Why Insurance Affordability Pressure Is Still a Strata Priority

Recent market commentary has again pointed to a growing affordability divide between lower-risk and higher-risk locations. While some policyholders may see more moderate movements than during the sharpest phase of recent premium rises, properties exposed to flood, storm, cyclone, bushfire or complex defect histories remain more difficult to price. Strata schemes can be particularly exposed because one renewal decision may affect dozens or hundreds of lot owners at once.

For committees and owners corporations, the practical message is that affordability should not be treated as a simple search for the lowest premium. A cheaper renewal may be appealing, but it needs to be assessed against the building sum insured, excess levels, exclusions, sub-limits, liability cover, claims service and the insurer's appetite for the scheme's risk profile. If cost pressure leads to reduced cover without proper analysis, owners may face larger special levies after a major loss.

This is where insurance governance becomes important. Committees should ensure that renewal discussions begin early, particularly for buildings with known defects, combustible cladding, ageing services, water ingress issues, large common facilities or a challenging claims history. Early preparation gives insurers more time to understand remedial works, maintenance programs and risk controls, rather than pricing the building only on its worst features.

Affordability also needs to be linked to reinstatement planning. Rising premiums can tempt schemes to question whether insured values are too high, but the better question is whether the current figure is properly supported. Committees may want to estimate realistic reinstatement costs, allow for professional fees, demolition, debris removal, escalation and compliance upgrades, and compare those assumptions with current policy settings.

Specialist support may also be valuable where a building is difficult to place or where competing options are hard to compare. Experienced strata insurance brokers can help committees understand why insurers are pricing a scheme in a particular way, what information may improve the submission, and whether risk improvements could support a better renewal outcome over time.

The broader affordability debate is likely to continue as climate risk, construction costs and regulatory expectations evolve. For strata communities, the best response is disciplined preparation: maintain the building, document risk improvements, review cover settings carefully and make renewal decisions that balance cost relief with long-term protection for all owners.