NIBA warning on direct products

NIBA warning on direct products | Insurance Business

NIBA warning on direct products
NIBA has cautioned strata unit owners and body corporate committees in North Queensland that buying cover direct from an insurer, without the aid of a broker, could create a “false economy.”

The warning comes as Suncorp announced that they have released a new direct strata insurance product that they claim can deliver savings of 20 per cent.

NIBA CEO Dallas Booth, said that the importance of expert advice when it comes to strata products should not be under-estimated.

"There are three key reasons for this,” Booth said.

“Firstly, every strata building is different and will have different risks and challenges which need to be taken into account when thinking about insurance; secondly, strata insurance policies all vary, and care needs to be taken to ensure the policy matches the needs of the strata block; and thirdly and most importantly, the amount of cover (the sum insured) needs to be adequate, or the strata owners will be exposed if a major loss occurs.

"As a general rule, insurance companies do not give advice to clients on what product is appropriate -- only licensed insurance brokers do this.

“And it is even more important to get advice when the market is difficult, which it has been for the past three years and continues to be in many areas of Australia," Booth continued.

Suncorp said that it has launched the new direct product to spark “more competition in the market” by targeting smaller strata developments such as duplexes, townhouses and complexes of up to 10 units.

The insurer said that the direct product features two specific benefits.

“As it will only be available to smaller, simpler complexes, it will be sold directly from call centres making it more affordable,” the insurer said in a statement.

“Preliminary estimates indicate the product could represent savings of around 20 per cent compared to competitors depending on the building complex.

“In large claims after a damaging storm or other weather event, the policyholder will have an entitlement which allows them to install building enhancements that increase their dwelling’s resilience.

”Suncorp will help pay for these enhancements greatly incentivising self-mitigation actions that lower the likelihood of future claims and damages to the policyholder’s dwelling.”

Booth warned that “simply going for cheaper cover does not necessarily mean you are getting the cover you need when that major catastrophe happens”.

"Strata owners and body corporate committees also need to make sure that they are complying with any requirements under State laws for adequate insurance arrangements. Once again, only an insurance broker will help and guide the committee on this issue.

"The insurance market for strata and body corporate insurance has improved this year, but it is important that strata owners and body corporate committees get the right advice and the right cover from someone who understands the current state of the market – their insurance broker," Booth said.