This article about yearly increases to strata insurance has been provided by Tyrone Shandiman, Strata Insurance Solutions.
Question: Is there a regulated fixed percentage scale by which insurance companies increase their premiums each year? If so, what is it?
Answer: Insurance premiums fluctuate year on year and therefore there is no regulated fixed % increase that can be applied.
Insurance premiums fluctuate year on year and therefore there is no regulated fixed % increase that can be applied.
The insurance market works in soft & hard market cycles and commentary suggests it takes 7-8 years to experience a full market cycle – the below diagram provides further context.
In 2015/2016, insurance premiums reduced by as much as 20%
In 2019 the average increase Strata Insurance Solutions experienced for buildings with a sum insured in excess of $10million was 13%-14% and it was a rare occurrence for a client to receive a premium reduction.
More recently, we are experiencing an average premium increase more in the vicinity of say 7%-13% and we are finding this year some clients are getting premium reductions if we quote the market and find a more competitive insurer to the holding insurer.
We believe the strata Insurance Industry is hovering around 10 to 12 O’clock on the Insurance Clock above.
In addition to market movements in premium, you also need to consider individual rating factors for the specific strata building – factors that can mean a higher premium increase specifically for a building can include:
- Adverse claims history;
- Disclosure of combustible building materials (such as cladding and expanded polystyrene);
- Building defects;
- An increase in your building sum insured;
- We are also seeing much higher premium increases in parts of Northern Australia due to cyclone exposure. Gold Coast & Sunshine Coast have also seen premium increases.
We have also noticed more recently strata manager/broker commissions and fees have increased on some policies. Committees who want to find out more should ask their strata manager or broker to provide a breakup of Strata Manager & Broker Commissions/Fees over the last 3-5 years to understand fees/commissions have increased.
If you are unsure about whether the premium you are paying is fair and equitable, we recommend contacting a broker to provide alternate quote. Strata Insurance Solutions have access to in excess of seven insurers and our major point of difference our low fee for service with no payment of commissions to strata managers. For an obligation free quote, contact Tyrone Shandiman on 1300 554 165 or [email protected]
This post appears in Strata News #399.
This information is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. Shandit Pty Ltd T/as Strata Insurance Solutions strongly suggests that no person should act specifically on the basis of the information in this document, but should obtain appropriate professional advice based on their own personal circumstances. Shandit Pty Ltd T/As Strata Insurance Solutions is a Corporate Authorised Representative (No. 404246) of Insurance Advisernet Australia AFSL No 240549, ABN 15 003 886 687.
If you have a question about yearly increases to strata insurance for volunteer workers or something to add to the article, leave a comment below.
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