SCA has taken the lead in finding a solution to the crisis in strata insurance in cyclone-prone areas of northern Queensland and Western Australia. There has been a Federal Government review and parliamentary inquiry.
Natural Disaster Insurance Review
In November 2011 the Federal Government released the report of the Natural Disaster Insurance Review. The Review, originally set up after the Brisbane floods to look at the lack of flood coverage, endorsed SCA's position that assistance to households in high risk areas should also be available to body corporates. Also in line with SCA's submission, it recommended the creation of a government reinsurance facility to help insurers provide affordable flood cover. More importantly, it also accepted SCA's arguments that the same issues of insurance market failure were causing a crisis in affordability and coverage for strata communities in cyclone-prone areas of the north. It recommended that the same reinsurance facility be made open to the strata sector in the north.
The Federal Government endorsed the Review's recommendations on standard flood definitions and including flood as a standard cover for policies including strata policies, with an opt-out provision, and promised further work on the reinsurance concept.
The National Disaster Insurance Review report was released against the backdrop of community forums hosted by SCA Queensland with the support of member companies. They attracted extensive media coverage:
- ABC Radio interview with SCA's CEO Mark Lever
- ABC News: "Federal intervention urged amid soaring insurance costs"
- Cairns Post: "Ease our insurance pain"
- Whitsunday Times: "Insurance Reviewed In Region"
Parliamentary Inquiry
On 23 November 2011 the Federal Government announced a parliamentary inquiry into strata insurance in northern Australia, extending the previous inquiry into flood insurance claims handling. Public hearings are being undertaken in northern Queensland during the parliamentary recess in January and February.
Hearing in Cairns, 29 January 2012 at which SCA appeared.
- The government's announcement and the new Terms of Reference
- SCA's media release
- SCA appearance before strata title insurance inquiry
- ABC News: Inquiry to probe insurance rises since Yasi
- Cairns.com.au: Call to action in Cairns over strata insurance
- ABC News: Insurers quizzed over rising strata title costs
- Cairns.com.au: Strata title insurance costs at 'crisis point', parliamentary inquiry in Far North told
Inquiry Submissions
Submissions to the Inquiry closed on 16 January 2012, with 388 being received.
- SCA's submission (PDF download)
Inquiry Report
On 21 March 2012 the Inquiry released its report.
The report stated that it was clear from the evidence received that residential strata title insurance increases are seriously impacting people's livelihoods and that any further premium rises will exacerbate the situation.
It challenged Queensland's political leaders to agree to a 12 month moratorium on the 7.5 percent stamp duty charged on the insurance of strata properties to provide some short-term relief.
Its recommendations also put pressure on the Federal Government to provide a whole of government response.
Amongst the recommendations are calls for a number of agencies such as the Australian Competition and Consumer Commission (ACCC) and the Australian Prudential Regulatory Authority (APRA) to conduct reviews into the behavior of insurers to look at why there have been insurance premium increases and ensure there is no anti-competitive behavior taking place.
Strata Community Australia CEO Mark Lever said the report demonstrated the urgency of the matter and highlighted the serious impact these costs are having on communities in north Queensland. "We welcome the recommendations which back SCA's call for urgent government action to deal with the issue. Any relief for apartment owners would be very welcome at this point in time."
SCA recognises that the issue is not going to be fixed overnight and that there was no single solution to the problems faced by apartment owners. "This is a complex matter with a number of serious issues that need to be addressed." said Mr Lever. "The report goes some way towards that and the SCA looks forward to working with government and its agencies in ensuring that apartment owners in north Queensland are treated fairly when it comes to their building insurance."
