As climate change triggers a growing number of extreme and catastrophic weather events, Australian homeowners and commercial building owners will have to pay more to properly insure their properties for weather-related threats, such as cyclones, according to Pilot Body Corporate.
Strata building insurance costs are expected to increase in 2023 because of various factors. The catastrophic weather events, such as flooding, bushfires, and the ongoing impact of the COVID-19 pandemic have resulted in the potential underinsurance of strata properties. There is sometimes limited ability to obtain multiple quotes, and reduced availability of insurance coverage overall.
“The recent catastrophic floods in South Eastern QLD and Northern NSW during February and March 2022, caused an insured loss of $4.8 billion. It is expected to further increase building insurance prices in 2023. This was the third costliest natural disaster ever. As a result, insurers have introduced additional information requirements on renewal, especially for unresolved defects in buildings,” states Pilot Body Corporate.
The expected premium increase of between 20 to 30 per cent for standard risks, will also increase insurance costs. Strata insurance premiums have surged over the last couple of years because of below-market-rate premiums, increased reinsurance costs, and catastrophic weather events, such as bushfires. Other factors include fewer specialty strata insurers in the market, inflation, labour shortages, and delays in the supply of materials.
“Catastrophic events, such as floods, have led to an increase in delays and setbacks across the board, placing pressure on the market and leading to significantly higher premium rate increases than in previous years. Along with an increased excess, $2,000 has now become the new standard.
“As a result, strata buildings and properties with existing defects are getting severely affected by premium increases, higher excesses, and significant policy exclusions.”
