As Body Corporate chair of his block KS is awaiting confirmation of insurance renewal this week. Previous insurance was indeed with Zurich, and last years premium was approx $9k for a building valued at $4.4 million. Zurich has now been rejected after a quote for renewal of @$31k. An increase of more than 200% this year and the insurance now also includes a $10 named cyclone excess! The preferred alternative quote does also come with the $10k excess on named cyclone events, and also a water damage excess, but is substantially lower.The actions of insurance giant Zurich had been highlighted; after coming into the Far North unit market and achieving local dominance by undercutting competitors, they have ramped up premiums by up to 800 per cent, Mr Entsch said.
Entsch seems to believe that Zurich has engaged in predatory pricing, however I suspect that would be difficult to sustain by the ACCC. Strata insurance is typically distributed through brokers and arranged by the body corporate manager. Typically 3 quotes will be supplied by the broker. One would have thought barriers to entry were quite low making predatory pricing a difficult strategy to sustain. Significant insurers have withdrawn recently from the market as premiums have been rising.
Suncorp have withdrawn from the strata insurance market in Queensland but their GIO subsidiary offers strata insurance throughout the rest of Australia (including NT). Large insurers such as Alliance and QBE are no longer quoting for this class of insurance in FNQ. Wesfarmers is also no longer issuing new business in FNQ.
The economics of strata living in tropical Queensland, are under some pressure with these cost increases. Some form of inquiry into the industry structure and marketing of strata insurance, and the current absence of competition in North Queensland, would be welcome.