The Insurance Council of Australia (ICA) has outlined a set of recommendations aimed at alleviating the financial pressures facing strata complexes amid escalating insurance costs. In a new policy paper, the ICA highlights several key areas for reform, driven by inflationary trends and the growing impact of extreme weather events on the insurance market.
Rising insurance premiums in the strata sector have been primarily caused by increasing repair and building supply costs, higher reinsurance prices following significant insurance losses, and more frequent severe weather events. These pressures have resulted in a challenging environment for strata owners and managers.
To address these issues, the ICA’s recommendations focus on improving outcomes for consumers and enhancing the overall resilience of the sector. Key proposals include:
Enhancing Education and Transparency: The ICA calls for enhanced education requirements for strata managers and owners’ corporation members to better equip them for managing insurance-related challenges. It also emphasizes the importance of ensuring transparency in fees and services provided to strata communities.
Land Use and Building Resilience: The ICA advocates for better land-use planning and stronger incorporation of resilience measures in national building codes. These changes would aim to reduce vulnerability to extreme weather events and other risks that could escalate insurance claims.
State and Territory-Level Improvements: The ICA suggests improvements in design and construction compliance at the state and territory levels, alongside robust maintenance regimes that would further safeguard strata properties and reduce the need for costly repairs and rebuilds.
The council also underscores the importance of mitigating risks within the strata sector, with the ultimate goal of reducing the number and severity of insurance claims. By addressing these factors, the ICA aims to stabilize insurance premiums for consumers over time.
In addition to these recommendations, the ICA welcomed recent legislative changes in New South Wales, which now require client consent before commissions are paid to strata managers and expand disclosure obligations. These changes are seen as a step forward in improving transparency and accountability in the strata insurance market.
Insurers have committed to working closely with the sector to implement these changes, with the ICA reiterating its dedication to fostering transparency, promoting disclosure, and ultimately improving consumer outcomes in the strata insurance market.
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