It may be easy to think that all insurers are ruthless penny pinchers when it comes to claims including those of the strata kind but data from the Insurance Council of Australia released earlier this year suggests otherwise.

It turns out that strata insurers have one of the highest claim acceptance rates in Australia at 97% of claims lodged. Compare this to home insurers who only accept 93.8%. This means that home insurers have a denial rate that more than doubles strata insurers!

That can’t be right though - perhaps Strata Managers are just not lodging enough of the ‘grey area’ claims.

Well you’d be wrong in thinking that as for every 100 strata policies that exist more than 23 claims are lodged per year compared with just seven home insurance claims.

So, what’s with this denial difference then?

The answer lies in the adage ‘you get what you pay for’. I’m a culprit, and most likely you are too. We get our home/contents/car insurance renewal and look straight for the price. We anchor on price, disregarding the quality of the policy itself.

Home insurers must deal with constant price pressure which means nothing other than chopping out benefits from their policies.

Less benefits, means more denials.

This concern with the immediate cost to us is somewhat myopic as we neglect to consider the long-term benefit of the policy i.e. the sum of premiums less the sum of claim payments we receive.

Having a Strata Manager or Strata Committee making the insurance decision can be of great benefit for your strata scheme as they appear to be able to consider the long-term value rather than just the immediate price. Something us as individuals seem to struggle with.

And it is this dynamic that has allowed strata insurers to provide products that transfer more risk away from Owners Corporations – and inherently deny less claims.

So strata insurers are the upright citizens of the insurance world, right? But who is the uprightestest? Well you’ll have to wait for our ratings to be released next month :)