Strata Title Insurance Relief in the Far North Rejected

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A 12-month moratorium on the stamp duty paid on body corporate insurance has been ruled out by the State Government.

The decision follows a call by a body corporate industry leader to commit to a recommendation from a federal inquiry into residential strata title insurance last year that the Federal Government liaise with the Queensland Government to implement a 12-month moratorium on stamp duty to give some relief to property owners facing soaring bills.

Archers Body Corporate Management director Colin Archer said the 12-month stamp duty moratorium would provide a rebate equivalent to additional tax paid by North Queensland home owners on top of extra insurance costs.

But a spokeswoman for the State Treasurer Tim Nicholls said a moratorium would “not address the underlying causes of rising insurance costs.”

“The Queensland Government has no legislative jurisdiction over general insurance matters and cannot intervene in the decisions made by private companies as to the level of premium payable,” she said.

“Providing an exemption to specific types of entities in specific regions of the state would be inequitable to others who have been similarly affected.

“Duty exemptions for body corporate insurances would establish a precedent with potentially significant revenue consequences for the state.”

The spokeswoman said Queensland has the lowest rate of duty on strata title insurance in Australia.

“Land tax in Queensland is 20 per cent lower than the national average and transfer duty (stamp duty) is 12 per cent below the national average,” she said.

Article printed by The Cairns Weekend Post - Saturday 9th February 2013

Peter Musso licensed real estate agent at Ray White Smithfield selling property in Cairns' beautiful northern beach suburbs including Trinity Beach, Kewarra Beach, Clifton Beach, Palm Cove, Trinity Park, Smithfield, Yorkeys Knob, Holloways Beach, Machans Beach, Caravonica, Kamerunga and surrounds.

Petition for Action on Strata Insurance Premiums

The Federal Government's failure to implement the recommendations of a bi-partisan Inquiry into strata insurance price hikes has led to the launch of an online petition by North Queensland residents. The petition will be sent to insurance companies, the Insurance Council of Australia and state and federal MP's.

View page here to sign the petition:

www.change.org/queenslandinsurance

Peter Musso licensed real estate agent at Ray White Smithfield selling property in Cairns' beautiful northern beach suburbs including Trinity Beach, Kewarra Beach, Clifton Beach, Palm Cove, Trinity Park, Smithfield, Yorkeys Knob, Holloways Beach, Machans Beach, Caravonica, Kamerunga and surrounds.

Cairns Post - 'North fights for a fair go'

STRATA title insurance holders have stepped up their campaign against premiums in the residential market, highlighting insurance price hikes by companies across the board.

Property Ladder Realty director Linda Tuck claims insurance companies are now setting their sights on non-strata owners.

On the Beach Holiday Apartments - Trinity Beach

Mrs Tuck gave one example of a Cairns landlord who was forced to pay an extra $1150 to insure three units after the cost skyrocketed from $ 450 in 2011 to $1600 in 2012.

“Duplex insurance has doubled, house insurance has gone up, contents insurance has gone up, every bit of insurance everywhere in north Queensland has gone up,” she said.

“I think the only solution is a government insurance office, whether it be federal or state.

“It’s not just affecting Cairns, it’s affecting everywhere north of Rockhampton.” Federal member for Leichhardt Warren Entsch echoed Mrs Tuck’s concerns and said he would introduce a private member’s Bill into parliament demanding that companies that cannot offer affordable insurance in the Far North be banned from insuring anywhere else in Australia.

“The insurance market in northern Australia has failed absolutely, it’s gone way beyond strata title insurance,” Mr Entsch said.

“It is an absolute disgrace at the moment and insurers are doing nothing whatsoever to make it any easier.” Mr Entsch said while some aspects of commercial insurance were not “too grossly affected” by the price hikes, residential, B&B, landlord and rural insurance were not so lucky.

“I’m now getting examples where people can’t even get any strata insurance when, by law, they’re required to have it,” he said.

Mr Entsch dismissed excuses given by insurance providers that the Far North was a risky area to invest in given its recent history of natural disasters.

“We’ve had two events in bloody six years, it’s all bull, quite frankly,” he said.

“They’re still making record profits and in my view, they’re cherry picking.”

It is understood CGU subsidiary Strata Unit Underwriters is the only major strata title insurance provider left in the Far North.

Mrs Tuck said she held “no confidence” in a recent Federal Government inquiry into strata title insurance premiums, labelling the recommendations put forward, including the removal of stamp duty, as “nothing of any real significance”.

Article printed in The Cairns Post - 13th July 2012

Writer: Michael Serenc

Peter Musso licensed real estate agent at Ray White Cairns Beaches selling property in Cairns' beautiful northern beach suburbs including Trinity Beach, Kewarra Beach, Clifton Beach, Palm Cove, Trinity Park, Smithfield, Yorkeys Knob, Holloways Beach, Machans Beach, Caravonica and surrounds.

Solution Demanded to Stop Soaring Strata Insurance

The following article was posted in the Australian Property Investor addressing what has proved to be a real sticking point for buyers and sellers of strata-titled properties in North Queensland lately.

