
If we look at key cities in Australia, the average strata insurance premium across the country is $954 per lot per year. Even on the Gold Coast where average premium is most expensive at $1200 per lot annually, strata insurance is still more affordable than home insurance.
Having said that, the cost of strata insurance has increased over the last five years, and we looked at the contributing factors other than the cost of reinsurance. Building Defects do have an impact on premium. Though, only about 3% of buildings actually have very significant defects.
According to CHU numbers, of 100,000 buildings, about 3% have known defects and about 4% of policies have combustible cladding.
Having assessed our strata portfolio, we found that the average building with defects noted had a 17% impact to premium cost versus the average like-for-like building that had no defects noted. That’s a real incentive for bodies corporate to rectify them.
Australia has a strong market for strata with lots of competition, what I would say is we now have as many players as I've ever seen.
There are still buildings that are hard to insure, defective buildings can have limited markets, and those really big buildings can be hard to find cover for.
I’d also point out that while NSW and ACT proportionately have more known defects, both of governments are very active in improving building standards and working with developers to rectify defects in newer builds.
My view is that buildings we see from now will be of better quality than those built in the last 20 years.
Attributable to Kimberley Jonsson, CEO of CHU Underwriting.

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