CHU: Strata Industry Preparedness And Resilience – Learnings From Recent Catastrophes

Australia’s climate presents unique challenges for strata buildings. From scorching summers to torrential rains and hailstorms, it’s essential for Strata Managers, Insurance Brokers, and property owners to be well-prepared for all weather events.

In recent years, a string of disasters, including the extreme La Niña weather events and the ongoing pandemic conditions, have tested the preparedness and resilience of insurers and property owners alike.

A recent report by the Insurance Council of Australia (ICA)1 sheds light on these challenges and offers recommendations for insurers responding to catastrophic events.

Chart 2.1: Insurance losses from extreme weather events in Australia (10 highest loss events per year)

Note: Indexed to 2022 dollars, using CPI. The ten highest insurance loss events for each year have been charted above. Source: ICA, 2023, Deloitte, 2023

This graph shows the frequency and severity of the natural disasters in Australia. Note that the losses from Cat221 in February 2022 from the SE QLD and Northern NSW floods have been the worst so far. There were over 242,000 claims with a loss value of over $6 billion.

The ICA report highlights the unprecedented nature of recent catastrophes, with total claims received being six times higher than the average for all catastrophic events since 2016.

The report also revealed that existing scenario planning proved inadequate, exposing gaps in systems and processes, and has provided recommendations.

Summary of Recommendations:

  • Preparedness: Strengthen catastrophe planning for extreme events like Cat 221, ensuring readiness for challenges.
  • Customer Experience: Enhance communication and streamline claim processes for a better experience.
  • Resourcing: Redesign workforce planning for increased workloads during crises.
  • Operational Response: Invest in technology and processes for efficient crisis management.
  • Governance and Transparency: Improve data analysis and information sharing which will allow for more informed decision-making during disasters.
  • Coordination with Government: Collaborate for faster funding, clean-up, and resilience investments.
  • Code Review: Update the Catastrophe definition in the Insurance Code to align with current challenges.

 

Being Prepared

As we move into an El Niño weather pattern, characterised by rising sea temperatures, a risk of heatwaves, bushfires, and power outages will be more prevalent.

Now more than ever, it is important for strata owners and stakeholders to ramp up preparedness and put in place protocols to safeguard against nature’s unpredictability.

CHU Underwriting Agencies is a leading provider of strata insurance. With over 45 years’ experience, CHU is well placed to respond to the ever-changing weather catastrophes in Australia.

When it comes to preparation, CHU suggests the following tips:

  1. Know Your Environment: Stay updated on local weather patterns and potential risks by consulting local experts.
  2. Review the Policy and Update the Sum Insured: Consider optional Catastrophe coverage for effective protection against disasters like bushfires or cyclones. Increase building valuations frequency to keep the sum insured up to date, ensuring coverage for full replacement value. Note that a bushfire is most likely to result in a total loss, emphasising the importance of an accurate sum insured. Additionally, be aware that Australian Standard requirements, such as the Bushfire Attack Level (BAL) rating, can impact the sum insured, potentially increasing rebuild costs significantly.
  3. Prioritise Regular Maintenance: Prevention is better than a cure. Develop a schedule for roof, gutter, and drainage inspections. Promptly repair damaged roofing to prevent leaks. Regularly clear branches, leaves, and clean gutters to prevent water damage. Upgrade stormwater systems and consider weather-resistant building materials.
  4. Establish Emergency Procedures: Ensure all residents are aware of evacuation routes and safety protocols. Create emergency contacts for insurance brokers, strata managers, and lot owners. Utilise specialised emergency services, like SES and reach out to insurers such as CHU, who have specialised catastrophe teams.
  5. Swift Action After an Event: In the unfortunate event of a disaster, act promptly. Conduct inspections, gather information on damaged units or common property, and contact your strata manager, insurance broker, or insurer immediately. A swift response ensures resident safety and enables timely repairs, minimising potential damages.

 

Future Planning

Property owners who adopt the tips above, will be more prepared should a disaster occur, ensuring the safety of residents and the protection of valuable investments.

CHU has welcomed the ICA recommendations and has already implemented changes in relation to preparedness, communication and operational response and resourcing. These include technology enhancements allowing increased transparency during a claims event and increased resourcing with a dedicated CAT response team which can be rapidly enacted in the event of a catastrophe.

These recommendations will not only bolster the resilience of individual strata buildings but also contribute to a more resilient and disaster-ready Australian community.

Important note

Insurance issued by QBE Insurance (Australia) Limited ABN 78 003 191 035 and distributed by CHU Underwriting Agencies Pty Ltd ABN 18 001 580 070 AFSL 243261. Any advice in this article is general in nature and does not take account of your personal objectives, financial situation and needs. Please read the relevant Product Disclosure Statement (‘PDS’), Financial Services Guide (‘FSG’), and the Target Market Determination (‘TMD’) which can be viewed at chu.com.au or obtained by contacting CHU directly.

  1. insurancecouncil.com.au/wp-content/uploads/2023/09/20897_ICA_Cat-Report_Print-2023_RGB_Final_Spreads.pdf ↩︎

Author: CHU 

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