Building on a strong performance from the previous year, E&O’s 2024/25 fiscal year (ending March 31, 2025) has been another year of positive developments for E&O and insureds. Highlights from this fiscal year include:

• Adding our E&O Cyber Guard program – with the March launch of our new free E&O Cyber Guard program, we’ve added more value to licensees with this suite of loss prevention tools, powered by DynaRisk, designed to provide agents and brokerages with cyber security protection and help them avoid becoming the victim of cybercrimes that may lead to claims against them.
• Strong financial performance for the 2024/25 year – E&O remains in a strong financial position for the year ending March 31, 2025, as seen in our financial statements audited by KPMG. The firm reports that the financial statements “present fairly, in all material respects, the financial position of the Corporation as at March 31, 2025, and its financial performance and its cash flows for the year then ended in accordance with IFRS Accounting Standards.”

Growing surplus provides protection for licensees

This past fiscal year, REEOIC recorded comprehensive income of $12,751,295 and increased the accumulated surplus by approximately 23% to $68,348,314. This surplus acts as a premium stabilization fund that will be a buffer in the event our claims experience changes for the worse.

Financial highlights for this year include:

• Reduced Liability for Incurred Claims – through an $8 million reduction in our Insurance Service Expenses largely due to a decrease in the Liability for Incurred Claims (“LIC”), which is the actuary’s estimate of the cost that will be incurred, in addition to the amounts already paid out, to eventually close all claims that were open as of March 31, 2025. Over the past year, both severity and frequency of claims were down, and claims reported in prior years have developed favorably.
• Strong investment performance – the value of investments in the Insurance Fund increased from $89.6 million last year to $92.2 million (approx. 3%). These investments are currently managed by Phillips, Hager & North and Connor Clark & Lunn, professional investment managers, pursuant to our investment policies and procedures that set out clear investment objectives that are consistent with the “prudent investor rule” as required by the Real Estate Services Act, SBC 2004, chapter 42.
• Purchasing office space vs leasing – we’ve invested in our own real estate this year, completing the purchase and construction in two commercial strata units that we moved into on February 1, 2025. Our new, smaller office space in a commuter-friendly building is modern, efficient and paperless, and we anticipate this new office will be an excellent long-term investment, reducing our monthly costs for leased office space.

Strong capital management tools

We continue to follow the capital management framework put in place by the Board of Directors in 2022, including our actuary preparing a Capital Target Guideline Analysis. This sophisticated capital management and decision-making tool assists E&O in establishing surplus thresholds based on our unique risk profile and risk tolerance. 

The Board used this framework in making the fee reductions that went into effect on April 1, 2023, in the decision to increase the claim limits from $1 million to $2 million on April 1, 2024 and in providing the Cyber Guard loss prevention tools for no charge to our insureds. The Board will use this framework again this coming year in making decisions on fees and other program enhancements.

In assessing the adequacy of its capital, E&O must comply with regulatory requirements and measurements. Our regulator, BCFSA, measures the adequacy of capital in relation to the risks associated with our business through the capital target analysis prepared by our actuaries.

Claims show promising trends

Both frequency and severity of claims were down this past year, with only 227 new claims reported, the lowest annual number since the program began in 1988/89 (see chart). A reduction in the number of transactions in BC real estate markets is likely one reason for the drop in claims volume as historically there’s been a correlation between the number of claims and the number of transactions. We currently see approximately three to four claims reported for every 1,000 residential real estate transactions in BC and 78% of those claims will be reported to us within two years of the alleged error being made.

With more than 11,772 claim files closed since 1988, E&O has spent more than $120 million to defend and indemnify licensees during this time. In approximately 3,000 claims that were opened since January 1, 2014 (and are now closed):

• 65% were closed without any expense other than staff costs to resolve them
• 20% resulted in legal expenses only, and
• 15% involved indemnity payments by E&O (see chart).

Currently there are:

• 433 open claim files, with 77% of those in litigation
• 85% of the litigation claims are in Supreme Court, with the remaining 15% in provincial court or the civil resolution tribunal (CRT). This trend over the last few years of an increase in Supreme Court claims is likely due to inflation and the amount of damages exceeding the $35,000 monetary limit in small claims court. 

Type of claims

Over the past year, 47% of the claims reported against licensees were for misrepresentation (see chart). These claims tend to be a mixed bag of issues but this past year the claim types that stood out because of either frequency or severity were for:

• Lot size
• No permits
• Sale of business
• Illegal suites
• Issues with contract drafting
• Taxes/GST
• Valuations

Resources to avoid claims

Managing Brokers looking for assistance in helping their licensees to avoid claims have several resources to go to including:

• E&O Risk Reports
• E&O Managing Broker Supports
• BCREA’s Managing Broker’s Support Line (for BCREA members, password is required)
• BCFSA’s Practice Standards Advisors

E&O’s staff lawyers are also available to do loss prevention talks for brokerages, boards etc. Please email reception@reeoic.com if you would like to book one of our lawyers to do a talk for your licensees.

Coverage overview

E&O has been the mandatory self-insurance program providing errors and omissions insurance to all real estate licensees in BC since 1988. Our mission statement is to provide cost-effective professional liability insurance, loss prevention tools and legal support services for the protection of real estate licensees and thereby the public.

The terms of coverage are set out in the Indemnity Plan, published annually with a policy year that begins on April 1. The current Indemnity Plan is RE0425. Annual fees are currently $315 per year, paid every two years on license renewal.

Further information on your insurance coverage can be in the E&O FAQs or the article by Bill MacLeod, KC, and Rob McLeod “Risks and insurance for the real estate licensee”.