ICA Advocates for Strata Law Reforms in Victoria to Curb Rising Insurance Costs

In a submission to the state's Expert Panel Review of the Owners Corporations Act 2006, the ICA emphasized that building defects in residential apartments are costing Australians an estimated $1.3 billion annually. Without reform, more buildings could become uninsurable or face unaffordable premiums due to structural problems and insufficient risk management.

The ICA's recommendations focus on several key areas:

• Stronger Governance and Education: Enhancing transparency and accountability within owners corporations, coupled with better educational resources for committee members to manage complex financial, maintenance, and insurance matters.
• Strata Manager Professionalism: Ensuring careful assessment of proposed licensing schemes, with an evidence-based review to ensure benefits outweigh costs and do not create unintended consequences.
• Insurance Commission Transparency: Full disclosure of all payments to strata managers that may influence insurance product selection, and thorough market impact assessment before banning commissions to avoid unintended premium increases.
• Easier Collective Sales: Supporting the lowering of the unanimous agreement threshold for strata complex sales, following New South Wales' move to 75% of owners, to enable faster renewal of aging, uneconomical buildings that pose insurance risks.
• Enhanced Compliance: Implementing stronger enforcement mechanisms to hold owners corporations accountable for building defects, including public complaints registers similar to other jurisdictions.

ICA Deputy CEO Kylie Macfarlane stated that as more people move into multi-unit dwellings, managing the expenses linked to strata properties is becoming increasingly important. Effective reforms backed by proper compliance and enforcement are essential to de-risk strata complexes and deliver better outcomes for all stakeholders.