Real Estate: Mandatory insurance breaks collection record – 08/06/2023 – Market

Condominium insurance reached the mark of R$ 245 million in collection in the first five months of 2023. According to a survey by CNseg (National Confederation of Insurance Companies), compared to 2014, the year the study began, the number represents an increase of 127% .

The payment of indemnities, from January to May, also grew, from R$ 89.7 million in 2020 to more than R$ 160 million this year. São Paulo was the state that most collected and compensated.

The result is attributed to two factors: the heating of the real estate market and the increase in the value of compensation paid by insurers since the pandemic, which resulted in price adjustments.

“The increase in the cost of insurance is due to the increase in the indexes of values ​​indemnified by the insurers, motivating readjustments in the prices of the insurance to balance the results”, says Magda Truvilhano, vice-president of the Commission of Mass Property Risks of FenSeg (National Federation General Insurance).

Condominium insurance is mandatory for residential and commercial buildings, both horizontal and vertical, and covers the building and its common areas as well as its goods and equipment. The person responsible for contracting the insurance is the trustee.

The fee is considered an ordinary condominium expense, paid by the owners or tenants of the units in the property. The value depends on several aspects, such as the number of units, towers and equipment and what is in the common areas.

Usually, condominium insurance does not include the resident’s unit or the goods inside the apartment or house, unless there is specific coverage offered by some insurers.

To insure what is inside the property, the resident must take out insurance on their own, the residential. In São Paulo, for an apartment of 100 m² the cost is, on average, R$ 450 per year.

Most expensive price since the pandemic

Truvilhano says that insurance has become more expensive since the pandemic, because residents use the condominium more. “People are using elevators, common areas and electrical appliances more, which increases the chance of accidents such as fires”, he says.

The consequence of the increase in occurrences, says the expert, is more expensive insurance. “It is one of the factors influencing the increase in the collection of premiums by the market. The increase in the price of insurance is also motivated by inflation and by the costs of reconstruction, labor and even the cost of replacing condominium assets”, he says.

In May 2023 alone, the compensation payment reached BRL 31.5 million nationwide. In addition to São Paulo, Minas Gerais and Rio de Janeiro are the states that paid the most this year.

Basic coverage in condominium insurance is divided into:

Simple – covers risks of fire, lightning and aircraft within the insured land and explosion of any nature, with the possibility of adding additional coverage.

wide – covers damage to the structure of the building, through the contracting of a single coverage that includes guarantees designed to protect the building, and may also add coverage for employee life and civil liability.