Why Insurance Tax Reform Matters for Strata Premiums
Rising attention on statutory charges is another reminder to look beyond the headline renewal figure
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Fresh industry attention on insurance tax reform has direct consequences for strata communities, particularly those already dealing with higher property premiums, weather risk and more demanding underwriting questions.
The renewed debate centres on the way government charges, duties and emergency services funding mechanisms can sit on top of the underlying insurance price, making cover more expensive without necessarily improving the risk profile of the building.
For owners corporations and bodies corporate, this matters because strata insurance is often one of the largest recurring expenses in the annual budget. When a renewal arrives, lot owners usually see the final premium first. What is less visible is how much of that total reflects the insurer’s view of the building risk, how much relates to reinsurance and claims inflation, and how much is attributable to statutory charges. If these components are not separated and explained, committees can find themselves defending a premium increase without the information needed to show what has actually changed.
The issue is especially important for larger apartment buildings, mixed-use schemes and properties in higher-risk locations. A percentage-based tax or levy can magnify already elevated premiums, meaning schemes exposed to flood, cyclone, storm, bushfire or complex construction risks may carry a heavier affordability burden. That can place pressure on levies, sinking fund planning and the willingness of owners to approve practical risk-reduction works. In that sense, insurance tax reform is not only a cost-of-living issue; it is also a building resilience and compliance issue.
Strata committees should use the current debate as a prompt to improve renewal transparency. Before presenting the next budget or premium notice to owners, it is worth asking the insurer, intermediary or manager for a clear breakdown of the renewal cost and how it compares with the prior year. That should include the base premium, excess changes, sums insured, optional covers, commissions or fees where applicable, and government charges.
Check whether the building valuation and sum insured remain current.
Separate risk-related premium changes from taxes, levies and fees.
Record maintenance, defect rectification and resilience works that may support underwriting discussions.
Seek professional assistance where the renewal involves restricted cover, major increases or limited insurer appetite.
The broader reform conversation will not remove the need for disciplined insurance management at scheme level. Even if taxes are reduced or redesigned, insurers will still assess construction quality, claims history, maintenance standards, location risk and replacement cost adequacy. However, a more transparent tax framework would make it easier for strata communities to understand what they are paying for and to focus their efforts on the factors they can influence.
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Knowledgebase
Endorsement: An amendment or addition to an existing insurance policy that changes the terms or scope of the original policy.
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