Insurance Capacity Constraints Impact High-End Strata Properties in Australia

According to Tyrone Shandiman, Managing Director of Strata Insurance Solutions, capacity problems are affecting the higher end of the strata market despite rising premium rates over the past couple of years that have improved the outlook for insurers. He notes that the issues particularly affect buildings with property-associated covers of at least $300 million, and new capacity providers are needed in the market.

Currently, Chubb is the only player able to provide an insurance solution for these strata buildings offering 100% capacity. However, recent challenges with their capacity have been encountered, including a reduction to 70% capacity on one high-rise client in Brisbane and declines to quote on several large buildings exceeding $300 million. Options are limited for gaining co-insurance from other providers.

These capacity constraints are leading to increased premiums and potential coverage gaps for high-end strata properties. Property owners and managers are advised to engage with insurance brokers early in the renewal process to explore all available options and to consider risk mitigation strategies that may make their properties more attractive to insurers.

The current market conditions underscore the need for increased insurer participation and the development of innovative solutions to address the unique challenges faced by high-value strata properties in Australia.