Poor Strata Governance in Victoria Leading to Higher Insurance Premiums

Poor governance within owners corporations, coupled with deferred maintenance, has led to structural issues that increase the risk profile of buildings. Consequently, insurers are compelled to raise premiums or, in some cases, deem properties uninsurable. The ICA warns that without significant reforms, more buildings could face unaffordable premiums or lose coverage altogether.

To address these challenges, the ICA recommends several key reforms:

• Enhanced Governance and Education: Improving transparency and accountability within owners corporations and providing better education resources for committee members to manage complex financial, maintenance, and insurance matters.
• Review of Licensing Schemes: Carefully assessing proposed licensing requirements for strata managers to ensure they are evidence-based and do not impose unnecessary costs.
• Full Disclosure of Commissions: Mandating complete transparency regarding payments to strata managers that could influence insurance product selection, with a thorough assessment of market impacts before considering a ban on commissions.
• Lowering Collective Sale Thresholds: Reducing the agreement threshold for collective sales of strata properties to facilitate the renewal of older buildings, similar to New South Wales's move to a 75% owner agreement.
• Stronger Enforcement Mechanisms: Introducing public complaints registers and other tools to hold owners corporations accountable for building defects and maintenance issues.

These proposed reforms aim to strengthen the governance framework within Victoria's strata sector, ultimately leading to better-maintained buildings and more stable insurance premiums for residents. By addressing the root causes of rising insurance costs, the ICA seeks to create a more sustainable and affordable strata living environment in Victoria.