The House of Representatives Standing Committee on Social Policy and Legal Affairs will be holding public hearings in Cairns, Townsville, Mackay and Port Douglas later in January/early February in relation to the inquiry into residential strata insurance.
The Cairns hearing will be held at the Sebel Hotel from 2.30pm – 5.30pm on Monday 30th January 2012.
The information attached below is from BCB in relation to premium rates.
Further information in relation to this inquiry can be found at the following website: http://aph.gov.au/house/committee/spla/strata/index.htm
As mentioned in our December blog, we remind you that submissions from concerned parties are due by today- Monday 16th January 2012.
Your submissions should include the name of your body corporate, the location, the number of units, claims history, and how TC Yasi and the insurance premium rises have affected you and your fellow owners. A 1-2 page summary in Word format should suffice. Should you require advice in relation to what to include in your submission, please call (02) 6277 2358. Your submissions are to be directed to: firstname.lastname@example.org by the abovementioned date.
We encourage all Port Douglas unit owners paying high body corporate fees to have their say.
Further updates will be issued after the Cairns/Port Douglas hearing and we hope to have some positive news to share with our valued unit owners soon.
Queensland, and in fact Strata insurance customers around Australia, has had to deal first hand with an unprecedented level of storm and catastrophic events this year. Against this tough economic background strata insurance specialist providers, will be reviewing their pricing policies and applying increases in premiums in most cases.Over the last few years, the strata industry has managed to hold rate increases to single figures in the majority of cases against a backcloth of increasing claims costs. You may have read in the media – and our own comprehensive analysis of our strata book confirms this – premiums are set to rise to sustain the long term viability of insurers, including strata underwriters.Weather is a key factorThis year, we have had the Queensland flooding, Cyclone Yasi and the Melbourne severe storms and Perth bushfires which have culminated in another expensive year of losses for the Australian market.Outside of Australia, major weather related events included the tragic earthquake in Christchurch and the devastating Japanese tsunami, both of which left a trail of devastation, with a level of human and economic loss which is hard to comprehend. And even more recently, the earthquake in Turkey and the Thailand floods, will only add to the insurance losses already seen for 2011.The general insurance sector has relied largely on the reinsurance market to absorb much of these large losses, but the scale and harsh economic impact has already driven up strata insurance rates in some areas, signaling the end of the recent soft insurance cycle.The factors that have led to these price increases have been well publicised and some of the main reasons include:1. An increase in the frequency and size of claims across Australia. Cost of claims in the general insurance industry has risen by *52% from $23.6 billion in June 2010, to $35.9b in June 2011.2. A 40% increase in the average cost of everyday claims in strata for such things as broken glass, fixing burst pipes, cleaning graffiti etc in the last three years.3. Reinsurers (insurance company insurers) have increased their premiums significantly to recoup for losses paid out on worldwide natural catastrophes, with a flow on affect of increases to the cost of local insurances.Historically, strata insurance policies have been underpriced when compared to the risks they cover. Many Bodies Corporate have been paying on average 1/3rd of the premiums paid for an equivalent stand alone home insurance policy. (**Refer to ICA Fact Sheet Oct 2011). Even today, collective strata insurance remains considerably cheaper than a standalone home insurance with a similar sum insured amount. It is important to remember that for strata insurance, each individual unit owner is paying much less than a comparative home insurance customer and strata policies remains good value for money.
Most strata insurance specialists endeavor to keep any increases in premium to a minimum, but it is important to apply realistic pricing so that they can continue to provide the level of service and cover expected by their customers.At Body Corporate Brokers we are expecting insurers to increase their rates between 10% – 25% depending on claims, construction and location.Some things that can help keep prices to a minimum are:- Implementing a preventative maintenance program – to identify, remove and rectify hazards- Carrying out ongoing building maintenance – in compliance with current work health and safety standards and requirements- Checking the extent of cover and the Building Sum Insured amount – to avoid underinsurance and lack of cover for your particular building and risks- Application of appropriate level of ‘excesses’These measures will help to ensure the long term protection and financial security of Bodies Corporate assets and people, whilst keeping any premium increase to a minimum.At Body Corporate Brokers, we continue to monitor and negotiate rates with the insurers to ensure Bodies Corporate are being offered reasonably priced terms without compromising the level of cover.Should you have any questions please call our office on (07) 3846 3678 and one of our dedicated staff will be able to help.Kind Regards,Con IconomidisManager – Brisbane and Northern RegionsSource:*APRA Report General Insurance Performance June 2011**Insurance Council of Australia (ICA) Fact Sheet – Residential Strata Insurance in Australia -