Strata - laws in Victoria state of Australia need to be reformed to improve the affordability and availability of insurance for the multi - unit dwellings according to Insurance Council of Australia (ICA).
In a recent media release the ICA said the current set of these strata laws are transforming insurable buildings into high-risk liabilities and driving up premiums for one in five Victorians living in strata-titled properties.
Strata laws in Australia govern a system of shared property ownership, primarily for apartments, units, and townhouses, where individuals own private "lots" and share ownership of common areas like driveways, gardens, and building exteriors. These laws are enacted at the state and territory level.
In a submission to the expert panel review of the Owners Corporations Act 2006, the ICA said that building defects cost A$1.3bn annually for residential apartments across Australia, with many strata buildings facing insurance affordability challenges or becoming uninsurable due to structural issues and inadequate risk management.
The submission draws upon the ICA’s 2024 report Improving Consumer Outcomes for Strata Communities and calls for several major reforms to Victoria’s strata laws, including:
- Stronger governance and education: Enhanced transparency and accountability within owners corporations, coupled with better education resources for committee members to manage complex financial, maintenance, and insurance matters.
- Strata manager professionalism: Ensure there is careful assessment of proposed licensing schemes, with an evidence-based review to ensure benefits outweigh costs and do not create unintended consequences.
- Insurance commission transparency: Full disclosure of all payments to strata managers that may influence insurance product selection, and thorough market impact assessment before banning commissions to avoid unintended premium increases.
- Easier collective sales: Support for lowering the unanimous agreement threshold for strata complex sales, following New South Wales’s move to 75% of owners, to enable faster renewal of ageing, uneconomical buildings that pose insurance risks.
- Enhanced compliance: Stronger enforcement mechanisms to hold owners corporations accountable for building defects, including public complaints registers similar to other jurisdictions.
Victoria's increasing densification makes these reforms particularly timely and will help support the ongoing availability and affordability of insurance for strata communities.
ICA deputy CEO Kylie Macfarlane said, “As more people move into multi-unit dwellings, maintaining costs associated with strata living are becoming increasingly important. 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 are necessary.
“Effective reforms backed by proper compliance and enforcement are essential to de-risk strata complexes and deliver better outcomes for all stakeholders.”