3 minute read
Apartment insurance nightmare
Mike Morris is among homeowners seeking government action after finding out his apartment may soon be uninsurable.
TANYA MURPHY
When Mike Morris purchased an apartment at the Lakes resort in Cairns, he looked forward to living out his retirement in peace, but this dream is quickly becoming a nightmare as he and other residents discover their properties may soon be uninsurable.
Two buildings at The Lakes resort in Cairns were left without insurance for three months this year, and ended up having to under-insure their properties by more than $1 million each, after no other options could be found.
They had to wait weeks to acquire a special dispensation from the Office of the Commissioner for Body Corporate and Community Management to insure their buildings for less than their value.
This comes as new analysis from Climate Risk has revealed more than 445,000 addresses in Australia where insurance is expected to become unaffordable or unavailable within 30 years.
After analysing 500 locations around Australia, Climate Risk analyst Karl Mellon said Cairns properties were in the top 10% of properties at risk of becoming uninsurable, due to their low lying coastal location, and the increasing risk of floods, coastal inundations and category four and five cyclones.
Peter Bunker, Body Corporate Chairman for one of the affected buildings at the Lakes, said their previous insurer Resilium informed them this year that they were withdrawing from the market for all strata buildings worth more than $5 million with more than 10 units north of Mackay affected.
After contacting every other insurer and getting the same response, they ended up having to insure their building, worth $6.2 million, for just $5 million with Sure Insurance, but at double the premium.
“Three years ago it was $17,000, last year it was $22,000 and now it’s gone up to more than $42,000 for the building, and it could easily double again next year, if they renew it at all,” said Mr Bunker.
“The only other option was to get insurance from overseas and take out parametric cyclone cover, which would have cost us $400,000, and in a building with only 22 units that’s simply not affordable for the owners.
“We were lucky nothing happened during the three months while we were search-
ing for insurance, but if the same happens next year it’ll only takes a burst pipe or a kitchen fire to leave us with a huge bill and no cover.
“Some of the owners are pensioners and they can’t afford it, nor can they sell a property that is uninsured, so they will face homelessness and financial ruin.
“This is clearly a market failure and we would like to see the government stepping in and offering assistance.”
Corp Sure’s Amanda Bryant, insurance broker for a large number of strata in Far North Queensland, said the Lakes was far from being alone, as all similar buildings north of Rockhampton were facing the same problem.
“We worked really hard to find options for our clients this year, and managed to get insurance for all of them, but some of them had to get insurance from London and are paying three or four times what they were paying last year,” she said.
Cairns Regional Council voted in their August ordinary meeting to write to the Queensland government requesting them to investigate a state-sponsored insurance scheme to address the issue.
Mr Bunker said he would support a levy on the fossil fuel industry to help cover costs for homeowners to upgrade their buildings to be better prepared and more insurable in the face of worsening weather extremes.
“The burning of coal and fossil fuels is causing sea levels to rise and cyclone severity to increase, so it seems reasonable that the people who profit from those industries should give a small amount of those profits to help people adapt their properties,” he said.
“But what we need right now is an immediate solution to help make insurance affordable.”
