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Residential strata insurance premiums in Queensland have surged over the past year, with increases of 25% to 40% becoming increasingly common. For many body corporate schemes, especially those with unresolved building defects, a history of frequent claims, or open insurance matters, these rises are proving to be a significant financial strain.
While insurance costs are influenced by a number of factors, several key drivers are having a significant impact on body corporate schemes.
What’s driving the premium increases?
1. Higher insured amounts
Many schemes have increased the sum insured for their building in line with rising construction costs. While this ensures adequate coverage, it also directly contributes to higher premiums as building sums insured increase.
2. Natural disaster claims
The 2022 floods in NSW and Queensland caused insured losses exceeding $5.8 billion, placing massive strain on the insurance industry. Combined with three consecutive La Niña weather patterns, insurers have faced a high volume of severe weather-related claims, including storm, flood, and cyclone damage.
3. Inflation and construction costs
Inflation, labour shortages, and supply chain disruptions have all pushed up the cost of building materials and repairs. This has led to a rise in the average cost of claims, which insurers are recouping through increased premiums.
4. Limited supply of insurers
There are now fewer specialist strata insurers in the market, particularly in disaster-prone regions like North Queensland. With less competition and more selective underwriting practices, remaining insurers are tightening their guidelines and increasing rates, especially for properties deemed higher risk.
What does this mean for body corporate schemes?
Insurers are requesting detailed information before offering renewal terms, such as:
- Asbestos reports and remediation plans
- Building defect or dilapidation reports, with rectification timelines
- Current building valuation (typically less than 3 years old)
- Reports on aluminium composite cladding, if present
- Confirmation that previous risk recommendations have been completed
Failure to meet these requirements may result in a body corporate not obtaining insurance at renewal time, which severely limits your ability to obtain cover from alternative insurers.
How to improve your scheme’s risk profile
To help reduce premium increases, or at least remain insurable, schemes must demonstrate proactive management and transparency. This includes:
1. Responding to insurer risk requirements
Insurers are requesting detailed information before offering renewal terms, such as:
- Asbestos reports and remediation plans
- Building defect or dilapidation reports, with rectification timelines
- Current building valuation (typically less than 3 years old)
- Reports on aluminium composite cladding, if present
- Confirmation that previous risk recommendations have been completed
Failure to meet these requirements may result in non-renewal, which severely limits your ability to obtain cover from alternative insurers.
2. Closing open claims
Insurers are increasingly refusing to quote on schemes with open claims, especially where the cause of the damage has not been fixed. Unresolved issues make it difficult to assess risk, and failure to act quickly may leave your scheme uninsured at renewal.
3. Addressing defects and maintenance proactively
Schemes with a known history of defects, water ingress issues, or poor maintenance are flagged as high-risk. Insurers favour schemes that:
- Take swift action to investigate and rectify problems
- Engage professional reports and follow through with recommendations
- Maintain a transparent and honest dialogue about past and current issues
In summary
In a tightening insurance market with limited competition, bodies corporate are strongly encouraged to take a proactive approach to preventative maintenance. Regular inspections of roofs, gutters, downpipes, and building façades, along with timely replacement of high-risk items like flexi hoses, can help identify potential issues before they result in costly insurance claims. This proactive maintenance not only protects the property but can also help moderate future premium increases by reducing the overall risk profile of the scheme.
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