ICA Advocates for Strata Law Reforms to Mitigate Rising Insurance Costs in Victoria

In its submission to the Expert Panel Review of the Owners Corporations Act 2006, the ICA highlighted that building defects in residential apartments are costing Australians an estimated $1.3 billion annually. Poor governance and deferred maintenance are transforming insurable buildings into high-risk liabilities, leading to higher premiums or, in some cases, rendering properties uninsurable.

The ICA's recommendations focus on several key areas:

• Stronger Governance and Education: Enhancing transparency and accountability within owners corporations, coupled with better educational resources for committee members to manage complex financial, maintenance, and insurance matters.
• Review of Licensing Schemes: Carefully assessing proposed licensing requirements for strata managers to ensure they are evidence-based and do not impose unnecessary costs or unintended consequences.
• Disclosure of Insurance Commissions: Mandating full disclosure of payments to strata managers that could influence insurance product selection, with a thorough assessment of market impacts before considering a ban on commissions.
• Facilitating Collective Sales: Lowering the threshold for collective sales of strata properties to facilitate the renewal of older buildings, mirroring New South Wales's move to a 75% owner agreement.
• Stronger Enforcement Mechanisms: Introducing public complaints registers and other enforcement tools to hold owners corporations accountable for defects and maintenance issues.

These proposals are part of a broader effort to improve affordability, transparency, and risk management within the strata insurance sector. The ICA's 2024 report, "Improving Consumer Outcomes for Strata Communities," outlines 17 proposals aimed at addressing challenges such as premium increases, supply chain disruptions, and more frequent extreme weather events.

For strata property owners in Victoria, these developments underscore the importance of active participation in owners corporations and advocacy for reforms that enhance governance and accountability. By implementing these recommendations, it is anticipated that insurance affordability and availability will improve, providing better protection and peace of mind for residents.