# How Is Strata Insurance Risk Assessment Evolving for 2026?

Amelia Palmer · September 22, 2026

> The Changing Face of Strata Insurance Risk Assessment in 2026 Strata insurance risk assessment in 2026 is undergoing a transformation driven by...

## The Changing Face of Strata Insurance Risk Assessment in 2026

Strata insurance risk assessment in 2026 is undergoing a transformation driven by technological adoption, shifting climate patterns, and evolving regulatory expectations across Australian and New Zealand markets. The traditional model of evaluating building characteristics, claims history, and location-based hazard exposure is being supplemented by data-driven analytics and artificial intelligence tools that promise greater precision but also raise questions about transparency and broker autonomy. According to industry reporting, one in four Australian firms now report being hit by AI-driven cyber attacks as risks intensify, a statistic that directly affects how strata schemes must think about their digital exposure alongside physical assets. The Australian Reinsurance Pool Corporation continues to administer government-backed reinsurance schemes for terrorism and cyclone-related risks under the Terrorism Insurance Act 2003, forming a foundational layer of the national risk architecture that strata insurers must navigate when pricing policies. Meanwhile, the British Columbia Financial Services Authority has published its 2026-27 real estate priorities, signaling increased regulatory attention to how strata and condominium markets are assessed and managed. For strata managers, body corporate committees, and brokers, understanding these converging forces is essential because the risk assessment frameworks that governed 2023 and 2024 policies are no longer sufficient to address the complexity of exposures present in 2026.

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The expansion of AI-powered assessment tools is perhaps the most visible change. AISIX Solutions recently expanded its Eli Report agreement by 16,000 buildings, more than doubling nationwide coverage, which demonstrates the accelerating scale at which automated risk modelling is being deployed across the strata sector. This kind of growth signals that insurers and brokers are increasingly relying on algorithmic outputs to determine premiums, coverage limits, and exclusions. However, the speed of adoption also introduces risks of its own, including the potential for model bias, data quality issues, and a growing recognition problem for strata brokers who find themselves at the committee table without the technical fluency to challenge or interpret AI-generated risk scores. The result is a market where human expertise and machine intelligence must coexist, and where the quality of risk assessment depends as much on the integrity of the data pipeline as on the sophistication of the underlying models.

## Climate, Catastrophe, and the Growing Coverage Gap

Climate-related risk remains the dominant force reshaping strata insurance risk assessment in 2026, and the numbers tell a sobering story. Australia's growing coverage gap, as documented extensively by Insurance Business, reflects a reality where increasing frequency of extreme weather events is pushing insurers to reassess entire portfolios of strata properties, particularly in coastal and bushfire-prone regions. The uninsurable coastline phenomenon is not a distant projection but a present-day reality for many strata schemes whose owners corporations are discovering that coverage has been withdrawn, significantly repriced, or loaded with exclusions that shift catastrophic risk onto individual lot owners. The Australian Reinsurance Pool Corporation's role becomes critical here, as it provides a backstop for cyclone-related claims that might otherwise render certain geographic areas commercially uninsurable through private channels alone.

In practical terms, this means that risk assessment for 2026 must incorporate forward-looking climate modelling rather than relying solely on historical claims data. Insurers are increasingly using probabilistic catastrophe models that project weather patterns over the next three to five decades, not just the past ten years. For strata schemes in regions like northern New South Wales, parts of Queensland, and coastal Victoria, this shift has tangible consequences: buildings that were considered acceptable risks five years ago may now face substantial premium increases or excess loadings. The Insurance Business reporting on Allianz and Strata Community Insurance extending their exclusive partnership to 2036 amid broker scrutiny further illustrates how the market is consolidating around large carriers with the capital reserves and modelling capability to absorb climate volatility, potentially leaving smaller brokers and schemes with fewer options and less negotiating power.

## Cyber Risk Entering the Strata Risk Assessment Framework

One of the most significant developments in strata insurance risk assessment for 2026 is the formal integration of cyber risk into standard evaluation criteria. The Unit 42 threat brief on the escalation of cyber risk related to Iran, updated as recently as April 17, highlights a geopolitical dimension to digital threats that affects organisations of every size, including strata schemes that manage sensitive owner data, financial transactions, and building automation systems. Strata schemes are increasingly targeted because they represent a concentration of valuable data, including banking details, personal identification information, and access credentials for common property systems such as elevators, security gates, and intercom networks. The fact that one in four Australian firms has experienced AI-driven cyber attacks suggests that automated threat discovery is outpacing the defensive capabilities of many community-governed bodies.

