Proactive Advocacy in Strata Insurance
In strata and community management, standard administration often treats annual insurance renewals as a routine exercise in collecting and presenting quotes. However, when buildings face compounding risk profiles, passive management frequently results in higher premiums or a total lack of market appetite. True strata leadership requires stepping beyond obvious outcomes to understand the underwriting concerns driving insurer decisions.
This case study demonstrates how Gary, Strata Manager at MBCM Reservoir, partnered with an Owners Corporation, insurance brokers, and commercial tenants to navigate a highly constrained market, delivering competitive choice and substantial cost savings.
The Backstory: Compounding complexity in a Mixed-Use Scheme
The subject property is a mixed-use development located within the City of Darebin, reflecting the growing trend of vibrant residential apartment living positioned directly above commercial tenancies across the Reservoir and Preston areas.
Over the previous two years, the Owners Corporation had faced ongoing challenges during its annual insurance renewal cycle, resulting in significant year-on-year premium increases. Underwriters viewed the building through a lens of elevated risk due to multiple factors:
- A history of past insurance claims on the property.
- Combustible cladding elements that were still in the process of being actively managed.
- A ground-floor commercial café operating beneath residential lots.
The Obstacle: A Constrained Market and a Single Quote
When the policy approached its renewal date, the broader market proved very cautious. Insurers assessing the combination of active cladding remediation, claims history, and commercial hospitality exposure declined to participate.
Consequently, only one insurer was willing to offer renewal terms. In strata management, having only a single quotation on the table places a committee in an unfair position where they feel there is little choice but to accept whatever terms and pricing are dictated to them. Rather than accepting this outcome as unavoidable, Gary resolved to examine why the broader market had shut its doors.
The Blueprint: Understanding the Underwriting Questions
Recognising that underwriters make decisions based on perceived uncertainty, Gary sat down with the scheme’s specialist strata insurance broker to analyse the risk assessment criteria in detail.
When risk documentation is incomplete or ambiguous, insurers can inflate premiums to price in uncertainty or refuse to quote altogether. Through these broker discussions, Gary identified a prospective second insurer that would consider extending terms, provided they received clear, detailed evidence regarding how specific risks across the residential property and commercial tenancy were being controlled.
The Strategy: Targeted Risk Verification and Stakeholder Collaboration
To address the insurer’s specific underwriting criteria, Gary initiated a collaborative fact-finding process involving the Committee Chair and the ground-floor café tenant:
- Commercial Risk Management: Met directly with the café operator to gather comprehensive documentation on daily business operations, kitchen safety standards, and commercial risk controls.
- Compliance Verification: Compiled up-to-date documentation regarding Essential Safety Measures (ESM) compliance across the entire development.
- Active Defect Management: Provided clear, verifiable records demonstrating that known building issues, specifically the combustible cladding, were being actively managed and rectified rather than neglected.
Equipped with this updated and comprehensive operational profile, the specialist strata broker formally re-approached the second underwriter.
The Victory: Restored Market Competition and Measurable Savings
Presented with a clear and verified picture of the building’s safety protocols, the second insurer formally agreed to enter the market and issue terms. This strategic intervention delivered immediate, tangible benefits for the scheme:
- Restored Committee Choice: Removal of reliance on a single underwriter, re-establishing genuine commercial competition within the renewal process.
- $5,000 Premium Reduction: Lowered the annual insurance premium by approximately $5,000 compared to the initial terms offered.
- Uncompromised Coverage: Ensured the Owners Corporation maintained complete, competitively priced and appropriate insurance protection.
Delivering Value Through Informed Decision-Making
As local municipal centres such as the City of Darebin continue to foster active community hubs and mixed-use precincts, managing properties with both residential and commercial risks requires deliberate, detail-focused oversight.
This project reinforces that optimal strata outcomes do not come merely from negotiating harder on price, but from understanding the questions behind the quotations. By taking the time to gather accurate information, coordinate with onsite tenants, and eliminate underwriting uncertainty, MBCM Reservoir ensured the committee had choice when securing the strata insurance protection for its community.