Archers Body Corporate Management
Strata Title Industry still waiting for Government answers on Disaster Insurance
28 November 2011There have been a number of positive developments in Strata Insurance over the past fortnight. On Monday, 14 November 2011, the Honorary Bill Shorten made available the National Disaster Insurance Review which made some strong recommendations in respect of flood insurance principally that:
"All home unit insurance policies include flood cover" and "all home contents insurance policies include flood cover".
and that a "flood premium discount and re-insurance system" be adopted and operate under the following principles:
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Recommendation 16: That flood premium discounts be delivered through a model that requires insurers to retain and price a portion of the risk with the remainder to be ceded to the reinsurance facility at a discounted reinsurance premium. |
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Government Response The Government will consider this recommendation as part of its broader consideration of the introduction of flood insurance premium discounts following a consultation process in 2012. |
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Recommendation 18: That for body corporate insurance policies receiving full discounts, policyholders pay for that portion of the risk retained by the insurer and pay nothing for the remainder of the risk up to $500,000 times the number of units. For properties with a value greater than $500,000 times the number of units policyholders then pay the full cost of the portion of risk exceeding $500,000 times the number of units. |
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Government Response The Government will consider this recommendation as part of its broader consideration of the introduction of flood insurance premium discounts following a consultation process in 2012. |
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Recommendation 19: That for home contents insurance policies, policyholders pay for that portion of the risk retained by the insurer and pay nothing for the remainder of the risk up to $100,000. For contents with a value greater than $100,000 policyholders then pay the full cost of the portion of risk exceeding $100,000. |
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Government Response The Government will consider this recommendation as part of its broader consideration of the introduction of flood insurance premium discounts following a consultation process in 2012. |
The government has agreed to conduct a consolidation process and consider the financial viability process of this re-insurance scheme and funding options.
To view a copy of the inquiry's full report CLICK HERE
To view a copy of the Government's response CLICK HERE
Importantly for Northern Australia, the review recommends that the home owners impacted by cyclone risk have a re-insurance scheme set up on the same basis.
Recommendation 27:
That:
a) the Agency offer cover to insurers for cyclone risk, on the same basis as for flood risk, but with no affordability discounts (in the expectation that, when the Agency does its own pricing, it will offer a fair price to home and home unit owners. This price may be lower but is not guaranteed to be lower than the prices of commercial insurers); and
b) an investigation be undertaken to ascertain whether there is a basis for granting affordability discounts for cyclone risk, along the lines of the recommended flood insurance discounts, for homes and home units in northern Australia.
Archers will continue to represent the interests of unit owners by personal representation to State and Federal Government and opposition members and supporting the SCA on their Industry representation.
