Risk snapshot
A mixed-use commercial and residential strata complex on the NSW south coast. Commercial tenancies at ground level, residential units through the rest of the complex. Substantial bushfire exposure by location. Tenant mix included an occupancy that most mainstream and specialist markets exclude from appetite alongside a range of other commercial occupiers.
Situation
The client needed a strata ISR programme that could hold full cover structure against three compounding underwriting pressures: residential tenants sitting within a commercial strata, a tenancy in the ground-floor schedule that most mainstream and specialist markets will not consider, and a location rated for bushfire exposure at the catchment level. Any one of those factors can trigger a commercial property market to decline. All three stacked together close most of the standard market to the risk before the submission is even priced.
Construction and exposure
Mixed-use commercial and residential tenancies across the strata. Location inside a bushfire-rated catchment. The strata committee had current AFSS annual fire-safety certification and standard fire compliance in place, which let the submission stand up to underwriting scrutiny on the fire and building management side.
Cover structure
Industrial Special Risks wording on the whole complex. Negotiated bushfire sub-limit on an any-one-event basis, with the aggregate position negotiated against the location exposure. Commercial and residential tenancies covered under the one ISR programme.
Market journey
Nine markets approached across specialist and mainstream property insurers. Several declined on the hard-to-place tenancy in the ground-floor schedule. Others declined on the residential component inside a commercial strata, including one market that confirmed it would have considered the placement under an ISR wording but could not hold any property risk with residential tenants on the building. Several declined on bushfire exposure. One specialist ISR market engaged and returned firm terms, subject to a bushfire sub-limit or exclusion at the underwriter’s discretion. A further specialist market returned comparative terms from a higher minimum-premium position.
Outcome
Firm ISR terms returned around $30,000 from a specialist ISR market, subject to a negotiated bushfire sub-limit. Comparative terms from a second specialist market sat further up the premium ladder in the $50,000 range on a higher-minimum-premium basis. The client had clear optionality between a sharper premium with a bushfire sub-limit and a broader-cover position at a higher cost.
Why it mattered
A bushfire-exposed coastal strata with residential units and a hard-to-place tenancy in the commercial schedule is a concentration of exactly the underwriting triggers mainstream insurers build their decline filters around. Returning firm ISR terms from a specialist market, with the bushfire aggregate position negotiated and the full cover structure preserved, is the placement this complex needed. Without specialist engagement and a willingness to negotiate the bushfire sub-limit, a complex like this is effectively uninsurable at scale.