Strata insurers increase premiums as costs stall

GOLD Coast apartment owners needlessly paying premiums buildings.

Wayne Stevens, president of the Unit Owners Association of Queensland, yesterday said the “too high” premiums on some properties were a flow-on from the GFC.

He said construction costs flatlined during the GFC but many strata insurers did not flatline their premiums.

“They continued offering increases of from 5 to 8 per cent, compounded from year to year, on the sums for which buildings were insured,” he said. “In other words, although the cost of building was stagnant, the insurers were offering premiums that reflected building replacement costs way above the reality.”

Mr Stevens said one property paid $100,000 too much and another $50,000. strata-title could be high insurance for overinsured

He said construction costs started rising again in 2014, justifying annual premium rises.

“Now construction costs virtually have stalled and owners are being gouged again,” he said. “The building cost increase in the June financial year was less than 1 per cent.

“Unfortunately, that seems to have slipped past the attention of some strata insurers. They still are offering their usual 5 per cent annual increases. That means any complex that has reinsured since June, by accepting a 5 per cent increase has most likely overinsured its building by about 4 per cent.”

Mr Stevens said the situation was not all bad news, with owners having the right to amend the sum for which their building was insured and obtain a pro-rata premium refund.

The Gold Coast has nearly 13,000 strata schemes, 27 per cent of Queensland’s total.