In a Competitive Marketplace, How Do You Make Better Strata Insurance Decisions?

Successfully navigating the strata insurance market to make well-informed decisions will increasingly involve making sure you understand more about insurance market dynamics and the particular risk exposures of your building(s) and associated common property.

The insurance underwriting market has been in a ‘hardening’ pattern for several years. With low interest rates affecting underwriters’ reserves to pay future claims, together with rising costs of common damage claims and the higher frequency of catastrophe events costing several hundred and now billions of dollars, we can expect further tough underwriting conditions for a while yet.

Understanding everyone’s role

• Insurance company – provides the financial capital to pay claims, may offer strata policies to brokers.
• Underwriting agency – acts as an agent of an insurance company, negotiates authority to offer pricing, policy terms and conditions, and claims settlements. Is a market niche specialist.
• Broker –acts on behalf of the insured to review available market policies and pricing and negotiate the most suitable terms. Licensed to provide specialist advice to find the most appropriate cover and advocates for optimum claims settlements.
• Strata manager – provides brokers with disclosure and risk information from the Owners Corporation, including building information, valuations, security and fire protection systems, upgrades, and other risk issues that may affect underwriting decisions on price and/or cover.

Challenging market conditions

In ‘soft’ markets, insurers may chase or protect market share, making cover availability and affordability easier. However, soft markets rely on favourable conditions with less frequent or severe natural disasters and higher interest rates to provide insurers with better returns on invested claims reserves.

More regular extreme weather events, declared catastrophes, properties with structural defects, higher costs of labour and building materials, and record low interest rates have all contributed to the current ‘hard’ market conditions. Affordability and availability of strata insurance is at an all-time low.

Having an advocate on your side

Forming proactive partnerships with a specialist strata broker and a strata manager helps Owners Corporations present insurers with the relevant data they need to accurately understand the risks and obtain the most competitive premium and cover terms possible.

As brokers, we act in the insured’s best interest. Whilst we can’t control this difficult market environment, we make sure you receive specialist quality products, appropriate coverage advice, claims advocacy, and the best available terms.

We often make suggestions and recommendations for improved cover, advising the insurer about changes to a property, like proposed major capital works, and outline any unique features that may require special coverage.

Where there are differences or variations in the cover offered by insurers, we highlight these in our detailed comparison table. Our recommendations are independent and always based on a combination of premiums, excesses, and policy features.

The right broker will be able to deliver personalised advice, access to broker-only options, and customised solutions to solve problems, in order to eliminate all of the complexity from insurance decision making.     

Jane Evans     

State Manager VIC/SA/TAS    

M: 0429 981 009