Today I chat with Con Iconomidis, Director of Customer & Distribution & Natalie James, Underwriter, Strata Community Insurance
We will cover the following & more!
What drives your insurance premium? Global performance influences the flow of capital, and the cost and availability of insurers in Australia.
Simply put - in good times, capital is attracted to the market, availability is abundant, and prices are cheaper.
In the not-so-good times, capital is eroded, and it’s hard to attract more capital into the sector, resulting in tight availability, cost increases, whether an insurer will quote a risk, and if so on what terms.
Claims costs are predicted by the number and value of claims across an insurer’s portfolio. Average cost assumptions are built into the pricing, they also take into account claims inflation, different to CPI, claims inflation is driven largely by the cost of building materials and labour, and supply and demand factors.
Taxes, duties and levies, yes let's not forget these, on top of the insurer's base premium are various forms of government taxes; terrorism levy, ESL/FSL, GST, stamp duty, these vary depending on the product and which state or territory you are in. So remember when premiums rise, so will tax and if you’re taking out a strata insurance policy in Australia as a strata community, then a big chunk, more than a quarter (27.45%) of what you pay on average goes to government taxes, stamp duties and levies.
Individual building characteristics Building quality and condition is a major factor influencing whether an insurer will accept a risk, and if so on what terms.
Insurers look at your building’s overall design, resilience (materials, standards, quality), whether it is well maintained, heritage, clad, asbestos, regional, floodzone and overall claims performance. They avoid buildings where the quality and upkeep are poor, so if you want good terms then ensure your building is well designed, well maintained, documented and frivolous claims are avoided.
