Insurance News Strata Seminar: CHU presents insights on strata market trends and insurance affordability
On Thursday 31 May 2024, over 100 industry professionals gathered in Sydney for a half-day strata seminar hosted by Insurance News. The attendees were there to hear from a range of industry experts and gain valuable insights on key issues facing the strata insurance sector.
The event covered some key topics which included:
- Strata Insurance Affordability
- Climate change and predictions for the future
- Transparency of strata remuneration
- Building Defects and the ongoing risks
- Strata Industry Regulations
As a sponsor of the event, CHU’s CEO, Kimberley Jonsson opened the seminar with a presentation on the state of the strata market, growth forecasts and key challenges including affordability. This was followed by insights from experts on climate threats, defects and regulations, a panel discussion and a thought-provoking closing statement from the NSW Strata Commissioner, John Minns.
Strata Insurance Affordability: A New Perspective
Our CEO presented compelling data that challenges the common belief about strata insurance affordability. When attendees were asked to estimate annual strata insurance costs, most chose the $1000-$1500 range. However, CHU’s data reveals the average cost across Australia’s capital cities is $954 (as at May 2024). Even when considering weekly incomes, strata insurance remains more affordable than home insurance.
“Despite strata residents earning less, their insurance is much more affordable,” Jonsson explained.
CHU acknowledges that premiums have increased over the past five years and that affordability and costs of living remains a concern for many. With premiums being a shared responsibility across all lot owners, strata living may offer a more affordable solution to these challenges.
The Future in Perspective with Climate Threats
Finity Principal Sharanjit Paddam highlighted the need to consider a range of climate risks in strata insurance. While cyclones and bushfires are major concerns, Paddam emphasised the looming threats of coastal erosion and extreme sea level rise which are difficult and expensive to protect against.
“Heat stress is another issue affecting more of the country,” Paddam noted, explaining that the Wet Bulb Globe Temperature – which tells us how hot it is based on a combination of temperature, humidity, wind speed and sunlight, will significantly impact liveability across Australia as climate change progresses.
A panel discussion on transparency and remuneration
A panel of strata professionals from leading brokerages and industry advisory groups discussed the impact of affordability challenges and the transparency of intermediary remuneration.
“There’s a need for more transparent pricing arrangements,” said John Trowbridge, a consultant, advocating for changes to remove conflicts of interest between brokers and strata managers.
The Ongoing Battle with Building Defects
Defects have always been a challenge for the strata industry. Bronwyn Weir, co-author of the Building Confidence report, highlighted the ongoing issues with building defects, particularly flammable cladding. Despite efforts from groups like the Insurance Council of Australia, there are several recommendations from her report that are still to be implemented by governments.
Weir stressed the emotional toll on property owners dealing with these defects, saying, “The financial costs are significant, but the emotional stress is also a major concern.”
Strata Industry Regulation
NSW Strata and Property Services Commissioner John Minns discussed the declining trust in the strata sector since its inception, attributing this to factors like complexity, competence, and cost. Minns warned that the sector’s challenges could impact housing supply strategies and affordability initiatives.
“We must improve confidence in strata to ensure the social and economic wellbeing of many in NSW and Australia,” Minns concluded.
Demystifying strata through education
The seminar highlighted the need for ongoing education, communication and action to address the pressing issues in strata insurance. From affordability and climate risks to transparency and building defects, these insights provide a roadmap for enhancing the sector and ensuring it meets the needs of property owners and industry professionals alike.
To learn more about the state of the strata market, get in touch with our team at CHU. There is a range of opportunities to learn more through our insurance webinars for brokers and strata managers and our ongoing news and insights articles.
