You’re looking for strata insurance and notice a big jump in the price of premiums. It’s another blow to your budget and adds to the frustration of finding the right insurance.
It’s a popular misconception that insurance companies increase the price of premiums just to fill their back pockets. But in reality, premiums are often out of the control of both the insured and the insurer.
Why are premiums rising?
Insurance premiums may go up and down according to the hardening or softening of the market, often referred to as the “Strata Insurance Rate Cycle”.
Like any market, rates are affected by several factors, such as the economy (inflation), insurance competition, natural disasters and regulatory changes.
Between 2014 and 2018, the insurance rate cycle was softening with premiums reducing up to 50%. But then recurring claims and catastrophe claims increased so stata premiums were on the rise again.
Despite of the rate cycle premiums are subjected to, there are ways you can reduce your premium.
The Responsibility of Strata
As a strata manager or strata committee member, it’s your responsibility to know about the state of your common property. It’s also your responsibility to notify your insurers of any property defects.
As part of The Strata Titles Act 1985 s35 and the Strata Titles Amendment Act 2018 (STAA 2018) s91:
A Strata company must;
(b) Control and manage the common property for the benefit of all the owners of lots; and
(c) Keep in good and serviceable repair, properly maintain and, if necessary, renew and replace etc.
3 Ways to Reduce Your Premium
1. Avoid making small claims
More claims = higher premium. If you’ve made several claims over the last three years, your premiums are likely to increase, as well as your excess. How to remedy this? We recommend avoiding claiming for small maintenance issues and planning for regular maintenance in your annual budget instead.
2. Keep up with maintenance
Insurers know most strata insurance claims are a result of poor maintenance. Make your building attractive to insurers by maintaining it. Show them you have a proactive strata company and Council of Owners, all contributing towards on-going maintenance. Create a maintenance plan so you have a list of actionables to deliver.
3. Mitigate Risks
Mitigating the risk of your building decreases the likelihood of an emergency and reason to claim. We recommend employing a building risk surveyor to provide a risk management plan you can implement. This, along with your ongoing maintenance, may reduce your premium over time.
There are many factors that contribute to strata insurance premiums and the excess you pay. But whatever is happening in the insurance market, a well-maintained building increases the likelihood of a lower premium.
Need help finding the right strata insurance? We guide you through the process with insightful, easy-to-read comparisons that go far beyond dollars and cents.
