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.

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.

Strata Title Insurance Under Parliamentary Review

Cairns Post Article - January 13, 2012
'Call to Action in Cairns Over Strata Insurance'

THE chairman of a parliamentary committee looking into the increasing costs of strata title insurance in Far North Queensland is urging the industry to make as many submissions as possible before the deadline on Monday.

The committee is investigating reports that insurance costs for units and apartments have risen by up to 800 per cent after cyclone Yasi.

It will examine if the Federal Government should intervene.

Committee chairman Graham Perrett said he encouraged input from more people.

"We’re particularly interested in hearing from any law firms or people who run body corporate enterprises and there is the capacity because I know it’s a small market in Cairns, Townsville, Mackay, Port Douglas for people to put an inquiry in and we can make it as confidential as possible," he said.

Mr Perrett’s office said there had been 40 submissions but it was important to have more.

A spokesman said some of the industry groups and associations had yet to file submissions.

"It is important there are as many as possible so everyone is heard and that an impact is made," he said.

A spokeswoman for Archers Body Corporate Management said there was concern that if there were not enough submissions, the inquiry would not get an accurate picture of the situation.

After community forums in November, the Federal Government announced the Natural Disaster Insurance Review would be expanded to incorporate the issue of rising strata insurance premiums in the region.

Archers director Andrew Staehr said the inquiry was broad-ranging and asked for submissions from the public. "It is essential that unit owners have their say to ensure that the outcomes of the inquiry reflect the current price situation," he said.

Submissions in Word or PDF format can be sent to spla.reps@aph.gov.au and must include full contact details.

Public hearings are scheduled for Port Douglas on January 30 at the Community Hall, Mowbray St, from 9am-noon and in Cairns at the Sebel Hotel, 17 Abbott St, from 2.30pm-5.30pm.


Read full article here


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

Body Corporate Insurance Makes Local Headlines

 

The following article concerning the ongoing body corporate insurance issue in the Far North appeared on the front page of the Cairns Post yesterday. As discussion around this issue grows local leaders are understandably not finding it hard to gain the support of the local community. Almost 20% of the total dwellings in the Cairns greater region alone consist of units within body corporate and strata-title arrangements and all owners of these properties will be effected by the recent insurance premium increases.

Article Text: BODY corporate and strata title owners are demanding a Federal Government-backed reinsurance scheme if an inquiry into the insurance industry does not result in a significant fall in premiums.

The call comes as the House of Representatives Standing Committee on Social Policy and Legal Affairs agreed to consider residential strata insurance as part of its inquiry into the insurance industry.

The agreement was reached after meetings involving property owners in Cairns, Townsville and Airlie Beach were told premiums had soared by up to 400 per cent.

Cairns-based Senator Jan McLucas and the Opposition’s federal member for Leichhardt Warren Entsch joined forces and lobbied in Canberra for the issue to be included in the inquiry.

Strata Community Australia CEO Mark Lever said the reinsurance proposal was quickly gathering momentum.

"The report of the Natural Disaster Insurance Review released last week pointed to a solution in the form of a specialised government-backed reinsurance facility for high risk properties in both flood and cyclone zones and the Government has already indicated it will consult further on this,’’ he said.

"This inquiry is an opportunity to fast-track that consultation and put a solution in place as quickly as possible."

Mr Lever said the community forums last week attracted 400 "angry, frustrated, confused and, in many cases, desperate apartment and townhouse owners and investors" who spoke of premiums rising from 200 to 400 per cent.

The issue affects about 70,000 body corporate property owners north of Rockhampton.

"The meetings heard from pensioners worried they might be forced from their homes, other retirees who could not sell up because of a collapse in the apartment market and investors facing negative returns before interest," Mr Lever said.

"Real estate agents said they could no longer recommend apartments and townhouses as investments and insurers could offer no sign of relief on the horizon.

"With development at a standstill and body corporates slashing maintenance and other spending to cushion the increases, the knock-on effects to the north Queensland economy are continuing to spread."

Swangem on McLeod body corporate chairman Ian Jamieson said he was hoping government pressure and/or intervention would reduce premiums.

"It’s becoming unsustainable. Our insurance has gone from $4000 to $19,000," he said.

Mr Jamieson said they were being discriminated against because of where they lived.

