Conversely, properties that do not meet these criteria continue to face sharp premium hikes. Many are limited to receiving renewal terms from their existing insurer, restricting their ability to seek more competitive offers in the market. Underinsurance remains a widespread issue, particularly for buildings that have not been recently revalued. Given the surge in building and replacement costs in recent years, updated valuations often result in a significant increase in the building sum insured (BSI), which in turn leads to higher premiums.
Buildings with ongoing defects also face significant challenges, as most insurers are reluctant to underwrite schemes with known structural or maintenance issues. Additionally, the rise of electric vehicles (EVs) and the use of lithium-ion batteries present emerging risks. While current insurance policies do not generally exclude EV charging infrastructure, insurers are increasingly examining these installations due to their potential fire hazards.
Meanwhile, the strata insurance industry in Australia is undergoing reform, particularly in the area of transparency and intermediary conduct. As of 3 February 2025, new legislation requires strata managers to issue itemised insurance quotes that clearly detail premiums, GST, commissions, and broker fees. Moreover, if an owners corporation sources its insurance independently, the strata manager is no longer permitted to receive any insurance commission. These changes are intended to empower owners corporations by giving them full visibility into their insurance arrangements and ensuring more accountable and transparent practices.
To navigate the current environment, strata managers should adopt the following strategies:
- Conduct Regular Property Valuations: Engage qualified professionals to perform valuations at least every two years to maintain adequate coverage and avoid underinsurance.
- Partner with Transparent Brokers: Work with insurance brokers who fully disclose all commissions and fees, helping the owners corporation make informed financial decisions.
- Ensure Safety Compliance: Implement and enforce safety standards for EV charging stations and lithium-ion battery storage. This includes installing safety equipment and adhering to all relevant regulatory guidelines.
- Promote Open Communication: Maintain consistent and transparent dialogue with lot owners about insurance-related matters. Educate stakeholders on the risks of underinsurance and the steps being taken to manage risk.
- Monitor Regulatory Changes: Stay updated on evolving legislation to ensure compliance and capitalise on any opportunities to improve coverage or reduce costs.
At Strata Sense, we are committed to helping you obtain the most competitive premiums in the market. For more tips and support on managing your strata insurance policy, please get in touch with our team.