Strata insurance in Australia is a growing class of insurance business as a result of the rising popularity and development of multi-owner properties across the country. However, issues have arisen for consumers living in strata schemes (known as ‘owners corporations’, ‘body corporates’ etc). These issues include:
- strata managers commonly receive rebates of broker commissions and simultaneously brokers charge fees to owners’ corporations: both of these practices are confusing and controversial,
- affordability and availability of strata insurance are problematic for some segments of the strata insurance industry.
John Trowbridge has been appointed by Steadfast Group Ltd to investigate these issues, and has released a paper from the first phase of the review.
- Phase 1 (this paper) relates to the disclosure practices of intermediaries,
- Phase 2 will be about the remuneration of intermediaries and possible reforms,
- Phase 3 will be about competition, affordability and availability of strata insurance.
The main recommendations in the Phase 1 findings paper are:
- Financial disclosures in the form of broker quotations and invoices be prepared by reference to standard templates containing a minimum set of eight items with common definitions.
- Brokers and strata managers arrange to ensure timely transmission of quotations and invoices to the strata committee during the annual renewal process.
- Financial disclosures be accompanied by a statement of the scope of services by the strata manager and broker and a full explanation of commercial relationships between broker and strata manager (noting that some are beneficial to all parties, in the interests of the owners, and others raise questions).
- Strata Community Association (SCA) and National Insurance Brokers Association (NIBA) consider the recommendations in detail and give effect to decisions they take on a self-regulatory basis by establishing guidance notes or practice standards for their respective members.
More information about the review can be found here.
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