This article about the best strata insurance 2020 has been supplied by Simon Plummer, StrataRatings.
You may recall that our 2019 Ratings unexcitedly had no changes from our 2018 Ratings. Well, things have changed this year!
Again, we’ve seen a healthy number of policy updates in 2019 with 55% of residential policies and 63% of commercial policies receiving an update. Many of these updates contained minimal material change however and were mostly compliance focussed such as adding AFCA contact details.
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There were however some policy changes which had a fundamental shift in the quality of the product which resulted in a change in Rating.
Notably, we also saw two products leave the residential market and another two leave the commercial market.
Methodology
Our rating methodology remained the same since inception and essentially considered the following:
- Is the policy an Insured Events policy or a Broadform Accidental Loss/Damage policy?
- Who is the insurer?
- Is the product freely available to purchase?
- How comprehensive is the wording?
Full detail of this methodology can be found here.
What Ratings Changed?
Four residential Ratings changes occurred this year which stemmed from changes in underwriting structure. Both Brooklyn Underwriting and Axis Underwriting moved from offshore Lloyd’s syndicates to onshore Australian insurers which upgraded their Rating from Silver to Gold.
Expert Strata Insurance and Longitude Insurance had their Ratings downgraded from Gold to Silver due to a change from a single underwriter to multiple underwriters.
In the commercial Ratings, Brooklyn Underwriting were upgraded while Expert Strata Insurance and Longitude Insurance were downgraded for similar reasons.
Sound Foundations
Stata insurance is all about the transfer of risk and as complexity is added to the underwriting structure such as will offshore syndicates or multiple incumbents, the transfer of this risk becomes less certain.
The above reason is why the market leaders in the space have strong and secure underwriters. In addition to this strong base, they build comprehensive products that suit the customer and distribute these fairly.
An analogous example is building a bridge with poor foundations. Perhaps the bridge has some great features; it has eight lanes, smooth tarmac and world-class onramps. For those using it in non-peak periods, great. But for those who happen to use it in dense traffic when it is under maximum load, there is a good chance of failure.
So, there you have it – the StrataRatings awards for 2020!
Come and check out which Rating your policy achieved: Click here to see the ratings for Best Strata Insurance 2019!
About StrataRatings
StrataRatings is Australia’s first and most respected strata insurance evaluator. As a pioneer in the strata insurance industry, StrataRatings was established to close the information divide between insurers and strata schemes and to cut through the complexities of Australia’s strata insurance industry.
Read next:
- Does my strata insurance cover me for everything?
- NSW: Q&A Can We Avoid Strata Manager Insurance Commissions?
This post appears in Strata News #312.
Simon Plummer
StrataRatings
E: [email protected]
This article has been republished with permission from the author and first appeared on the StrataRatings Website.
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Do you have a suggestion for best strata insurance in 2019? Have a question or something to add to the article? Leave a comment below.
A previous comment from last years Ratings from Tyrone Shandiman, Strata Insurance Solutions:
I’ve looked into strata ratings and while I think rating insurers is a great idea I have some concerns about Strata Ratings. I am an insurance broker that works full time in the strata insurance industry and my concerns about the strata ratings website are as follows.
Firstly, the strata ratings website does not explain who gives the ratings – Is it just Simon Plumber and what involvement does he actually have in the strata industry and day to day dealings with the insurers he is rating other than having previously worked as the national claims manager for CHU?
What is the actual amount in dollars that each insurer pays strata ratings? Is there a conflict in the remuneration offered?
The strata ratings website pays no consideration into what we believe to be one of the most important factors on rating an insurer and that is the insurers attitude to paying claims – for example one of the “platinum” insurers is an insurer who we feel synonymous with making every attempt to avoid water damage claims (45% of all strata claims) and who we have taken to the Financial Ombudsman Service on a few occasions.
The website goes on to talk about Lloyds of London as being a riskier option but it does not properly explain why – Lloyds have the same the same S&P ratings and are an APRA approved insurer and have a much longer history than any insurer that is on the strata ratings website. What specific examples does strata ratings provide to suggest Lloyds is not a good insurer?
Is availability to purchase really something a client considers when purchasing a product? Just because a product is only available through a broker, the client still has the availability to purchase it – they just need to find a broker that offers the product.
The website really gives brokers a bad wrap – it talks about brokers receiving commissions and it costing clients more and goes on to suggest it might be cheaper for a strata manager to learn it themselves but does not mention that strata managers receive the same commissions as brokers. The website does not properly discuss the importance of brokers in the insurance process and the benefits clients get from dealing with a broker these include. 1. Providing clients access to a more comprehensive range of insurers, many that are only available to brokers 2. The owners corporation transferring the responsibility of ensuring appropriate cover is taken to a properly qualified party and thus reducing their risk of a negligence claim against the office bearers for taking out a policy that was not correct 3. Most importantly the brokers role of acting as the clients representative at the time of a claim – last year, we were successful in disputing 10% of all claims and getting 10% in additional settlements for our clients.
The work that has been done thus far is a great start and I hope that my comments do not discourage Strata Ratings from pursuing their service as I would like to use the ratings myself for my clients – I just feel more rigor and transparency needs to be put around the rating process and better explanation of some of the claims on this website.
Simon Plummer, StrataRatings replied:
Thanks for your comments Tyrone, fantastic to get some intelligent discussion going! I’ve just popped up a blog post in response: https://www.strataratings.com.au/blog/2019/2/28/a-strata-broker-concerned-with-disruption-does-strataratings-remove-the-need-for-brokers