In almost every major Canadian city, condominium cranes can be seen popping up on almost every street corner. Brokers who try to capitalize upon this boom, however, may find themselves in a bind.
Financial service professionals are lining up to enroll condominium owners, since they’re often viewed as lifelong clients who will produce business for advisors for years to come. In order to reach them, many are pursuing relationships with condo developers and sales agents, who can then recommend their services to buyers. Some, such as bank mortgage specialists set up shop in the developers showrooms, with clients funneled straight to their desks.
While this strategic idea is paying off for certain brokers, most P&C players struggle to win that kind of access to a burgeoning demographic of Canadians. Those industry veterans question how they will ever be able to reach clients with developers acting as gatekeepers.
“Normally you think it would be the guy who insures the contract or developer,” said Bill Steele, president, C.M. Steele Insurance Brokers. “There’s not a whole lot of construction going on where I am, so I don’t get those opportunities.”
On the other hand, some developers and real estate agents partner with insurance brokerages and send new condo owners directly to a preferred firm.
Although they cannot legally receive compensation for those recommendations, they feel that the benefit is two-fold: they receive goodwill from clients who appreciate a favorable insurance experience, and they can have the security of knowing that the buyer will obtain sufficient coverage.
If nothing else, insurance brokers may want to partner with their mortgage counterparts to at least advise new owners about personal insurance requirements, since many “mistakenly believe their units are fully covered by the condo board,” according to the
Montreal Gazette, citing a report.
The outlet points to one study conducted by a Quebec evaluation firm which discovered that 70% of 270 respondents were underinsured for their properties. A representative of the
Insurance Bureau of Canada said that condo shoppers often jump into the process without considering its accompanying costs of coverage.
It’s critical that P&C brokers collaborate with mortgage professionals, though, to help prevent a coverage gap that can leave condo owners in financial ruins.
“If you are a real estate broker, then you must make sure you inform the buyer that the building isn’t sufficiently insured,” Yves Joli-Coeur, an attorney specializing in condo law, told the
Montreal Gazette.
