn’t it?
    .
    Unless the government sets up a state-run insurer (like ICBC in British Columbia), there’s nothing they can do to force private companies to do business here, or to not charge risk-appropriate premiums for doing so. The insurers will just close up shop and walk away for more profitable pastures in the South.

  2. Posted by pissed off on

    This is a direct reaction to the ridiculous number of fires and break ins in the Territory.
    Try insuring a school in Nunavut to see how it looks.
    You end up paying the price for the behaviour of a small number of people.
    By the way this is not an obligation for any insurance company to do business in a certain area.

    Insurance company refuse to sell insurances in some areas of the big cities in the South because of higher than normal number of claims. That`s their privilege.
    It becomes an issue of communites to maintain 1st of all better firefighting and policing capacities but also for the citizens to behave properly as a whole.

    Sooner or later the behaviour of the people comes back to haunt you one way or the other.

    Thank you

  3. Posted by Fill them with inuit on

    That’s where housing crises begins, yet there’s homeless in our land

  4. Posted by Money Bags on

    With the crash of the stock markets, the insurance companies and the banks are going to have huge losses this year rather than earn money to pay claims.
    .
    Expect rates to rise a lot more than they already have.

  5. Posted by Keith C. on

    It’s also one of the many far-reaching effects of climate change. Insurers are facing far more claims, and more expensive claims, due to the impacts of more severe storms, flooding, fires, etc. They respond by jacking up insurance rates or refusing outright to insure.

  6. Posted by question on

    iqaluit condo owner here… is it possible to insure through an ibternational company if canada fails to regualte the costs of national providers?

  7. Posted by Paul Murphy on

    Yime for the GN to consider mandatory no fault insurance on ALL vehicles (autos, atvs and snowmobiles. Home owners Insurance as well. Too many people in the north don’t carry insurance

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