With only two (2) insurers remaining willing to cover the vast majority of apartment complexes in the Far North it is clear that the market for strata-titled insurance has failed and measures need to be taken in order to restore competitiveness to reduce costs to rate payers.

THE Queensland Government has until December 1 to announce how it will bring affordable insurance back to the north and far north Queensland region, according to Federal Member for Leichhardt Warren Entsch.

Thousands of unit owners in north and far north Queensland are becoming crippled by hiking strata insurance costs, as insurers blanket ban strata insurance coverage simply to minimise their exposure to cyclone-prone coastal areas, in many cases north of Mackay.

Unit owners are angry because on buildings valued at $5 million-plus they’re left with the choice of only two insurers – a duopoly – translating to escalating costs on what is a mandatory insurance obligation for body corporates.

The other insurers who’ve dropped like flies from the region have not considered each suburb and area on a case-by-case basis or even the structural integrity of a building and its ability to withstand a cyclone; or if a building has ever been damaged by a cyclone.

Entsch said since a public inquiry took place in late January, he’s heard many stories of insurance quotes that have skyrocketed.

“One letting agent in Cairns, Linda Tuck, reported that last year the cost of insurance for a two-bedroom, one‐bathroom duplex with a value of around $350,000 was $941,” said Entsch.

Federal Member for Leichhardt
Warren Entsch 

“This year, she was told that the insurer… had withdrawn from domestic property insurance for all locations above Mackay.

“With only two insurers willing to quote, the prices jumped to the ridiculous level of $4803… and $4439 with (the other two insurers).”

In his speech to parliament recently, Entsch made it clear the market had “clearly and totally failed”.

The Federal Government has until October 1 to complete the reviews recommended by the Standing Committee on Social Policy and Legal Affairs as tabled in its second In the Wake of Disasters report in March.

The government then has until December 1 to outline its solution on how to reduce the insurance costs for unit owners and make policies more competitive again.

View article source HERE

Peter Musso licensed real estate agent at Ray White Cairns Beaches selling property in Cairns' beautiful northern beach suburbs including Trinity Beach, Kewarra Beach, Clifton Beach, Palm Cove, Trinity Park, Smithfield, Yorkeys Knob, Holloways Beach, Machans Beach, Caravonica and surrounds.

Keeping Momentum on Strata-Title Insurance Inquiry

A formal parliamentary report on insurance costs was recently submitted to the government detailing a series of recommendations in response to the inquiry meetings held throughout Far North Queensland. Very interesting was the final recommendation which calls for the government to "outline the plan of reforms it will undertake with the Queensland Government to establish a competitive and affordable insurance market for residential strata title insurance, with a focus on North Queensland..."

Insurers Face Fresh Scrutiny

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The Cairns Post - March 23rd 2012

THE pressure must stay on insurance companies and government if recommendations to address the spiralling costs of body corporate insurance are to have any chance of success, Far Northerners say.

Late Wednesday, the Federal Government’s Social Policy and Legal Affairs Committee released a series of recommendations in response to the inquiry that visited Cairns and Port Douglas in January.

Yesterday, chairman Grah-am Perrett said the committee had heard stories of "heartache, stress and despair".

Mr Perrett said a number of factors did not add up when looking at the increases, from the insurance industry’s claim reinsurance was to blame, to body corporate manager commissions, to the fact building codes had improved in the past 30 years yet a massive leap in premiums had taken place.

Leichhardt MP Warren Entsch, who pushed for the inquiry along with Cairns-based Queensland Senator Jan McLucas, said the recommendations "were not a silver bullet".

"I have been dealing with property owners who are struggling to keep their homes after being hit with strata title insurance increases of up to 1000 per cent," he said.

"Some people have had to borrow just to pay their insurance and if they’re faced with the same premiums next year, it’ll tip them over the edge."

Cairns Chamber of Commerce president Anthony Mirotsos said it was encouraging that the committee had put forward a substantive action plan with "tangible outcomes and deliverables".

"It puts insurance companies on notice that this is being investigated and we’re not just going to continue handing out cheques," he said.

Sue Chapman, manager of Verandahs Boutique Apartments at Port Douglas, said it was important to keep the pressure on.

"They’ve gone out and sourced information from a huge area, they’ve come to us, they’ve actioned it very quickly so now it’s absolutely vital that we keep the momentum going," she said.

Cairns unit owner Ian Jamieson saw nothing to alleviate the hardship people were facing.

"I can’t see the insurance companies reducing their prices so the crisis remains, it’s just bad news for investment in Cairns for people on fixed incomes."

Peter Musso licensed real estate agent at Ray White Cairns Beaches selling property in Cairns' beautiful northern beach suburbs including Trinity Beach, Kewarra Beach, Clifton Beach, Palm Cove, Trinity Park, Smithfield, Yorkeys Knob, Holloways Beach, Machans Beach, Caravonica and surrounds.

Parliamentary Hearings on Strata Title Insurance

Federal Parliamentary Inquiry hearings concerning the price rises for residential strata title insurance began in Cairns on Tuesday and will also be held in Townsville and Mackay in coming days.

