30 May 2014

Manager 
Insurance and Superannuation Unit 
Financial System and Services Division 
The Treasury 
Langton Crescent 
PARKES ACT 2600 	

By Email: insuranceconsultation@treasury.gov.au

Dear Sir/Madam

Addressing the High Cost of Home and Strata Title Insurance in North Queensland

Thank you for the opportunity to provide feedback on the Government’s Discussion Paper.  As the peak organisation representing the building and construction industry in Queensland, Master Builders Queensland has an interest and would like to provide the following comments.

High Cost of Insurance (Questions 2 & 3)

An inability to secure reasonably priced strata insurance for a particular building can make dwellings within that building considerably less desirable for owner-occupiers and investors.  The current problems with availability and affordability of strata insurance are therefore likely to become an increasingly important impediment to strata titled developments in affected regions of the State. This in turn may limit the diversity of housing stock in these areas with detached dwellings being built in preference to strata titled attached dwellings. 

A diversity of dwelling types is essential to ensure that housing is affordable, meets the needs of residents and the use of resources such as land is optimised. There is a very real risk that the current problems with the availability and affordability of strata insurance may limit this diversity.

It is also important that governments and insurers work together to ensure that the risks associated with severe weather can be accurately assessed on an individual property basis (rather than by suburb or postcode) and priced accordingly.  

All building work in Queensland is regulated by the National Construction Code, ensuring that is undertaken to at least the minimum standard necessary for safety, including structural safety.    The Code is revised annually and addresses changing climatic conditions at a regional level.  New buildings, built to recent versions of the Code, are therefore built to a standard appropriate to the current level of weather related threats and do not pose the heightened risk to insurers that older buildings do.

Promoting Resilience (Questions 24 & 25)

While new buildings can be regarded as ‘resilient’, there may be a role for remedial work in older buildings so that they address more recent provisions in the Code and to ensure that all buildings are appropriately maintained.

We therefore see merit in the recommendation for inspections of strata properties in the case of older properties in North Queensland and would be interested to consider this recommendation in more detail.  

I trust that these comments are of assistance in your consideration of this matter.

Yours sincerely

Paul Bidwell
Director – Housing Policy