The recent floods in NSW and Queensland were described as a “1 in 1,000-year event”, according to New South Wales Premier Dominic Perrottet.
But that’s not what the insurance industry suggests. Nor does it account for climate vulnerability through global warming.
Throughout Australia, particularly in areas prone to natural disasters such as flooding and fires, homeowners will likely face escalating insurance costs as the frequency and severity of extreme weather events increase.
It is also expected that premiums in many classes of insurance will be affected because insurers will be forced to pay more for their insurance to meet their obligations, which is known as reinsurance.
Impacts on strata premiums
Body Corporate Brokers (BCB), Australia’s most experienced specialist strata insurance broker and our preferred provider, advised the Australian insurers they deal with will be seeking to renegotiate the reinsurance contracts and pricing they set on their portfolios, which will be dependent on the cost of reinsurance.
It’s not surprising that the increase of major climate-related catastrophes in the Asia-Pacific region in recent years has resulted in higher costs for reinsurance, which then flow on to the premiums we pay.
Overall, we should be prepared for insurance premium increases when it comes time for renewal.
How to keep insurance premiums affordable
A well-maintained property will always be easier to insure than a property with a poor risk profile and claims history.
Building defects and maintenance-related issues are a significant financial exposure for the insurer, who are already faced with rising claims costs, as well as for owners who may be forced to pay higher excesses or self-insure the losses that fall below a high excess.
The key is to keep up with regular maintenance. Prevention is better than cure.
Delays in repairs and insurance claims
The strata industry, just like most industries, has experienced delays in non-essential repairs and maintenance work due to the pandemic. Particularly Victoria with the extended lockdown period.
As a result, insurance claims have also experienced delays.
With resources being re-directed to support the extensive work required to get people back into their homes and businesses in flood-affected areas, local loss adjusters, assessors and repairers have moved north to assist insurers in NSW and QLD.
Please remain patient as insurance claims are triaged. Should you have any queries regarding your claim, please contact your Community Manager with as much detail you can provide to assist when following up with the insurer.