Why Strata Insurance Premiums Have Skyrocketed — And What You Can Do About It
If there's one line item that's caused more angst in strata meetings over the past three years than any other, it's insurance. For many Australian buildings, strata insurance premiums have risen 40-80% since 2022. Some have seen increases of 100% or more. Buildings with cladding, claims history, or exposure to natural disasters have been hit hardest — but even well-maintained, claim-free buildings in low-risk areas haven't been immune.
The CHU 2025 State of the Strata Market report showed premiums rising just 2.8% in the year to June 2025, which might suggest the worst is over. But that modest headline figure masks enormous variation between buildings, and the cumulative impact of three years of steep increases has fundamentally changed the cost structure of strata living.
The Anatomy of Your Strata Insurance Premium
Understanding what drives your premium helps you identify where savings are possible. Insurance premiums are essentially a function of four factors:
| Factor | Weight | What Drives It |
|---|---|---|
| Claims costs (natural perils) | 25-35% of premium | Cyclones, floods, storms, bushfires in your region |
| Claims costs (attritional) | 15-25% of premium | Water damage, fire, property damage in your building |
| Building characteristics | 15-20% of premium | Age, construction type, sum insured, cladding, defects |
| Market conditions | 20-30% of premium | Insurer competition, reinsurance costs, capacity |
The Five Forces Behind the Increases
1. Climate-Driven Catastrophe Costs
Insurance claims from catastrophic weather events have risen nearly 50% over the past five years. Australia experienced devastating floods, cyclones and bushfires through 2023-2025, with the Insurance Council of Australia declaring multiple catastrophe events each year. These costs are spread across all policyholders through reinsurance, meaning even buildings in unaffected areas pay more.
The 2025 bushfire season and events like Tropical Cyclone Zelia and Ex-Tropical Cyclone Alfred reinforced the trend. Climate change is making these events more frequent and severe — this is not a cycle that will reverse.
2. Construction Cost Inflation
When a building is damaged, the insurer pays to repair it. Those repair costs have surged dramatically:
| Repair Type | Cost Increase Since 2022 |
|---|---|
| Concrete remediation | +40-50% |
| Waterproofing | +30-40% |
| Painting | +35-45% |
| Plumbing | +25-35% |
| Electrical work | +20-30% |
| Glazing and facade work | +25-35% |
Higher repair costs mean higher average claim payouts, which directly feed into premium calculations.
3. Shrinking Insurer Competition
Only a handful of underwriting agencies in Australia write strata insurance. When several insurers reduced their appetite for strata risk or exited certain segments of the market, the remaining players gained pricing power. Buildings with sums insured over million face a particularly limited pool of insurers.
The good news: a new entrant is anticipated to join the strata insurance market in mid-2026, which should provide extra capacity and potentially help maintain competitive pricing.
4. Combustible Cladding
Buildings identified with non-compliant cladding face premiums 2-5 times higher than comparable buildings without cladding issues. Excesses for cladding-related claims can range from ,000 to ,000, or even 10% of the building sum insured. Until cladding is fully remediated, these buildings will continue to pay a heavy insurance penalty.
5. Water Damage: The Silent Premium Killer
Water damage is the single most common type of strata insurance claim, and it's getting worse. Older buildings with ageing waterproofing membranes, corroded pipes and poor maintenance are driving a surge in attritional claims that insurers can directly attribute to individual buildings' claims history.
What Committees Can Do
Get Multiple Quotes Every Year
Never auto-renew without testing the market. Engage a specialist strata insurance broker who has access to all the major underwriting agencies. A general insurance broker may only approach two or three insurers; a specialist will approach all of them.
Increase Your Excess
Moving from a ,000 excess to a ,000 or ,000 excess can reduce premiums by 15-25%. This works best for buildings with a healthy claims reserve and a low frequency of small claims. The trade-off is that the owners corporation absorbs more of the cost of smaller incidents.
Fix What's Driving Your Claims
If your building has a history of water damage claims, investing in plumbing inspections, waterproofing repairs and preventive maintenance can reduce your claims frequency — which directly impacts your premium at renewal. Insurers reward buildings that demonstrate a proactive approach to risk management.
Get Your Sum Insured Right
Many buildings are underinsured because they haven't been valued in years. While increasing the sum insured may increase the premium, being underinsured is catastrophically more expensive if a major loss occurs. Get a professional building valuation every three to five years.
Address Cladding Proactively
If your building has combustible cladding, develop a rectification plan and keep your insurer informed of progress. Even partial remediation can improve your risk profile and lead to better terms at renewal.
Leverage the Cyclone Reinsurance Pool
The Australian Reinsurance Pool Corporation's Cyclone Pool, reviewed in September 2025, has been reducing premium pressure for buildings in cyclone-prone areas. If your building is in northern Australia, ensure your broker is factoring this into your renewal.
The Outlook
The strata insurance market appears to be entering a softer phase in 2026, with increased competition and more stable pricing for well-maintained, low-risk buildings. However, buildings with poor claims history, unresolved defects, or high natural peril exposure will continue to face above-average increases.
The long-term trend is clear: climate change, construction cost inflation and an ageing building stock will keep upward pressure on premiums. The most effective strategy is proactive risk management — maintaining your building well, addressing defects promptly, and shopping the market aggressively every year.
How UnitBuddy Helps
UnitBuddy lets you benchmark your building's insurance costs against comparable buildings. If your premium is significantly above the median, that's a clear signal to engage a specialist broker and investigate what's driving the difference.
Insurance is likely the single biggest line item in your strata budget. Understanding what drives it — and what you can control — is the most impactful thing your committee can do for every owner's hip pocket.