Why are strata insurance excesses increasing?

Why are strata insurance excesses increasing?

A trend found across strata insurance (both for new business and renewals) is that there’s an increasing number of insurers raising their standard minimum excess, so that it is now $1,000 for all claims.

The common factors amongst underwriting agencies use to justify this increase include:

  • The rising cost of claims which is being driven by increasing costs of materials and labour shortages throughout the workforce.
  • The hardening insurance market conditions which are being compounded by higher claims experience due to a string of catastrophes that have occurred in recent years.


PERILS, an independent organisation providing industry-wide catastrophe insurance data, provided an initial estimate of the insurance market loss from the heavy rainfall experienced along the east coast of Australia.

From 23rd of February 2022 to 8th of March 2022 their initial estimate of the insured market loss, based on loss data collected from the Australian insurance market, hit AU$3.991 billion – covering property and motor hull lines of business.

Conversely, some insurers noted that the standard policy excess on strata insurance has historically been low when compared to domestic home insurance policies and/or other types of property insurance.

In some instances however, strata policy owners may be able request a lower excess which will result in a premium increase (subject to the underwriter’s acceptance).

Christian Lingga, Strata Broking Manager, explained this further by adding “when insurers increase the minimum excess, they are reducing their associated costs two-fold; in the pay-out of the claim and also the claims-handling costs. The end goal of these excess increases is to eliminate smaller claims, so as to ensure that they continue to offer this (strata) product moving forward without dramatic price increases that could come in addition.”

If you have any questions or would like to discuss other excess options, please feel free to contact a CRM Broker on 1300 880 494 (dial 4 to speak to Strata team) or [email protected].



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