This reality is forcing insurers to ask new questions during the risk assessment process. Rather than focusing exclusively on building age, construction materials, and claims history, underwriters are now examining IT infrastructure, data governance policies, and the presence of multi-factor authentication across strata management platforms. Vero's launch of a new intermediated residential strata product to unlock underserved market opportunities reflects an industry recognition that traditional products were not designed to address these contemporary risks. However, the introduction of new products also creates confusion, as body corporate committees must now evaluate whether their current coverage adequately addresses cyber liability, business interruption from digital incidents, and the costs associated with data breach notification and remediation. The gap between what strata schemes believe they are covered for and what their policies actually include is widening, making a thorough and technically informed risk assessment more important than at any point in the recent past.

## Regulatory Pressures and the Broker Recognition Problem

The regulatory environment surrounding strata insurance in 2026 is becoming more complex, and this complexity directly affects how risk is assessed and communicated. The Insurance Business reporting on strata brokers facing a recognition problem at the committee table underscores a structural tension in the market: brokers who possess deep technical knowledge of insurance products and risk assessment are not always recognised or empowered by the body corporate committees they serve. This problem is compounded by the increasing sophistication of insurance products and the growing number of variables that must be considered in a modern risk assessment, from climate exposure and cyber vulnerability to regulatory compliance and governance quality. When brokers are sidelined or their expertise is undervalued, the risk assessment process becomes shallower and more prone to oversight.

On the regulatory front, the British Columbia Financial Services Authority's 2026-27 real estate priorities indicate a broader trend toward greater oversight of strata and condominium markets, including how insurance is procured and how risk is disclosed to owners. In India, compliance regulation operates across three distinct strata, reflecting a layered approach to governance that mirrors the complexity of Australian strata frameworks. The merging of banking, investment, and insurance functions, as permitted under recent regulatory changes, is also reshaping the financial ecosystem in which strata schemes operate, potentially creating new channels for risk assessment and capital management but also introducing conflicts of interest that require careful navigation. AM Best's downgrade of Himalayan Re ratings over governance concerns serves as a reminder that the financial strength and governance quality of reinsurers themselves are legitimate factors in any comprehensive risk assessment, as the stability of the reinsurance layer directly affects the availability and pricing of primary strata insurance.

## Practical Steps for Conducting a Robust 2026 Risk Assessment

For strata managers and body corporate committees looking to conduct a thorough risk assessment in 2026, the process must begin with a clear understanding of the evolving risk landscape and a willingness to invest in data quality and professional advice. The first practical step is to commission a current building valuation and condition report that incorporates modern construction standards, updated replacement cost estimates, and an assessment of climate-related vulnerabilities specific to the property's location. This should be supplemented by a review of the scheme's digital infrastructure, including an audit of data security practices, software licensing, and access controls for any systems connected to the internet or to shared networks. The expansion of AISIX Solutions' Eli Report coverage to over 16,000 buildings demonstrates that automated risk scoring is becoming a standard reference point, but committees should treat these scores as one input among many rather than as a definitive assessment.

The second step involves engaging a qualified insurance broker who possesses both technical knowledge of strata insurance products and the ability to advocate effectively at the committee table. The recognition problem identified by Insurance Business is not merely a matter of professional courtesy; it has material consequences for the quality of risk assessment and the adequacy of coverage. Committees should also request detailed disclosure from their insurer regarding exclusions, sub-limits, and waiting periods, particularly for events related to climate, cyber incidents, and acts of terrorism. The Australian Reinsurance Pool Corporation's administration of government-backed schemes means that certain perils are covered through a public-private partnership, but the boundaries of that coverage are not always clearly communicated to policyholders. A robust risk assessment in 2026 therefore requires a multi-layered approach that combines professional valuations, technological tools, regulatory awareness, and informed broker engagement.

## Cost Implications and Pricing Dynamics for 2026 Policies

The cost of strata insurance in 2026 reflects the cumulative impact of climate risk, cyber exposure, regulatory changes, and market consolidation. While precise premium figures vary widely depending on location, building characteristics, claims history, and the scope of coverage, industry observers note that premiums in high-risk zones have increased substantially over the past two years, with some coastal and bushfire-exposed schemes experiencing double-digit percentage increases at renewal. The growing coverage gap along Australia's coastline is partly a function of these rising costs, as some owners corporations find that the premiums required to obtain adequate coverage exceed their budgets, leading to underinsurance or a complete withdrawal from the private market. The Australian Reinsurance Pool Corporation's role in providing government-backed reinsurance helps moderate costs for cyclone-exposed properties, but it does not eliminate the fundamental challenge of pricing risk accurately in a changing climate.

