Brokers hit out over Suncorp direct strata product
Suncorp’s new direct offering for small strata properties has drawn fire from brokers, with the National Insurance Brokers Association (NIBA) warning property owners about the product.
The insurer has issued the direct strata product for simple properties of up to 10 units.
The cover will be sold nationally, but Suncorp says it is particularly helpful in addressing affordability issues in north Queensland. Owners can buy the policy through a call centre and Suncorp estimates they could save about 20%.
It will pay up to $10,000 to improve the resilience of strata properties that make weather-related claims that are either 10% of the sum insured or $40,000, whichever is higher.
NIBA last week issued a statement warning strata unit owners that buying direct may be a false economy if they do not get the right cover.
CEO Dallas Booth says strata cover is traditionally sold through brokers because owners need expert advice.
Every building is different and policies vary, so care must be taken to match a policy to a property. “Thirdly, and most importantly, the amount of cover needs to be adequate, or the strata owners will be exposed if a major loss occurs,” he said.
Many strata managers deal directly with underwriters and one specialist broker told insuranceNEWS.com.au that small complexes are “very labour intensive with low income for us” so he has very few small clients.
Mr Booth told insuranceNEWS.com.au it is even more important for consumers to seek advice in a difficult market such as north Queensland.
“Having a relatively basic product being provided to the community with no advice and people having no idea whether they are properly insured or not goes against all the messages we have been trying to put out to the community,” he said.
But Suncorp Personal Insurance EGM Customer Product and Pricing Lisa Harrison says the product is intended for properties such as townhouses and duplexes, not large developments.
“There is still a place for broker-led strata products,” she told insuranceNEWS.com.au.
She says Suncorp has kept the product simple, so it is suitable for sale through a call centre, and it is one part of a package to address insurance affordability in north Queensland.
One broker contacted insuranceNEWS.com.au to say he has compared quotes on a suburban Townsville block of units and found a Strata Unit Underwriters quote is more than four times the Suncorp direct premium, while Suncorp/Vero-underwritten Longitude is three times higher and Brooklyn almost three times.
“People won’t be able to afford not to shift their cover,” he said. “There will be some policy differences, but they won’t justify the massive gap in premiums.”
A policy for a nearby house was double the cost of the strata cover. “It is illogical,” the broker said.
Another broker questioned whether clients would continue to get the best price in later years.
“Who does the work at renewal? Quite often – particularly in this market – the insurer that is competitive this year may be the least competitive a year or two later,” he told insuranceNEWS.com.au.
“A good broker will know the right markets to approach at renewal and understand the market, also taking the need to shop around out of the hands of a committee of volunteers.”
Mr Booth says insurers have worked hard to help ease the cost of insurance in north Queensland, but it is crucial for bodies corporate, which are making decisions for groups of owners, to obtain “real help and real advice” to meet their insurance needs.
Apart from helping clients with claims, only brokers can guide an owners’ committee to ensure it complies with state laws on having adequate insurance, he says.
Brokers told insuranceNEWS.com.au the Queensland strata market has improved since the entry of underwriting agencies Brooklyn and Mobius, with more cover available and downward pressure on premiums.
However, north Queensland remains difficult, particularly after Cyclone Marcia in February.
In 2012 the Australian Government Actuary found strata premiums had trebled since 2007 following Mackay flood losses in 2008 and Cyclone Yasi in 2011.