"The insurance companies don’t even come out and inspect the properties to see that ours, which is less than 10 years old, has been built to cyclone standards and even has cyclone shutters," he said.

Mr Jamieson said in Darwin there was a government-owned insurance office and there should be one in Queensland.

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

Far North Insurance Concerns

A hot topic in the north at the moment; body corporate and strata title insurance premiums increasing as a number of insurance providers pull out of the market all together. A supposed rise in the number of natural disasters throughout the region is cited as the reason why compulsory insurance cover for complexes has risen on average by around 400 percent.

The following two articles concerning this topic have recently appeared in the Cairns Post and highlight a real local community concern and call to action by local MP’s.

Insurance Sting Takes Toll - 31st October 2011

THE insurance problems facing the Far North’s body corporate and strata title sector were a bigger crisis than that of southeast Queensland flood victims, an industry leader warns.

Cairns Central Plaza Apartment Hotel

Strata Community Australia chief executive officer Mark Lever said the soaring insurance premiums that body corporates and strata titles were being charged now required government intervention.

He is calling on the Federal Government to provide reinsurance guarantees for the segment in specific areas, including those in cyclone category 3 and higher areas and flood zones.

Mr Lever said he hoped to have some answers from the National Disaster Insurance Review to give to a forum in Cairns in two weeks.

“It’s a massive issue from our members’ point of view. It is causing a dramatic impact on the investment and lifestyle up there (in Far North Queensland),” he said.

Mr Lever said typically there had been 400 per cent increases as well as 200 to 300 per cent on the compulsory insurance cover.

Insurance companies were struggling to obtain reinsurance coverage as no one was prepared to take the risk, he said.

Mr Lever said it was having an impact on the property and development sectors with people reluctant to buy or construct units and apartments in the region.

Federal member for Leichhardt Warren Entsch said his office had been swamped with phone calls from concerned body corporates and property owners.

“It’s quite profound. It’s only going to get worse next year when it comes around again,” he said.

“I have examples over the past four years of insurances increasing from $11,000 to $12,000 to $23,000 and the most recent quote of $ 92,500.”

Mr Entsch said he knew of retirees who could not afford to pay their body corporate fees because of the increase in insurance premiums.

“Many owners are now being forced to borrow money to pay for this year’s body corporate fees,” he said.

Springfield body corporate chairman Don Cunningham said the insurance on their 12 units at Manoora, went from $2350 to $ 3532 last year to $15,500 this year.

View article here

Ease our insurance pain: plea from Far Northern apartment owners and investors - 9th November 2011



Leichhardt MP Warren Entsch

THOUSANDS of Far Northern apartment owners and investors hit by massive hikes in body corporate insurance will have their concerns heard by the consumer rights umpire.

Leichhardt MP Warren Entsch’s push for an inquiry into body corporate insurance has gathered momentum, with the matter now in the hands of the Australian Competition and Consumer Commission.

"Many people are absolutely distraught at the massive hikes in their body corporate insurance premiums and some of them will be out on the street if we don’t get this mess sorted out," Mr Entsch said.

In one example, a customer’s insurance premium rose from $11,000 in 2008 to $92,500 this year.

"This is having a profound impact on strata title owners in the Far North, but I’m also hearing horror stories as far south as Mackay," he said.

Mr Entsch wants strata property owners in the Far North to keep putting pressure on body corporate insurers before the next round of premiums is issued next year.

His campaign has been backed by the local body corporate and strata title sectors, which say price gouging is impacting investment and lifestyles in the region.

Strata Community Australia chief Mark Lever said there were 70,000 units between Mackay and Port Douglas, and body corporate insurance affected a cross-section of the community.

"This is owners, investors, retirees, holiday homes – a lot of people are impacted by these rises," Mr Lever said. He will host a forum for strata property owners in Cairns on Monday.

Mr Entsch blamed the huge price hikes on the insurance giant Zurich forcing other companies out of the market by undercutting costs and then raising premiums by as much as 800 per cent.

But Zurich insists its premiums reflect the growing cost of doing business in the Far North after natural disasters such as cyclones Larry and Yasi in recent years.

Mr Entsch has urged affected property owners to attend the Natural Disaster Insurance Review at the Holiday Inn on November 14.

View article here

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