From a pricing perspective, the extension of the Allianz and Strata Community Insurance partnership to 2036 suggests that major carriers are committing to long-term participation in the strata market, which provides some stability but also reduces competitive pressure on pricing. When a small number of large insurers dominate a market segment, the risk assessment process can become standardised to the point where individual scheme characteristics are less influential than broad portfolio-level decisions about appetite and capacity. For strata committees, this means that the cost of insurance may be driven as much by macro-level underwriting strategies as by the specific risk profile of their building. Understanding this dynamic is important because it affects how committees should allocate their risk management budgets, whether they should invest in mitigation measures that could improve their insurability, and how they should plan for potential cost increases over the term of their insurance program.

## Common Mistakes in Strata Risk Assessment and How to Avoid Them

One of the most common mistakes in strata insurance risk assessment is relying on outdated information, such as building valuations that have not been updated in several years or risk profiles that were completed before significant climate events or regulatory changes. The pace of change in 2026 is such that a risk assessment conducted in 2023 may already be substantially obsolete, particularly if it did not account for the increased frequency of extreme weather, the emergence of AI-driven cyber threats, or shifts in insurer appetite. Another frequent error is treating the insurance broker's recommendation as a complete risk assessment rather than as one component of a broader evaluation process. Brokers provide valuable guidance on coverage options and market conditions, but they may not have visibility into all of the physical, digital, and governance risks that a comprehensive assessment should address.

A third common mistake is the failure to engage with the data generated by automated risk assessment tools critically. The rapid expansion of platforms like AISIX Solutions' Eli Report, which now covers more than 16,000 buildings nationwide, demonstrates the scale at which algorithmic risk scoring is being deployed, but these tools are only as reliable as the data they are trained on and the assumptions embedded in their models. Committees that accept AI-generated risk scores without questioning the underlying methodology or comparing them against independent assessments may make decisions that expose the scheme to unanticipated gaps in coverage. Finally, many strata schemes fail to document their risk assessment process, which creates difficulties not only in demonstrating due diligence to insurers but also in tracking changes over time and ensuring continuity when committee membership changes. A disciplined, documented approach to risk assessment is one of the most effective ways to avoid these common pitfalls and to ensure that the scheme's insurance program remains fit for purpose in a rapidly evolving market.

## Quick answers

### What is the role of the Australian Reinsurance Pool Corporation in strata insurance?

The Australian Reinsurance Pool Corporation administers government-backed reinsurance schemes for terrorism and cyclone-related risks under the Terrorism Insurance Act 2003. It forms part of Australia's broader insurance safety net, helping to ensure that strata properties in cyclone-exposed regions can access affordable coverage through a public-private partnership mechanism.

### How has AI changed strata insurance risk assessment?

AI has accelerated risk assessment through tools like AISIX Solutions' Eli Report, which expanded coverage by 16,000 buildings to more than double nationwide reach. Automated risk scoring allows insurers to process larger portfolios faster, but it also raises concerns about model transparency, data quality, and the diminishing role of human broker expertise at the committee level.

### Why are strata brokers facing a recognition problem?

According to Insurance Business, strata brokers face a recognition problem at the committee table because their technical expertise in insurance products and risk assessment is not always valued or understood by body corporate committee members. This is exacerbated by the increasing complexity of modern insurance products, including cyber coverage and climate-related exclusions, which require specialised knowledge to evaluate properly.

### What is the uninsurable coastline and how does it affect strata schemes?

The uninsurable coastline refers to Australia's growing coverage gap where increasing extreme weather frequency is pushing insurers to withdraw or significantly reprice coverage for coastal strata properties. This phenomenon forces owners corporations to either accept underinsurance, absorb catastrophic risk individually, or seek alternative coverage through government-backed mechanisms.

### How is cyber risk being integrated into strata insurance assessments?

Cyber risk is now a formal component of strata insurance risk assessment, with underwriters examining IT infrastructure, data governance, and digital security practices. The Unit 42 threat brief on escalating Iran-related cyber activity and the statistic that one in four Australian firms has experienced AI-driven cyber attacks underscore the urgency of evaluating digital exposure alongside traditional physical risks.

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