Following on from our January market update, the outlook for strata insurance policyholders is a continuation of stabilised premiums, driven by moderating inflation and lower interest rates. On average policyholders are seeing their expiring premiums “roll” at renewal. Notwithstanding, considering the increase in building values this is likely to equate to a mild rate reduction of up to 5 to 7.5 per cent on claims free policies with “in appetite” risk profiles (construction and commercial occupation).
While potential rate reductions are available for strata plans with a positive risk profile, schemes with a poor claims history, building structural defects, or ongoing maintenance issues may face challenges in securing competitive insurer terms.
Underinsurance continues to present concerns for insurers. To mitigate the risk of underinsurance in an environment of escalating building replacement costs, it is prudent to engage a qualified valuer and have properties appraised at least biannually. This practice ensures that insurance coverage limits are appropriately set. Further detail can be found in our article here.
Under strata legislation, it is the duty of the owners corporation (or body corporate) to ensure that the property is insured for its full reinstatement or replacement value. The building sum insured should also include removal of debris, professional fees and an allowance for cost escalation over a period of time. If a strata property is underinsured, individual owners may be required to bear the costs of any shortfall in coverage in the event of a total loss or claim.
Additionally, it is crucial that an annual review of loss of rent and temporary accommodation limits is undertaken to ensure figures are accurately calculated and adjusted for inflationary changes in market conditions. Regular review ensures that coverage limits are updated to match current costs, and that owner-occupiers and rental property owners are safeguarded against financial exposures related to lost income and additional living expenses in the event that damage renders the property uninhabitable.
With electric vehicle usage on the rise, fire risks associated with lithium-ion batteries and charging units continues to present concerns for insurers. Strata building managers must adopt comprehensive risk management and fire safety measures to mitigate fire hazards by establishing safe charging areas, enforcing strict protocols for the proper disposal and recycling of expired or damaged batteries, and scheduling regular fire safety inspections conducted by certified professionals.
Due to the increased criminal activity related to the sale of illicit tobacco alongside related firebombing and arson attacks, properties which occupy tobacconists are under great underwriting scrutiny for all risks in Victoria and NSW. As such, underwriters have amended their approach to rating risks with tobacconist occupants for all buildings, including strata titled complexes. We have observed some insurers declining to offer cover where tobacconists are an occupant or have a tenancy forming part of a building. In other instances, we have observed insurers apply significant premium loadings and increased excess’ of up to $250k for property claims arising out of malicious damage, theft and arson.
Continue reading our full range of market updates:
- Insurance Market Overview: July 2025
- Property
- Commercial General Liability
- Motor
- Contractors Plant & Equipment
- Renewable Energy
- Strata
- Claims
- Workplace Risk
- Executive & Professional Risk
- Construction
