Cyclone pool covers short-term rentals in strata

Cyclone pool covers short-term rentals in strata

3 April 2023

Properties that are holiday let on a short-term basis in strata buildings will be eligible for the Federal Government’s cyclone reinsurance pool.

The scheme, managed by the Australian Reinsurance Pool Corporation (ARPC), came into effect last year to improve insurance affordability in Australia’s northern regions. It excludes buildings that have more than half commercial occupancy worth over $5 million.

The Australian Consumers Insurance Lobby (ACIL) welcomed the confirmation of eligibility – made by ARPC CEO Chris Wallace – saying it resolved a lack of clarity on whether such holiday rentals would be deemed commercial.

“It’s more great news for consumers in northern Australia. This clarification by ARPC should come as a great relief to many unit owners who own in strata buildings that have short term holiday rentals,” it said.

“ACIL held concerns in relation to the classification of short-term holiday rentals given tourism plays such a vital role in communities in northern Australia.”

Broader eligibility of the pool is still needed for age and disability care buildings and properties on Hamilton Island that “operate like a strata building but are not titled as strata,” says ACIL, which is lobbying politicians.

Dr Wallace made the comments on Thursday at a forum entitled “Energising the strata insurance market – a blueprint for affordability, availability, competition”. The forum was part of industry expert John Trowbridge’s review of the strata sector, which was commissioned by Steadfast.

ARPC said in February 468,000 policies in Queensland, the NT and WA – or 19% of home insurance policies in northern Australia – are already covered by the cyclone pool after Allianz Australia and Sure Insurance joined.

It expects two more major insurers to start cover from July, and a further six by the end of the year.