Premiums soar, but worse to come

Strata complex insurance premiums across the Pilbara have increased by up to 400 per cent in the last year, with some analysts predicting the worst is yet to come.

Hedland First National principal Morag Lowe said residential strata units in Port Hedland had been hardest hit as insurers look to cover an avalanche of claims on the east coast.

Ms Lowe, whose firm manages more than 95 per cent of all strata titles in Hedland and Newman, said the major insurers had yet to factor in this year’s horrific Queensland floods to their external premiums, meaning rates could quadruple again in coming years.

“It is my understanding these increases have been because of the impact of Cyclone Larry in 2006.

"This is the insurance companies actually factoring in the destruction that was caused to contemporary buildings by that cyclone.

"They haven’t actually factored in the destruction caused by the cyclone and the flooding over in Queensland this year.

"That is still ahead of us.”

In Karratha, commercial strata complexes have copped the brunt of the insurance hike.

Balmoral Road Shopping Centre unit owner Ian Weir said one insurer had quoted the 11-unit complex at $84,000 before the owners settled on $52,000 with QBE.

“That’s a 130 per cent increase on last year,” Mr Weir said.

“Normally premiums go up about 10 per cent on the previous year. In 1994, when we bought the property, it was about $6500-$7000.”

Mr Weir said it was inevitable that the increase in insurance would filter through to prices.

“It’s the townspeople who are going to end up paying, and having been a 30-year resident of the area and rather pro-Pilbara I just think enough is enough.

"We pay higher for fuel, we pay higher for food, and we’re paying higher for insurance.”

Karratha Village Shopping Centre council of owners’ chairperson Fatima Revola-Gibson said the premium for the 40-unit commercial strata title was $50,000 just two years ago.

“We’re now paying $121,000,” she said.

“It is ludicrous what is happening.”

Graham Glasson, from North West Strata Services, said the increases were unacceptable.

“Karratha and Port Hedland are the worst two hit,” Mr Glasson said.

“It’s compulsory to insure if you’re (a strata title) over five lots but it’s becoming financially prohibitive.”

Perth-based insurance broker Chris Carr has worked extensively in the North West for the past 20 years and said the recent increases in premiums were the worst he had seen.

He said QBE’s withdrawal from the residential strata market had contributed to the hike.

Mr Carr said insurance companies were reluctant to insure any Australian property above the 26th parallel, despite a low number of claims from Pilbara clients.

“The problem is the insurers don’t want to be there.

"Most insurers I go to say they don’t want anything in the North West because the catastrophe rates are so high (and) their margin on it is so small.

"They see it as too much of a risk.”

Mr Weir said a group of strata unit owners in Karratha would petition their local Federal and State politicians to investigate the “unfair” increase in external premiums.