Australia's surging strata premium rates continue in 2023
Over the past year, residential strata premiums have experienced a significant surge, driven by a combination of insureds increasing their building sum insured and sector-wide rate rises.
In certain instances, premiums have escalated by 25-40% or even higher, particularly for properties with concerns related to workmanship problems and other defects.
These rate increases can be attributed to several key factors. The devastating floods in NSW and QLD during February and March of last year resulted in insured losses of more than $5.8 billion, which further intensified the pricing pressure within the market.
There has also been a noticeable rise in the volume of strata insurance claims due to the growing number of severe weather events and flooding associated with three consecutive La Nina weather patterns in Australia.
At the same time, inflation, elevated costs of building materials, labour shortages, and material supply delays are all putting upward pressure on repair costs resulting in a rise in the average cost of strata insurance claims.
The demand for insurance coverage also remains high, while supply is limited, meaning insurers are being forced to increase insurance premiums and tighten underwriting guidelines. This is particularly the case for properties that have experienced high loss ratios and frequent claims, as well as those with defects or maintenance issues.
Insurers can also be reluctant to provide quotations for properties with pending insurance claims or outstanding rectification works.
According to market analysts, the Strata insurance market will likely remain challenging in the foreseeable future. Therefore, strata committees, lot owners, and body corporate managers are urged to appropriately budget for premium increases of at least 20% when it comes to renewal time.
How Coverforce can help
At Coverforce, we have extensive experience dealing with the insurance requirements of strata managers and owners corporations. Our team approach all of the major strata insurance underwriters in the market to ensure we provide you with a recommendation based on the best value policy available.
For personalised risk advice and tailored insurance solutions to meet your specific needs and budget, contact your local Coverforce Office Coverforce Office or call 1 3000 COVER and speak with a Coverforce risk expert today.
The information provided in this article is of a general nature only and has been prepared without taking into account your individual objectives, financial situation or needs. If you require advice that is tailored to your specific business or individual circumstances, please contact Coverforce directly.
REFERENCES
Strata rates poised for more double-digit hikes after floods, brokers say
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