Longitude Underwriting’s Jesses Borthwick has highlighted strata insurance as a major area of growth in the next few years – but has cautioned brokers that it’s not as easy as it looks.
“Strata has been an under-the-radar insurance, but the market is bright and healthy. Around 50% of new dwellings are expected to be strata dwellings – it’s the fastest growing form of residential property,” said Borthwick. “Additionally, while the market is served by two main channels of distribution – strata managers and brokers – there’s a shift towards using brokers.”
Borthwick added that there are a huge number of factors that come into play when underwriting – not least legislation.
“Everything around strata is driven by legislative requirements,” he said. That legislation is subject to change: in fact, additional requirements will soon be introduced in NSW – increases to liability limits, changes to how valuations need to be done. We see that as a precursor to other states also making similar changes.
“Therefore, brokers need to deal with multiple forms of legislations in different states. As a result, very few strata insurers will do length and breadth of country or all market segments.”
Borthwick added that education is essential, as well as seeking out experienced partners.
“Experience is critical – you do need to know the market to appropriately price the risk. It may look like you can make a quick buck but it can be deceiving. It can come back to bite you if you don’t fully understand what you’re writing.”
To find out more about the current state of property insurances, see Insurance Business 2.4, available now.