Did you know that insurers consider different business activities more risky than others and some have varying risk preferences. For example an office is considered a low risk business activity whilst a fireworks factory is a high risk business activity.
Often commercial strata properties are occupied with businesses with varying business activities. Knowing what each of these businesses does and providing this information at renewal or when applying for insurance enables us to present your clients’ property risks to insurers as accurately as possible. It also means that we approach the insurers best suited for the risk.
What does this mean for your clients?
It means a more accurate risk rating by insurers which leads to a fairer insurance premium and excess that truly reflects the risk profile of the building.
What information do Insurers use to rate commercial strata property risks?
While this will vary slightly between different insurance companies, please find below a list of the information generally required by commercial strata property insurers:
- Occupants business activities
- Building location
- Building materials and age of building
- Security systems in place
- Fire protection measures
- Building facilities e.g. lifts, escalators
- Claims history
What happens if there are information gaps on business activities?
If little is known about the business activities of each occupant, an insurer will likely still look at and insure your client’s risk, BUT, if they don’t know the specific business activities, they may rate the risk taking on a “Worst Case Scenario” mentality.
Generally in this instance, insurance companies will rate the property risk poorly; in order to protect their own financial interests they are required to assume the “worst”. Insurers may apply higher scale premium rates and excesses, than they would if they knew the actual business activities taking place at the property, and were able to accurately assess and rate the risk.
Worse still, cover may be placed with the insurer based on missing or incorrect business activity details. Once the correct business activities come to light, this then has the potential to negatively impact a claim made on the policy or even cancellation of the policy.
How to get the information?
Below are some suggested solutions to assist us in getting the information in the event you don’t have the various occupant details on your files, please speak with us about the options available.
- Site Contacts – Providing us with a contact at the property, or putting us in touch with the managing agent may be able to assist us in obtaining the information required.
- Property Surveys – Providing us with a contact at the property who is happy to take us around the site to perform a survey will help us gain an accurate picture of the risk.
- Contacting Owners – Sending a letter/email to all the unit owners / Chairperson / committee to gather the information required.