Independent review of strata insurance practices

Brick apartment building

CFA has supported a written submission made by a CFA member, the Queensland Consumers’ Association (QCA) to the first phase of an independent review by John Trowbridge of strata insurance practices.

The review has been commissioned by the Steadfast Group, a large insurance broker network, and Phase 1 relates to the disclosure practices of intermediaries. Phase 2 will be about the remuneration of intermediaries and Phase 3 will be about competition, affordability and availability of strata insurance.

QCA’s submission supported the Discussion Paper’s advocacy for greater transparency in disclosure, since this will facilitate informed consumer choice and enhance competition. It also emphasised that:

  1. The general principles in the United Nations Guidelines on Consumer Protection include: Access by consumers to adequate information to enable them to make informed choices according to their individual wishes and needs
  2. The 2015 Competition Policy Review (the “Harper Review”) commissioned by the Australian government included a chapter on Informed Choice and the recommendations on informed choice included that:
    • Governments should work with industry, consumer groups and privacy experts to allow consumers to access information in an efficient format to improve informed consumer choice.
    • Further, governments, both in their own dealings with consumers and in any regulation of the information that businesses must provide to consumers, should draw on lessons from behavioural economics to present information and choices in ways that allow consumers to access, assess and act on them.
  3. The importance of ensuring that consumers can make informed choices, and the need to facilitate this by providing information (often pre-tested with consumers) that consumers can easily use, are now  accepted as key components of many public policies in Australia, including the provision of financial information.

The submission also:

  1. Strongly agreed with the statement in the Discussion Paper that: ….there is a pressing need, in the interests of transparency and visibility to owners’ corporations, for improving the scope, standard and quality of disclosures made to OCs by some SMs[1] and brokers.
  2. Supported a full disclosure regime.
  3. Considered that:
    • All of the eight transaction items (base premium, commission, broker fee, any government charges, stamp duty, any other fees, GST, and commission rebate and resulting allocation of intermediary charges between SM and broker) should be disclosed
    • to increase clarity, the dollar amount should be provided for all items i.e. that the provision of only the percentage should not be allowed for  item (b) Commission or item (h) Commission rebate and resulting allocation of intermediary charges between SM and broker
    • To ensure clarity and facilitate understanding, the provision of the percentage should also be encouraged for item (b) Commission and item (h) Commission rebate and resulting allocation of intermediary charges between SM and broker
  4. Supported:
    • The maximum possible standardisation of nomenclatures, definitions and information display. To facilitate consumer use of disclosed information.
    • Pre-testing with consumers any standard formats proposed for presenting consumer information to ensure that disclosed consumer information is easy for consumer to notice, read, understand and use.
    • The inclusion in any guidance, etc. provided to industry on the display of written information of a requirement that the information be easy for the reader to notice, read, understand and use, no matter how it is provided.

Prepared by CFA Executive Member Ian Jarratt, of Queensland Consumers Association. He can be reached at

[1] OC = Owners Corporation, SM = Strata Manager

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