The explosion of condominium living has forced brokers to rethink what insurance packages they can offer this growth market – and exposed a gaping hole in coverage that one company is rushing in to fill.
“What we’ve seen changing in the condominium market just recently is that commercial policies have had to increase the deductible over the years,” says Paul Johnstone, senior vice president and personal insurance zone manager of Chubb Insurance Company of Canada. “The challenge for unit owners is that I the building incurs a loss, the unit owner is assessed the building’s deductible. That used to be a conservative figure, but now it can be upwards of $100,000.”
That can be a body blow for any homeowner, Johnstone says, which spurred Chubb Canada to take a closer look at how they could improve coverage for those living in condominiums.
“Imagine if you were a condo unit owner, and you are suddenly assessed for a loss of $100,000. We don’t believe insureds should be on the hook for that,” he told InsuranceBusiness.ca. “We discovered this when we were reaching out to our partners in claims, asking them where there have been sources of friction in claims. The condo deductible came up a few times.” (continued.)
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As part of its remaking and updating of the Masterpiece insurance offer, Chubb Canada enhanced the unit assessment for condos.
“We expanded the coverage to $25,000 across the whole country, with an opportunity to buy up to $100,000,” he says. “The updated Masterpiece takes the global look, and tailors it for the Canadian marketplace; part of that tailoring is for the condo market, with the enhancement substantially increasing the deductible unit assessment.”
The focus on the condo market is reflected in the changing demographic and economic realities of today, Johnstone says. With an aging population choosing a downtown lifestyle, free of the obligations of maintain a large house and property – and more people investing wealth in tangible items like fine art, shying away from the stock market – Chubb Canada’s Masterpiece policy was also reformulated to meet those needs.
“Traditionally, the average wealthy person had a diversified portfolio, with quite a bit of equity in the market,” he says. “With the anemic realities of the stock market, we’ve seen individuals diversify into buyable articles, like more real estate, or more fine art.” (continued.)
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With the recent flooding damage still high in the minds of policyholders, Johnstone is seeing a trend towards homeowners purchasing and installing emergency and back-up systems to protect their home and contents – a move that has created more of a partnership between the client and insurers.
“When you have a client who invests in a sump pump, alarm, check vale or an emergency generator, our data suggests you should get a discount on the insurance. Clearly it is an advantage, and should be credited,” he says. “The best way to refer to this is a partnership – a partnership between the insureds and Chubb, as they are spending money to help mitigate a potential loss.”
Creating a policy that can be tailored to the individual is a fact of life for insurers if they want to succeed in the market today, says Johnstone.
“The days of an off-the-shelf generic insurance policy are probably over,” he says. “Consumers expect more choice, and the consumer experience is enhanced when you provide more choice.”
