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

In its submission to the Expert Panel Review of the Owners Corporations Act 2006, the ICA highlighted that building defects are costing Australians an estimated $1.3 billion annually. Poor governance and deferred maintenance are transforming insurable buildings into high-risk liabilities, leading to higher premiums and, in some cases, rendering properties uninsurable.

The ICA's recommendations focus on several key areas:

• Enhanced Governance and Education: Improving transparency and accountability within owners corporations, coupled with better educational resources for committee members, to effectively manage complex financial, maintenance, and insurance matters.
• Review of Licensing Schemes: Carefully evaluating proposed licensing requirements for strata managers to ensure they are evidence-based and do not impose unnecessary costs or unintended consequences.
• Disclosure of Commissions: Mandating full disclosure of any payments to strata managers that could influence insurance product selection, with a thorough assessment of market impacts before considering a ban on commissions.
• Facilitating Building Renewal: Lowering the threshold for collective sales of strata properties to facilitate the renewal of older buildings, similar to reforms in New South Wales.
• Strengthening Enforcement Mechanisms: Introducing stronger enforcement tools, such as public complaints registers, to hold owners corporations accountable for building defects and maintenance issues.

These proposed reforms aim to address the root causes of rising insurance costs by promoting better governance and proactive maintenance within the strata sector. By implementing these changes, the ICA believes that insurance affordability and availability can be improved for the significant portion of Victorians residing in strata-titled properties.

For strata property owners and managers, staying informed about these potential legislative changes is crucial. Engaging with industry bodies, participating in educational programs, and adopting best practices in governance and maintenance can help mitigate risks and contribute to more stable insurance premiums.