After much reading, interpreting, analysing, re-reading, re-interpreting and re-analysing, we have finally put together StrataRatings inaugural set of 2018 ratings!

We are a completely independent ratings agency and run a similar business model to Canstar. We will never take a payment from an insurer for a favourable rating. The only income we accept from an insurer is a small licencing fee which will allow them to use the rating logo their policy has achieved. This is a flat rate for all insurers so as no bias exists.

So what methodology did we use to get to these ratings?

There were four major questions we sought to answer:

1. Is the policy an Insured Events policy or a Broadform Accidental Loss/Damage policy?

Insured Events policies have a set list of events that are covered under the policy. This leaves an onus of the Owners Corporation to prove that their loss falls within one of these events but also not within one of the exclusions. A Broadform Accidental Loss/Damage policy on the other hand essentially covers all events except for those excluded. The only onus that rests with the Owners Corporation in this case is to demonstrate that loss or damage has occurred. To decline the claim, the insurer then has a burden to show that an exclusion applies. This difference is major in strata as in many circumstances it is very difficult to determine the exact cause of damage.

2. Who is the insurer?

Many strata insurance policies are issued by an underwriting agency on behalf of an insurer. It is very important to know who the insurer is so one can be confident that in the case of a major loss, the insurer will be able and willing to make payment. Most insurers behind strata insurance products have strong financial ratings and an upheld reputation in the market. This reputation is important as it can be used as leverage in the case of a claim refusal. We did note that some policies had no major Australian insurer and utilised Lloyd’s of London syndicates. Whilst there are still protections with this set-up it is a much riskier arrangement for strata schemes.

3. Is the product freely available to purchase?

Whilst most strata insurance products are available to all, some providers restrict the availability of their product for their own strategic reasons. As an example, we have identified some providers that only offer their product through Brokers while another only through Strata Managers. This is a big issue for schemes as it means that they would be forced to use a certain type of intermediary if they want that policy, carrying its own risk. This set up is not for the benefit of Owners Corporations and solely makes for more profitable relationships between the insurer and their chosen type of intermediary.

4. How comprehensive is the wording?

Whilst the first three questions were relatively easy to answer, the answer to how much cover is given by each policy requires much more in-depth analysis utilising historical claim data. This was of course the longest part of the process and we are confident that we have it right.

So, there you have it, our first set of ratings!

Go and check out where your policy sits here.