Disaster Insurance Breakthrough?
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 was an important breakthrough with the release of the report of the federal government’s Natural Disaster Insurance Review on November 14. This inquiry, 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 our 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 has endorsed the inquiry’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 pressure is now on the government to urgently complete that work and implement a solution to ensure affordable cover for both flood and cyclone.
The report was released against the backdrop of community forums hosted by SCA Queensland with the support of member companies. About 400 angry, frustrated, confused and, in many cases, desperate owners and committee members poured in to the three meetings in Cairns, Townsville and Airlie Beach.
They told of premium increases of 200%, 300% and 400% and the devastating impact this was having on their communities and them personally. Pensioners said they could not afford to stay in their homes, other retirees said they could not sell their apartments, investors told of negative returns even before interest payments and estate agents told of the collapse in sale values and new development activity.
Brad Robson of Strata Unit Underwriters, effectively the last insurer standing in the region, explained the forces driving up costs while senior federal politicians senator Jan McLucas, a Cairns-based government MP, Warren Entsch and senator Ian Macdonald promised to take up the fight in Canberra.
The meetings enthusiastically endorsed SCA’s approach and committed to actively lobby to see the inquiry’s recommendations implemented.
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