Advocating for Strata – Driving the Change

The ‘new normal’ for the world is still in crystal ball territory, but other issues will continue to dominate the strata world in the future.

In particular, there are two ongoing issues which will hang over strata for some time: building defects and dangerous cladding.

The strata industry has worked constantly to advocate change on these issues and we are seeing progress in combatting them. At the same time, CHU has worked – and will continue to work – with the SCA and the industry as a whole to negate some of the issues.

Building defects

Trust in apartment buildings was badly shaken by cases of building defects. However, the building industry is now under the scrutiny of the new construction watchdog, the NSW Building Commissioner. They have the power to inspect building sites, prevent the issuing of occupation certificates, call for documents, and ensure the rectification of serious defects and recovery of associated costs. This should help provide confidence for prospective buyers but it’s an issue we will continue to keep a close eye on.

Following some high profile building defects cases in the media, some insurers lost their appetite for buildings with defects. Whilst that sounds perfectly reasonable, based on CHU’s experience the majority of buildings have defects with severity ranging from low (e.g. efflorescence) to major (e.g. severe cracking/balcony failure).

As a result, CHU has spent more time than ever before with brokers, strata managers and with strata committees in working through rectification programs to ensure major defects are addressed and buildings don’t become uninsurable over time.

Dangerous cladding

The other big issue that, although has seen some progress, will continue to be closely scrutinised is dangerous cladding.

This has been highlighted by a number of major disasters, including a disastrous fire in February 2019 which raced up dangerous cladding on the side of an apartment building in Melbourne. Again, the strata industry and strata insurers have been advocates for change on this issue with state governments.

Consequently, the NSW Government has agreed that apartment owners forced to replace flammable cladding on high-risk buildings will be able to access interest-free loans. This is part of a $1 billion government program over the next three years helping to resolve the crisis.

This follows the Victorian Government’s lead of funding rectification work, putting together a $600 million package to directly cover owners’ costs to remove cladding from high-risk buildings.

Cladding and building defect issues won’t go away overnight and the strata market will continue to encourage change to dissipate them.

Driving change in business

While strata insurance is CHU’s ‘reason for being’, our strategy to 2025 is focussed on Diversity and Inclusion, Environment and Sustainability, AI and Technology.

• Diversity and Inclusion

Diversity and Inclusion are no longer seen as a “nice to haves”. It’s a vital part of the community’s culture and the strata industry is no exception.

The Australian National Strata Data Analysis 2018* found that 50% of people living in strata do not speak English at home and this varies by state. Part of what we are focusing on next at CHU is making our products, documents and website more accessible to everyone in strata.

In 2021 we are looking to deliver multilingual content to assist owners in understanding what their strata insurance covers and where they may need to seek separate insurance like Landlords and Contents. We have recently created multi-lingual videos which are available on our website.

Diversity and inclusion in the workplace is the key to providing a larger spectrum of knowledge, values, and preferences. It can benefit a company’s ability to innovate, help its customer-focus and within a company, help promote the morale of its employees. This translates to a positive impact on business results.

The strata industry is certainly moving in the right direction in terms of diversity, but we need to make sure we see it right through to the inclusion part. People need to feel respected and connected, as though they are contributing and progressing in order to feel included in an organisation. 

• Environment and sustainability 

It’s estimated that strata properties account for as much as 10% of Australia’s total carbon emissions.

As a significant contributor to emissions the strata industry, from owners to managers, needs to be on the front foot with sustainability programs and initiatives.

CHU is tackling head on how our business can lessen its impact on the planet and how to encourage strata owners, business partners and suppliers to do the same.

We, like others in the industry are committed to being a carbon neutral business and have an agreement with environmental scientist/ explorer Tim Jarvis’s Forktree project in combating climate change and biodiversity loss.

CHU is also piloting a scheme with eco waste managers Handel Group to lessen impact on landfill. CHU is using handel:’s unique FLEXiSKiPs to collect and remove the waste.

The skips are made from 100 per cent recyclable material and can be easily erected on sites. The waste materials are later moved to handel:’s recycle partners to recycle.

Strata property owners with environment programs in place are not only helping save our planet, but can actually realise cost savings from environmental initiatives.

• AI and Technology – the new digital world

The restrictions of the pandemic have seen the digitalisation of business and the community dramatically gain momentum.

Likewise, the strata insurance industry has to focus more on how to cater for the now digitalconscious strata market – and this will continue even when the pandemic ebbs.

CHU has embraced a digital transformation plan over the past few years and has given us the base to react to changes in strata and in the future. We are further refining our underwriting rules in StrataTech so the bulk of quotes go straight through without manual underwriting intervention.

This strategy will also bring great things to our customers like instantaneous claims payments and responding to client requests in seconds rather than hours or days. We are working with Optical Character Recognition (OCR) technology to read quote slips and claim forms and keen to set up API links with our intermediaries to remove the need to re-key information.

The future

Obviously much depends on how the world recovers from the pandemic. But there are some positive signs for the strata industry. However, it will take a committed effort by strata and strata insurance industries to ensure they have a continued voice for change.

*Published by: City Futures Research Centre, UNSW Australia, May 2018, with addition of addendum August 2018.

CHU Underwriting Agencies Pty Ltd (ABN 18 001 580 070, AFSL 243261) acts under a binding authority as agent of the insurer, QBE Insurance (Australia) Limited (ABN 78 003 191 035, AFSL 239545). Terms, conditions, limits and exclusions apply to the products referred to above. Any advice is general advice only. Your client should consider the relevant Product Disclosure Statement available at chu.com. au and whether or not the product is appropriate for your client in deciding whether to acquire, or to continue to hold, the product.

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