Why Strata Committees Are Seeing Premium Pressure Across Australia

Rebuild costs are climbing faster than general inflation. Water damage keeps driving repeat claims. A growing share of buildings carry defects that insurers now price explicitly. None of these pressures are confined to one region or one type of building, they land on strata schemes across the country, regardless of whether a building has ever seen a cyclone.

Rebuild Costs Have Moved Further Than Most Sums Insured Reflect

The Insurance Council of Australia’s analysis of Cotality’s Cordell Construction Cost Index found overall building costs rose around 30 per cent in the five years to March 2026, against general inflation of about 24 per cent over the same period. That average understates the real problem for a strata building specifically: roof tiles are up 77 per cent over five years, more than three times the general inflation rate, while structural steel, windows, copper piping, and plaster and plywood have all climbed between 37 and 48 per cent.

For a strata scheme, the practical consequence is direct: the sum insured needs to reflect what a genuine full reinstatement would cost today, not what it cost at the last valuation. A scheme that hasn’t been independently revalued in several years is very likely carrying a sum insured below current rebuild cost. Worth being upfront about what that actually means: an understated sum insured doesn’t lower your premium risk, if anything it produces an artificially lower premium today, at the cost of a real shortfall if a major claim happens before the figure is corrected. Getting the valuation right will almost certainly increase the premium. That’s not a downside to avoid, it’s the cost of the building actually being covered for what it would take to rebuild it.

Claims History Shapes What You Pay Next

CHU’s own claims data shows just over 50 per cent of residential strata claims are the result of water damage, burst pipes, leaking roofs, or faulty plumbing, with storms and other natural events accounting for around a further 25 per cent. This matters because claims history is a direct input into how an individual scheme is priced. A building with a pattern of repeated water damage claims will typically face both a higher premium and a higher excess, reflecting the insurer’s assessment that an underlying cause, ageing plumbing, poor waterproofing, or a maintenance gap, is likely to keep generating claims rather than being a one-off event.

This is genuinely within a committee’s own control. Addressing the root cause of a recurring water ingress issue, rather than repeatedly funding the repair, is one of the more effective ways to bring a scheme’s specific premium down over time, independent of anything happening in the broader market.

Building Defects Are a Growing Underwriting Concern

This is one of the more significant pressures on strata premiums today, and one that gets less attention than it should. Insurers increasingly price a building’s defect history and risk profile as a distinct factor, separate from its age or claims record alone. A scheme with known, unresolved building defects, waterproofing failures, structural issues identified in a defect report, or unresolved builder disputes, presents a different underwriting picture to a comparable building without that history, and insurers are pricing that difference explicitly. Where a scheme has an active defect report or a building consultant’s assessment, disclosing it fully and early tends to produce a more accurate premium than an insurer discovering it later, whether through a claim or a subsequent inspection.

Broader Market Pressures Worth Naming

Two further pressures sit underneath everything above, and neither is specific to any one building. Insurers’ own reinsurance and catastrophe costs have risen industry-wide as extreme weather losses increase, and that cost is passed through into base premiums across the market, strata included. Separately, state-based taxes and levies applied to insurance premiums vary considerably by jurisdiction and add a further layer on top of the underlying premium, worth being aware of when comparing costs against a scheme in a different state.

The Cyclone Reinsurance Pool: Real Relief, But Only for Some Buildings

Australia’s Cyclone Reinsurance Pool, administered by the Australian Reinsurance Pool Corporation and backed by a $10 billion government guarantee, has operated since July 2022 to make cyclone and cyclone-related flood insurance more affordable in medium to high-risk areas. It now reinsures around 3.2 million properties, including about 73,000 strata buildings, and by April 2026 had made claim payments exceeding $1 billion across 20 declared cyclones.

The ACCC’s fifth and final insurance monitoring report, released 25 June 2026, found genuine impact where the pool is targeted: in the first year after insurers joined, average premiums in higher cyclone-risk areas fell 8 per cent for strata insurance specifically (11 per cent for home insurance, 24 per cent for small business insurance). Separately, ARPC’s May 2026 statistics found average home premiums in the highest-risk bands down 37 per cent since the pool’s introduction, using a different, standardised-quote methodology.

But the pool’s design is deliberately narrow, and that matters for most strata schemes reading this. It doesn’t reach the roughly 98 per cent of policies nationally without elevated cyclone risk, and the ACCC found premiums in the areas it doesn’t cover are generally rising along with the broader market. Even within cyclone-exposed regions, the relief is uneven: strata premiums in north Western Australia rose 18 per cent over the same period, to an average exceeding $18,000 per policy, showing the pool moderates cost growth rather than eliminating it. The ACCC’s oversight role concluded on 30 June 2026, and a statutory review of the underlying legislation, the first since the pool’s 2022 establishment, was launched by the Assistant Treasurer in September 2025, specifically examining whether the pool is meeting its purpose.

If your building sits in a genuinely high cyclone-risk zone, this pool is very likely already moderating a premium that would otherwise be considerably higher. Rather than assuming your insurer is passing the full available benefit through, ask your broker to test the market at renewal, since pricing and how fully insurers reflect the pool’s benefit varies between them. If your building sits anywhere else, this specific relief mechanism isn’t reaching you at all, and the pressures above are landing without any offsetting relief.

What Strata Committees Can Actually Do

1. Get the building’s sum insured independently revalued if it hasn’t been done in the past two to three years. Note that some states set a legislated minimum interval for larger schemes on top of this, worth confirming the specific requirement in your state directly with your strata manager or a valuer, since these vary and are worth getting right rather than assumed.
2. If your scheme has known or suspected building defects, get them properly assessed and disclose them fully and early to your insurer, rather than waiting for them to surface through a claim.
3. If your scheme has a recurring water damage pattern, prioritise fixing the underlying cause over repeatedly funding the repair.
4. Consider a voluntary higher excess if your scheme can genuinely absorb smaller claims itself, which can meaningfully reduce the premium on larger, less frequent risks.
5. Put a documented maintenance plan in place, and keep it current. Insurers increasingly look for evidence of proactive maintenance, not just claims history, when assessing a scheme.
6. If you’re in a cyclone-exposed region, ask your broker to test the market at renewal rather than assuming your current insurer is passing through the full available benefit.
7. Start the renewal process early. A scheme with defects, a recent revaluation, or a claims history to explain benefits from more lead time to present that information properly, rather than compressing it into a last-minute renewal.

Want a review of how your scheme’s sum insured, claims history and disclosure position are likely to be assessed at your next renewal? Speak with Knightsbridge Insurance Group about your strata cover.

Important Disclaimer: This article provides general information only and does not constitute legal or financial advice. Strata insurance premiums, valuation requirements, and claims history impacts vary significantly based on individual buildings, states and territories, and insurers. Statistics referenced are drawn from the ACCC, the Australian Reinsurance Pool Corporation, the Insurance Council of Australia, Cotality, and CHU, and reflect the most recently published data at the time of writing. Readers should obtain building-specific advice and consult with qualified insurance professionals before making decisions about strata cover. Knightsbridge Insurance Group holds Australian Financial Services Licence 514855.

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