Strata insurance specialist QUS is still searching for a new capacity arrangement to replace the contract it had with AIG Australia, which concluded at the end of last year.

Steadfast Group, which owns a 45% stake in QUS, says Chubb withdrew “at the last minute” as lead underwriter in a proposed co-sharing program with a group of Lloyd’s syndicates in London.

“They let us down,” Steadfast CEO Robert Kelly told insuranceNEWS.com.au, referring to Chubb.

“At the very last moment, very disappointingly, Chubb’s Lloyd’s underwriting box decided not to take the lead on it. We had a group of syndicates in London who were going to write this. At the last minute Chubb pulled the plug on being the lead, and it has put us back.”

Chubb says it “will be making no comment” on the matter. Chubb currently provides binding authority to another strata insurer, Longitude Insurance.

Mr Kelly says 80% of the capacity is secured for QUS and the business is now looking for an underwriter to lead the program.

insuranceNEWS.com.au understands the Lloyd’s arrangement that QUS was seeking to enter into was a co-insurance arrangement. In such situations, a lead insurer will set the policy terms and conditions and administer claims with other following insurers accepting a portion of cover on a percentage basis.

QUS has stopped accepting new business since the arrangement with AIG ended. Its portfolio was worth around $45 million in gross written premium at that time.

Strata Insurance Solutions Practice Manager Tyrone Shandiman says it is “unfortunate that QUS is still in a position of not having an insurer to back their product”.

“As QUS were the most competitive insurer in certain market segments, their withdrawal has had an impact on premiums for our clients,” Mr Shandiman said.

He says in the current hard market conditions, insurers often cap increases on renewals, meaning rates can be lower for renewals with the holding insurer than for new insurers on rates that do not have capping.

“Their withdrawal also means we have to insure with other insurers that were not as competitive than QUS in the previous year,” Mr Shandiman said.

“We set the expectation for QUS clients to expect increases of 40%, when most other insurers are raising premiums by 15%-25%.”