Did you know we are currently in a “hard” insurance market?
What does that mean?
This means there is a high demand for insurance coverage and limited supply, the effects of which can be seen throughout the property industry.
Below we will run you through:
Insurers are continuing to take a cautious stance when it comes to the risks associated with building cladding. The safety and fire ratings of cladding can have huge variations depending on the materials it consists of, with Aluminium Composite Panels (ACP) continuing to cause concern for insurers due to its potential flammable nature.
It is best practice for owners to be educated on their state regulations surrounding cladding and disclose all information of your building cladding materials to your insurers.
Defects are common in the building industry and depending on the severity, can significantly impact your insurance cover. The owners facing the biggest financial impacts are those who reside in the buildings with existing defects that have not been resolved.
The volume and severity of catastrophic events have continued implications across the entirety of the insurance industry. The financial impact of these events has led to premiums rising at a much higher rate than previous years.
There is also a delay in resources across the board with insurers, assessors and construction trades being in high demand. These implications not only apply those that are directly affected by these events, but also have influence across the entire insurance industry.
The construction industry is under pressure nationwide due to the increased demand for apartment living. The haste to construct quickly throughout the industry leads to a larger risk of buildings being constructed to a lower standard, creating significant problems from the outset.
Insurers are aware of the difficulties owners face with the correction of building defects and due to market saturation, can afford to quote selectively.
Insurers are having to make major changes to their current procedures to continue to maintain profit and survive in the current market. The change with the biggest influence on the Strata space is that owners will be seeing a premium increase of up to 15 percent for issue-free risks and 20 to 30 percent and higher for those with existing issues.
Other responses being seen from insurers include:
Ensuring your property is proactively maintained and does not suffer from defects will make a huge difference when approaching insurers in the current market conditions.
If you find your property is affected by such issues, proactive and ongoing communication with your strata manager and insurance team will help to lower the risk of any negative implications and ensure that the appropriate risk mitigations are put in place early.
It is projected for the current strata insurance market to remain difficult for an extended period of time. Insurers are advising owners corporations to increase their insurance budgets by a minimum of 20 percent in consideration with the current market predictions.
For more information please get in touch with your Strata Manager or the Insurance Team.
1300 724 256