Welcome to the blog of NSW strata investigative journalism
| From: | SP52948 owner |
|---|---|
| To: | Peter Bone BCS Strata Management |
| Subject: | SUMMARY: Case for AGM 2012 and CTTT File 12/50450 and 12/50460 - Why is strata insurance high in 2012 |
| Date: | 11/10/12, 10:36 pm |
Hello,
For the executive committee, owners (if this is "allowed" to be given to them) and the CTTT.
In case we want to have some facts about why the strata insurance premium for many buildings has gone up so much in 2012...
Firstly, we have the same insurer as last year (QBE). The policy number is the same but it was hidden under different name in last year's AGM notice.
Secondly, only several parts of the policies for the complex increased (by exactly 5 per cent, see attachment).
Thirdly, some of the policies have been removed this year (could be higher risk to owners), and the deductibles have raised significantly.
Note that the new policy has increased a deductible for legal claims to $10,000.00 and same applies to water damage (which we had several this year)! I know of two owners in Block A who suffered damage inside their lots (one of them got very upset and is now selling and leaving the complex; she had enough).
a) Until recently, strata unit owners were typically paying about one-third of the premium of stand-alone residences in the same area.
Historically, strata insurance policies have been underpriced when compared to the risks they cover. Many Bodies Corporate have been paying a third of the premiums paid on average for an equivalent stand-alone home insurance policy. (Refer to ICA Fact Sheet Oct 2011).
b) Strata unit properties often face similar or even greater risks than stand-alone residential properties and discounted premiums have proven unsustainable. Insurers are now pricing strata property insurance to reflect the risk of the area and the characteristics of the building.
c) After several years of natural disasters, the commercial reality is insurers must operate under a prudential and sustainable premium position if they are to continue providing insurance. Properties in many areas are now being risk-rated at sustainable levels, and in many cases the premiums remain lower for each unit than equivalent single dwellings.
d) Many strata properties carry a very high risk, and high repair costs, due to their location, age, design, features and construction methods.
Unlike standalone houses, strata properties often have expensive body corporate assets, such as common areas, underground car parks, lifts and pools that can be vulnerable and expensive to repair.
e) Other factors such as mandatory public liability provisions, claims history, maintenance issues and the way the building is used can also significantly increase the premium payable.
I walked around the complex to check the status. Lot of things to repaint and fix. I am taking photographs of what I found and they will be available in a day or so.
There is no doubt that number of repairs and fixes will be necessary sooner than later.
f) Strata buildings that contain units used for holiday letting, or other business activities, will have a different risk profile and premium compared with residential-only buildings and complexes.
That is also very applicable to Macquarie Gardens. We have lot of properties that are advertised for short and long-term visitors.
g) An increase in the frequency and size of claims across Australia. Cost of claims in the general insurance industry has risen by 52 per cent from $23.6 billion in June 2010, to $35.9 billion in June 2011.
h) A 40 per cent increase in the average cost of everyday claims in strata for things such as broken glass, burst pipes, graffiti etc, in the last three years.
i) Re-insurers (insurance company insurers) have increased their premiums significantly to recoup losses paid out on worldwide natural catastrophes, with a flow-on effect of increasing the cost of local insurances.
j) Some property managers complain they can't find insurance for strata properties with a replacement value above $5 million. That is a global problem.
k) When we take into account some maintenance costs this year, they look very and significantly higher than in previous years:
Maintenance General: $49,898.00 (undisclosed details of expenses)
Maintenance Plumbing: $29,001.00
Maintenance Electrical: $17,866.00
Maintenance Glass: $8,790.00
and so on...
I am very eager to know, among the other things, what was almost nine thousand dollars for glass maintenance?
There is no question why our insurance is going up so much... And we are no unique in that regard.
One Northern beaches apartment complex experience this year with insurance:
Her latest body corporate fees for the quarter are $2172.25, a $736.27 hike to pay for the mandatory insurance premium for their complex of $37,000.00, up from $9,800.00 in 2009.
I would like to hear anyone who can counter my findings.