After several turbulent years, there is cautious optimism that 2025 will bring more stability to the strata insurance landscape. While external pressures remain, recent trends suggest a more predictable environment for both property owners and strata managers.
Here’s what we’re seeing as we look ahead.
Key Market Trends from 2024
Reflecting on the past year, several important trends have shaped the current state of the strata insurance market:
- Severe weather events have become more frequent and intense.
- Building material and construction costs have continued to rise, outpacing CPI.
- Higher claims costs have followed, driven by both weather damage and inflated rebuild prices.
- Underinsurance has become a growing concern, increasing the risk to property owners.
- Premium increases have eased slightly compared to 2023.
- Insurers are applying more scrutiny to properties with known defects or high-risk tenants (e.g. tobacconists).
So, what does this mean for 2025?
A More Stable Premium Environment
With inflation starting to settle, premium rates are expected to level out. For well-maintained properties in low-risk locations, some insurers are already renewing policies at the same or even reduced premiums.
However, properties with unresolved defects or a poor claims history are still likely to see higher premiums and excesses. If you’ve undertaken defect rectification or risk mitigation, be sure to provide this information well before your renewal date—early disclosure helps insurers offer the most competitive terms.
Slowing Construction Cost Inflation
Construction costs surged in recent years due to supply chain disruptions and a spike in natural disasters. Encouragingly, the rate of increase has begun to slow. According to Domain, “massive price rises for building materials appear to be in the rearview mirror,” with growth now in the single digits across all categories.
This is welcome news for strata insurance, as slower cost growth helps keep claims costs—and premiums—more manageable.
Addressing Underinsurance
In many cases, insured values haven’t kept up with rising rebuild costs. This can result in underinsurance, especially when owners try to contain premiums by keeping sums insured artificially low.
Strata legislation places a clear responsibility on owners corporations and body corporates to insure properties for their full replacement value. If your building hasn’t had a professional valuation in the last three years, it’s likely underinsured. In the event of a total loss, any shortfall becomes the individual owners’ liability.
Now is a good time to remind owners of their obligations and consider arranging a fresh valuation to ensure adequate cover.
Weather Resilience and Mitigation
The Insurance Catastrophe Resilience Report (2023–24) from the ICA revealed that the economic impact of extreme weather in Australia has tripled over the past 30 years. The report underscores the urgent need for proactive risk mitigation, including preparedness planning and building resilience at the property level.
Cyclone Reinsurance Pool – A Positive Step
Since its launch in 2022, the Cyclone Reinsurance Pool (CRP), managed by the Australian Reinsurance Pool Corporation, has started delivering benefits for strata properties in cyclone-prone regions. The ACCC’s latest monitoring report (September 2024) found that 16% of strata policies in medium to high-risk areas saw a premium decrease or slower increase following their insurer’s enrolment in the CRP.
With the next review of the pool scheduled in 2025, the government is expected to explore refinements such as:
- Discounts for buildings that complete cyclone mitigation works
- Adjustments to coverage periods and premium formulas
These changes could further improve affordability and access to cover in vulnerable regions.
New and Emerging Risks
The strata insurance market is also contending with two significant emerging risks:
- Lithium-ion battery fires, often linked to devices like e-bikes and scooters
- Firebombing of tobacconists, which has become a growing concern due to arson attacks tied to organised crime
The presence of tobacconists, particularly in mixed-use properties, is now leading some local insurers to withdraw entirely, forcing affected buildings to seek expensive international special risk policies.
The Importance of Full Disclosure
Insurers are increasingly focused on transparency and proactive risk management. Here are some steps you can take to present your property in the best light:
- Disclose all defects, claims history, and any rectification works underway
- Update building information and insured values after renovations or improvements
- Maintain and document regular servicing and compliance checks
- Schedule a professional valuation at least every three years
These practices help smooth the renewal process and reduce the risk of delays or claim disputes.
Supporting Better Insurance Outcomes
At ASM Strata Management, we understand that strata insurance isn’t just about premiums—it’s about getting the right coverage and knowing your property is protected. We work closely with qualified insurance specialists to help owners corporations navigate changes in the market, avoid underinsurance, and reduce risk exposure.
For insurance advice tailored to your property’s specific circumstances, we recommend speaking with the team at Whitbread Insurance Brokers—experts in strata insurance solutions.