In these unprecedented times, strata owners are feeling the impact of COVID-19 on their properties.
For many their strata property is a key income stream, while to occupiers their property is their home.
MARKET PRESSURE INCREASES
The Australian rental market was already weakening prior to COVID-19. The virus has added to the pressure.
Job losses have seen tenants wanting to negotiate lower rents or sharing accommodation or simply, moving back to their parents.
With international students, migrants and international tourists no longer able to enter the country, more rental properties may become available. Airbnb rentals are said to be converting to long-term rentals, adding to a surplus of strata properties.
These negative effects may not necessarily be long-term — no-one has a complete grip on how long COVID-19 will be with us — some things remain constant.
OPPORTUNITY FOR BROKERS
One important item is insurance. Despite possible reductions in rental income streams — vital in cash-strapped times — and the impact of rising unemployment figures on some owner occupiers, they still must have residential strata insurance as it’s compulsory in Australia.
Strata owners struggling to adequately continue with insurance cover on their property is an opportunity for brokers to help them. Brokers can provide them with advice on how to reduce their premium costs while still feeling safe that they are properly covered for disasters and misfortunes.
NO NEED FOR BELLS AND WHISTLES
Brokers can advise clients on potentially increasing the excess payable, which may lower the cost of the overall annual premium. However, clients need to be made well-aware of the outcome if a major claim has to be made.
Perhaps your client has some unnecessary inclusions that could be removed? But again, the client needs to be fully aware of the outcome of removing some of their options and should always seek advice.
TAILORING CLIENT’S INSURANCE NEEDS
Some insurance companies are now providing tailored insurance cover to help clients reduce their premium costs.
For example, Flex Insurance — one of the most flexible residential strata insurance products on the market — can help clients in these tough periods.
Flex cover is fully flexible and can be customised to suit the unique needs of the strata building, small to large, allowing clients to only pay for what they need.
Additionally, Flex allows clients to tailor cover through a range of optional inclusions based on the building and owners' corporation’s needs. It can also support clients in these times by offering six-monthly premium payments.
SOFTEN THE BLOW
One of the best way to determine whether the building is sufficiently covered while optimising premium costs, is to make sure your client’s property value is always up to date, especially when it comes to renewal times.
Making sure the property is extra safe and secure could also help to reduce premiums and it could also potentially reduce the size of a claim should there be an incident.
Simple things like installing a security system or adding extra window, gate and door locks could help reduce premiums.
Another way of easing some of that financial burden is to look at strata insurance premium funding to assist clients to pay their annual insurance premium by instalments rather than in one full-year payment.
This article is intended for insurance intermediaries only. The Residential Strata Plan Insurance product is distributed by CHUiSAVER Underwriting Agency Pty Ltd trading as Flex Insurance (ABN 85 613 645 239, AFSL 491113) as agent for the insurer QBE Insurance (Australia) Limited (ABN 78 003 191 035, AFSL 239545). Your client should consider the relevant Product Disclosure Statement available at www.flexinsurance.com.au and whether or not the product is appropriate for your client in deciding whether to acquire, or to continue to hold, the product.