There has been plenty of publicity in the last 36 months relating to the Insurance price hike in the Far North and the impact on strata properties. This price rise has been attributed to severe weather events in the region. From a Strata Managers perspective it can be frustrating to have to explain these price increases to clients, knowing that our Southern counterparts have similar weather events, yet have seen only moderate increases in Insurance pricing.
This leads to the question of why? One response is that the FNQ Strata Market has been underpriced for some years and therefore the hike was dramatic to take these prior years into account. Another is that it’s a simple case of supply and demand and with limited Underwriters willing to place cover in the region, the risk is spread between fewer insurers with a low premium pool resulting in a higher risk. The explanation usually favoured by investors struggling with a limited ROI, is that Insurers are simply price gouging.
Whilst the recent government hearings into Insurance in the North was lengthy and extensive, it was a shame that only certain stakeholders were included in the process. Strata Managers have a unique perspective because they deal with insurance policies and claims at the coal face across a number of different schemes, with different insurers and different claims history.
The most reputable Strata Managers in North Queensland would clearly advise their clients that a majority of claims in the region relate to small water damage claims, not large catastrophic event claims. On this basis, perhaps their policies and therefore their claims and subsequent levels of risk could be limited by increasing the claim excess and thereby allowing for lower pricing and more affordable premium cover.
Whatever the reason for the increases – justified or not, a more collaborative approach needs to be taken to avoid a mass exodus of investors in a region trying to recover from the recent economic down turn.
Markets rise and fall, and property is no exception; but long term stability is the key. Ironically the global Reinsurance market is particularly weak at the moment and has lead to an aggressive move by Reinsurers to cut premiums to get business.This might lead to a positive impact downward on premiums here in Nth Qld moving forward. In the absence of anything else, let’s hope so.
Servicing the Strata Industry and Far North Queensland
for over 20 years