Sunday, November 17, 2013

Window-free solution for strata insurance

A report from JCU has recommended that if windows are abolished then insurance premiums for strata buildings will be lower. Well not quite, but windows and water ingress from wind driven rain were determined a significant factor in strata insurance claims: Pilot study: Examination of strata building risks from cyclonic weather by utilizing policy claims data

The report was commissioned by the Insurance Council and prepared by the Cyclone Testing Station at JCU based on strata insurance claims data following Cyclone Yasi. The media release includes the usual spin from the Insurance Council and their summary of recommendations based on the limited terms of reference provided for the detailed study:

Perhaps unexpected was the finding of higher claims in multi-storey building because they have more windows and doors exposed to wind driven rain. Also the age of the property had less influence on claims than many seem to have expected. These two findings are possibly related?

The recommendations do not guarantee a reduction in premiums. There are some indications that the strata insurance premium hikes may have peaked while underlying issues remain unresolved: North Queensland strata cover: signs of hope?
James Cook University’s research on north Queensland strata prices highlights some of the problems of insuring property in cyclone-prone areas and makes suggestions for risk mitigation, but insurers are unlikely to return to the market on the strength of its recommendations.
A more detailed reading of the report and associated Insurance Council spin may throw up some further questions!?!

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