BY: HELENE JOHANSEN
Announcements released 23 November 2011 prove persistent pressure by the Strata Community Australia continues to improve the Government’s stand on the National Disaster Insurance Review recommendations.
Announced by Assistant Treasurer Bill Shorten and Committee Chair, Mr Graham Perrett MP, an extension to the Terms of Reference will allow the Enquiry to examine factors influencing the affordability of residential strata insurance.
“At the invitation of Strata Community Australia, Mr Entsch and I attended a meeting in Cairns [in November] and heard from more than 150 strata title unit owners, managers and real estate agents about rising costs of strata insurance,” Senator McLucas said.
“I thank Assistant Treasurer the Hon Bill Shorten MP and Mr Graham Perrett MP for developing the new Terms of Reference for the insurance enquiry in direct response to the concerns we raised. This will allow us to understand more about the underlying causes affecting strata insurance affordability in Far North Queensland.”
“The enquiry will also help us explore solutions to ensure strata insurance is affordable and sustainable in the long term. This is an opportunity for the community to make direct suggestions to the Government and I encourage everyone to participate,” he added.
The Federal Member for Leichhardt, The Hon Warren Entsch welcomes the announcement.
“This is an action that needed to happen and it needed to happen quickly. If this issue is not addressed by the next round of insurance premiums I have no doubt we will see people forced out of their homes,” Mr Entsch added.
The Commissioner for Body Corporate and Community Management, Robert Walker, said in a statement that it is an obligation for the body corporate to have adequate insurance.
“The Body Corporate and Community Management (BCCM) Act and its regulations provide that if one or more lots in a community titles scheme are created under either a building format plan or volumetric format plan, the body corporate must insure each building for full replacement value.”
Mr Walker further said the Body Corporate for a community titles scheme created under a standard format plan must also insure each building for its full replacement value.
“The insurance policy must cover damage and the costs associated with the reinstatement or replacement of insured buildings. These costs must include the cost of taking away debris and the fees of architects or other professional advisers and also provide for the reinstatement of property to its condition when new,” Mr Walker added.
The Government released their response to the National Disaster Insurance Review (NDIR) recommendations on the 14 November 2011.
The NDIR issued 47 recommendations to deal with the insurance issues relating to natural disasters, specifically flooding.
In the response the Government states it does not intend to make either home building or home contents insurance compulsory.
It also states it will draft regulations for a standard definition of flood as soon as possible.
“The standard definition of flood will be required if the word flood is used in their home build, home contents, small business and strata title insurance policies.”
“This will reduce the confusion as to what the word flood means in these types of policies.”
The Government will also implement a requirement for insurers to provide their customers with a “key facts sheet for all home and home contents policies.”
Insurancenews.com.au explains that this will clearly set out on a single page all key information about the features of the policy, and complement the existing product disclosure statement.
“Further consultation on the content of the Key Facts Sheet will take place early next year.”
A sample of the Key Facts Sheet will also be subject to testing for feasibility prior to being finalised.
The Government responded firmly to only a few of the review’s recommendations; the remaining is something the Government will “consider” at a later time, after performing additional research.