Premiums need change
‘Conga line of vultures’: calls for insurance fix
STATE duties should be abolished and mitigation funding increased for North Queensland, where cyclones cause huge damages claims, a strata insurance report finds.
But a Townsville unit owner says there is a “conga line of vultures” feeding off the high premiums in North Queensland and that high commissions and fees paid to strata managers and insurers should also come under the spotlight.
The report was compiled by Deakin University and commissioned by managers group Strata Community Association. It finds the northern Queensland zone is the only one in Australia where the cost of claims exceeded the cost of premiums over the five years to 2020. It suggests the reason for this is the cost of damage from catastrophic events like Cyclone Debbie in 2017.
SCA national president Andrew Chambers said the amount of duties, levies and taxes being paid was a “real eyeopener”.
“If you’re taking out a strata insurance policy in Australia as a strata community, then more than a quarter (27.45 per cent) of what you pay on average goes to government taxes, stamp duties and levies. In NSW, that figure is closer to 40 per cent,” Mr Chambers said.
Abolishing stamp duties is one of the report’s recommendations but it also finds issues including climatic events affect affordability and availability most acutely.
“Our weather will always be unpredictable but our approach to insuring against it does not have to be. Funding for mitigation as well as an effectively introduced reinsurance pool in Northern Australia and better building regulations are among the measures that will help drive down premiums and drive up consumer protections.”
But Townsville unit owner and lawyer David Bowers said the very high and often undisclosed commissions of up to 10 per cent paid to strata managers or their associated brokerage businesses seemed to be one issue missing from the report.
“When you look at all the parties taking a cut from the high insurance premiums paid by North Queenslanders, one can see that there is a conga line of vultures, feeding off the dying carcass of North Queensland strata owners and developers,” Mr Bowers said.
Mr Bowers listed the 10 per cent GST, the 9 per cent stamp duty, 10 per cent commissions and insurance administration costs of as much as 30 per cent.
“The more the premiums go up, the more these vultures benefit,” Mr Bowers said.
As well as the abolition of duty, Mr Bower said there should be a cap on brokerage fees, including full disclosure, and an enforceable code on insurers to provide affordable insurance across Australia.