StrataRatings is a completely independent ratings agency and we aim to provide the highest of quality generalised product ratings that will assist consumers investigate which strata insurance policy will best suit their strata scheme.
We guarantee to be open and honest about any income we receive as this of course can be a driver of bias. You can see how we make money here.
In determining our ratings there were four fundamental 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 strata scheme 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 strata scheme 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. Some policies do not have a major Australian insurer and instead utilise Lloyd’s of London syndicates. Whilst there are still protections with this set-up it is a much riskier arrangement for strata schemes due firstly to the insurer having no reputational risk plus the added legal complexities of pursuing the insurer.
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, certain providers only offer their product through Brokers whilst others 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 strata schemes 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, determining how much cover is given by each policy requires much more in-depth analysis utilising historical claim data. Considerations here include:
· The broadness of policy exclusions with weight given to exclusions relating to high occurrence/cost events.
· The broadness of general policy conditions with weight given to conditions relating to high occurrence/cost events.
· The broadness of additional policy benefits over and above property damage with weight given to benefits relating to high occurrence/cost events.
Once these factors were considered we then applied the ratings of Platinum, Gold, Silver and Bronze using a bell-curve.
We are confident that the methodology we have used in determining our ratings is fitting for the StrataRatings purpose and will give consumers a general understanding of quality contained in the strata policies available to them.
Last updated: 17th March 2018