Solution demanded to stop soaring strata insurance

Solution demanded to stop soaring strata insurance

Posted on Thursday, May 24 2012 at 2:21 PM

The Queensland Government has until December 1 to announce how it will bring affordable insurance back to the north and far north Queensland region, according to Federal Member for Leichhardt Warren Entsch.

Thousands of unit owners in
north and far north Queensland are becoming crippled by hiking strata insurance
costs, as insurers blanket ban strata insurance coverage simply to minimise
their exposure to cyclone-prone coastal areas, in many cases north of Mackay.

Unit owners are angry because on
buildings valued at $5 million-plus they’re left with the choice of only two
insurers – a duopoly – translating to escalating costs on what is a mandatory
insurance obligation for body corporates.

The other insurers who’ve
dropped like flies from the region have not considered each suburb and area on
a case-by-case basis or even the structural integrity of a building and its
ability to withstand a cyclone; or if a building has ever been damaged by a
cyclone.

Entsch said since a public inquiry took place in late January, he’s heard
many stories of insurance quotes that have skyrocketed.

“One letting agent in
Cairns, Linda Tuck, reported that last year the cost of insurance for a
two-bedroom, one‐bathroom duplex with
a value of around $350,000 was $941,” said Entsch.

“This year, she was told
that the insurer… had withdrawn from domestic property insurance for all
locations above Mackay.

“With only two insurers
willing to quote, the prices jumped to the ridiculous level of $4803… and $4439
with (the other two insurers).”

In his speech to parliament
recently, Entsch made it clear the market had “clearly and totally failed”.

The Federal Government has
until October 1 to complete the reviews recommended by the Standing Committee
on Social Policy and Legal Affairs as tabled in its second In the Wake of Disasters report in
March.

The government then has
until December 1 to outline its solution on how to reduce the insurance costs
for unit owners and make policies more competitive again.

You can read more about this issue and how unit
owners are dealing with it in July’s Australian
Property Investor magazine, out on June 1.

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