The Insurance Council of Australia (ICA) is calling for significant updates to Victoria’s strata legislation, citing a link between inadequate strata governance and rising insurance premiums for residents.
According to the ICA, about one in five Victorians lives in strata-titled properties, and many face higher insurance costs or difficulties securing coverage due to governance issues and delayed maintenance.
In a submission to the state’s Expert Panel Review of the Owners Corporations Act 2006, the ICA highlighted that building defects in residential apartments are costing Australians an estimated $1.3 billion each year.
It warns that without reform, more buildings could become uninsurable or face unaffordable premiums as a result of structural problems and insufficient risk management.
The ICA’s recommendations – based on its 2024 report “Improving Consumer Outcomes for Strata Communities” – focus on several areas.
The council advocates for stronger governance within owners corporations, suggesting that improved transparency and accountability – combined with targeted education for committee members – could help address complex financial and insurance matters.
The ICA also calls for a careful review of proposed licensing schemes for strata managers, urging that any new requirements be grounded in evidence to avoid unnecessary costs or unintended effects.
Regarding insurance commissions, the council recommends full disclosure of payments to strata managers that could influence insurance product selection, and a thorough assessment of market impacts before considering a ban on commissions.
Other proposals include lowering the threshold for collective sales of strata properties – mirroring New South Wales’s move to a 75% owner agreement – to facilitate the renewal of older buildings, and introducing stronger enforcement mechanisms such as public complaints registers to hold owners corporations accountable for defects.
In November 2024, the ICA released a policy paper with 17 proposals aimed at improving the strata insurance sector.
The document addresses challenges including premium increases, supply chain disruptions, and more frequent extreme weather.
The ICA’s proposals encourage collaboration among government, insurers, brokers, and other stakeholders to improve affordability, transparency, and risk management.
Key recommendations include expanding education for strata managers and owners’ corporation members, enforcing transparency in fees and service provider relationships, promoting land-use planning that reduces risk, embedding resilience in building codes, and establishing maintenance regimes overseen by owners’ corporations.
The ICA also noted legislative changes, such as new requirements for retail client consent on insurance commissions under the Corporations Act 2001 from July 2025, and enhanced disclosure rules for strata managers in New South Wales effective February 2025.
ICA deputy CEO Kylie Macfarlane stated that as the number of residents in multi-unit buildings grows, managing the expenses linked to strata properties is becoming a more significant issue.
“We’ve put forward reforms that address gaps in the current system to reduce excessive defect and other costs that will help to improve the affordability and availability of insurance. Effective reforms backed by proper compliance and enforcement are essential to de-risk strata complexes and deliver better outcomes for all stakeholders,” she said.
ICA CEO Andrew Hall said in a previous statement that strata insurance represents a major segment of Australia’s compulsory insurance market, underscoring the need for effective management to protect consumers.
“As one of the largest mandatory insurance sectors in the country, it’s important that strata is managed properly for consumers,” he said.