Property owners affected by the rising costs have been called to present cases and representatives from the big three insurers in the Far North will also be in attendance to defend the rises experienced.

The hearing in Cairns on Tuesday was covered by ABC News and The Cairns Post - both publications printed the following articles on Wednesday:

'If the risk's high, the premiums will match, say insurance companies in FNQ'
The Cairns Post - Wednesday February 1, 2012

THE region's largest insurer has defended itself against growing community anger over price hikes, saying as long as councils allow development in high-risk areas, premiums will remain high.

During a tour of the Far North yesterday, Suncorp Personal Insurance CEO Mark Milliner said: "As long as councils continue to approve building works in these high-risk areas, which are cyclone and flood prone, then the inherent risk is high and the premiums will match."

Cairns Mayor Val Schier said insurance companies should not try to pass the buck on to councils.

"I actually think that the insurance companies are making excuses," she said.

Suncorp, including brands such as AAMI and GIO, ranks as one of the nation’s biggest insurers and has paid out more than $4 billion over the past year for claims from cyclone Yasi to the Christchurch earthquake in New Zealand.

In that period, the company has put up insurance costs by an average of 10 per cent around Australia, while residents in cyclone Yasi ravaged Cardwell and Hull Heads have reported rises of up to 30 per cent from Suncorp and other companies.

Mr Milliner said mitigating the risks was the only way of keeping premiums down for individuals in the long term.

He said councils needed to stop approving building applications in areas prone to cyclones and storm surges.

"We bottle insurance and price it according to the risk of each individual house," he said.

"I have always said the way to keep premiums down is to mitigate that risk – whether that is local councils stepping up and saying no to building applications in at-risk areas or if it is the State Government building dams to temper the flooding.

Suncorp Personal Insurance CEO Mark Milliner said as long as councils approve building works in high-risk areas – such as the cyclone Yasi devastated Tully Heads – homeowners will pay the price. Picture: MARC McCORMACK

"In the long run it will be mitigation that will keep the premiums from rising – if people continue to choose to live in high risk areas, they will have to pay high premiums."

When asked about building in areas like cyclone-hit Tully Heads, Hull Heads and the proposed development at Taylor Point, near Trinity Beach, Mr Milliner said the company had to cover the risk costs.

"One thing is for certain, the Far North will have another cyclone and when that happens our costs go up.

"As a business, we have to be able to pass on those costs to our customers, who are at risk and who will most likely claim from us.

"I think that is reasonable.

"If houses are built properly in lower risk areas, the premiums will be lower; it is simple.’’

'Insurers defend strata title costs'

ABC News - Wednesday February 1, 2012

Insurers have defended price rises for residential strata title insurance in north Queensland at a federal parliamentary inquiry.

A House of Representatives Committee began hearing evidence in Cairns yesterday and will head to Townsville tomorrow.

It is due to report in April on what has led to significant increases in insurance costs in recent years and whether the Government should intervene.

About 200 property owners attended the Cairns hearing yesterday afternoon.

All were angry at the massive jump in premiums and excess quotes for their units and apartments in the past few years.

They called for a 12-month moratorium on premiums and the establishment of a government-backed insurance company for Queensland, similar to the Territory Insurance Office.

Zurich Insurance spokesman Shaun Feely told the inquiry, prices had to go up to ensure future natural disasters could be covered.

"We've been operating in strata insurance for five years in north Queensland," he said.

"For every $100 we've collected, we've paid out $115."

The Insurance Council of Australia (ICA) says the State Government could have an immediate impact on premiums by removing GST and stamp duty.

ICA chief executive officer Robert Whelan says affordability is a crucial concern, but there are options to reduce the cost.

"An increased excess will reduce the premium but it also reduces the claims which continues to feed back into premiums," he said.

"We think they are practical ways of actually assisting people to be able to affect insurance in an affordable way and they're things that we could do virtually immediately.

The Unit Owners Association of Queensland (UOAQ) is calling for a freeze on strata title insurance premiums.

UOAQ spokesman Andrew Hayes says more competition is needed, with only one insurer - CGU - offering new policies north of Rockhampton for unit complexes over $5 million.

"We could put a moratorium in in the spirit of the issue not to put residential owners in more hardship until we actually can consider a model that is appropriate for the needs up here," he said.

"The point being is that it's all about being reasonable - these increases aren't reasonable."

Mr Hayes has told the inquiry the Government should consider allowing premiums to become tax deductable.

Cairns property owner Helen Reed says she rejects the insurance industry's claim that high premiums are a reflection of a building's age, structure and claims history.

"We have actually a house in Redlynch as well as a unit in Parramatta Park and we're paying more for our insurance in our unit, which is a smaller area," she said.

"The one in Redlynch actually included our contents as well so it's not risk-based as the insurance companies lead you to believe.

"Our building is only four years old, has no insurance claims whatsoever and it's gone from $3,000 insurance up to $16,000."

Peter Musso - Ray White Cairns Beaches - Licensed real estate agent selling property in Trinity Beach, Kewarra Beach, Clifton Beach, Palm Cove, Trinity Park, Smithfield, Yorkeys Knob, Holloways Beach, Machans Beach.