This response to a lot owner’s question about cladding insurance issues such as insurance increases due to the presence of certified safe cladding has been supplied by Tyrone Shandiman, Strata Insurance Solutions.
Question: Our insurance has doubled over the past 12 months. We think this is to do with cladding insurance issues as we have a green board cladding, which has been certified as safe, on our buildings. Is there some sort of lobby group tackling this?
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I live in a complex on the Sunshine Coast, and our insurance has doubled over the past 12 months. I suspect the reason for this is cladding insurance issues as we have a green board cladding on our buildings.
Even though we have a letter from the manufacturer and a certificate from Warrington fire to say that it is a safe product, we are still being shafted. Also, these products are all Australian standard products.
Is there any noise being made to the Government and Insurance companies about this situation. I would think that we are not the only complex with this problem.
I was hoping there was some sort of lobby group or action committee to tackle this outrageous situation around cladding insurance issues.
Answer: This seems to be the norm for buildings with cladding.
We have seen increases for buildings with cladding by up to four times the previous year offered by some insurers. Unfortunately, the circumstances advised by the questioner is certainly not an isolated circumstance, but more so what is we have noticed as the norm for buildings with cladding.
We put the increases down to losses from claims that insurers have already had and uncertainty over how non-combustible the product actually is. This uncertainty means insurers price a policy more conservatively to factor in the unknown risk.
In July 2017, a senate committee asked Wade Martin an Alucobond supplier about standards for non-combustible cladding his answer was “The standard is AS 1530, part 1. There is no such thing as a panel that passes AS 1530 part 1 as the product would be supplied.” In August 2017 ABC’s 7:30 Report also raised questions over flammable cladding products.
We are not aware of any lobby group or action committee that are specifically addressing the high cost of insurance for buildings that contain cladding, however, governments are starting to take action to address the cladding issue.
The Queensland government has recently legislated the Building and Other Legislation Cladding Amendment Regulation 2018 which requires buildings to register their building and engage professionals to inspect the building and where there is cladding complete a risk assessment.
We are of the view that premiums may start to decrease when:
- claims resulting from cladding decrease;
- there is better understanding of how combustible/flammable the products are;
- buildings adopt risk management of properties with cladding to minimise the chance of a major claim;
- Insurers can demonstrate the premium charged is appropriate – capitalism at the end of the day will ultimately determine the direction of where premiums end up.
Owners should also seek alternate quotes from the market.
Below is a history of known fires where there has been a direct connection with the use of ACP.
1991 – Liverpool, UK
1999 – Garnock, Scotland
2004 – Television Cultural Ctr, Beijing, China (7 Injured)
2010 – Shanghai, China (58 dead / 70 Injured)
2012 – Saif Belhasa Building, Dubai (2 Injured)
2012 – Tamweel Tower, Dubai
2014 – Lacrosse, Melbourne, Australia
2015 – The Torch, Dubai
2015 – The Torch, Dubai
2016 – The Address, Dubai
2017 – Grenfell Tower (71 Dead / 70 Injured)
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Read Next:
- Safer Buildings: understanding the combustible cladding legislation
- Queensland cladding laws: The cladding bus has left the station
- Could Intumescent paint be a solution to the cladding fiasco?
- Q&A Can non-fire rated Aluminium Composite Panels comply with National Construction Code
- Strata Finance: The guide for Owners Corporations
This post appears in Strata News #213.
Tyrone Shandiman
Strata Insurance Solutions
T: 07 3899 5129
E: [email protected]
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. This information is designed as a basic guide with relation to cover and you should refer to your Policy Schedule and Product Disclosure Statement for all terms and conditions related to cover under any insurance policy. 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.
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