ICA Advocates for Strata Law Reforms to Address Rising Insurance Costs in Victoria

In its submission to the 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. These defects, coupled with deferred maintenance, are transforming insurable buildings into high-risk liabilities, thereby driving up insurance costs and, in some cases, rendering properties uninsurable.

The ICA's recommendations focus on several key areas:

• Enhanced Governance and Education: Improving transparency and accountability within owners corporations through targeted education for committee members to better manage complex financial and insurance matters.
• Licensing of Strata Managers: Implementing evidence-based licensing schemes to ensure strata managers possess the necessary qualifications and adhere to professional standards.
• Disclosure of Insurance Commissions: Mandating full disclosure of any payments to strata managers that could influence insurance product selection, with a thorough assessment of market impacts before considering a ban on commissions.
• Facilitating Collective Sales: Lowering the threshold for collective sales of strata properties to enable the renewal of older buildings, similar to New South Wales's move to a 75% owner agreement.
• Strengthening Compliance Mechanisms: Introducing robust enforcement tools, such as public complaints registers, to hold owners corporations accountable for defects and maintenance issues.

These proposed reforms aim to address the systemic issues within Victoria's strata sector, promoting better risk management and ultimately leading to more affordable and accessible insurance for strata property owners.