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 are costing Australians an estimated $1.3 billion annually. These defects, coupled with deferred maintenance and poor governance, are transforming insurable buildings into high-risk liabilities, thereby driving up insurance costs and, in some cases, rendering properties uninsurable.

The ICA's recommendations focus on several key areas:

• Enhanced Governance and Education: Implementing stronger transparency and accountability measures within owners corporations, along with targeted education programs for committee members, to improve financial and insurance decision-making.
• Licensing and Compliance: Reviewing proposed licensing schemes for strata managers to ensure they are evidence-based and do not impose unnecessary costs or unintended consequences.
• Disclosure of Commissions: Mandating full disclosure of any payments to strata managers that could influence insurance product selection, with a thorough assessment of market impacts before considering a ban on commissions.
• Facilitating Building Renewal: Lowering the threshold for collective sales of strata properties to enable the renewal of aging buildings, thereby reducing insurance risks associated with structural issues.
• Strengthening Enforcement Mechanisms: Introducing public complaints registers and other enforcement tools to hold owners corporations accountable for building defects and maintenance issues.

These proposed reforms aim to create a more resilient and transparent strata sector in Victoria, ultimately protecting property owners from escalating insurance costs and ensuring the long-term viability of strata-titled properties.