Strata Insurance Commissions: Mythbusters

strata management insurance

A big topic at the moment around the corridors of the strata industry is insurance commissions and how they affect you – the lot owner. Recently, the biggest underwriting insurance agency CHU Underwriting shared an in-depth article. It is their perspective on a number of key issues involved in the current insurance commissions debate.

SOURCE |  CHU Underwriting

The NSW Government is considering imposing a prohibition on Strata Manager (and only Strata Managers) from receiving commissions for insurance – related activities for strata schemes.  Such a move will remove choice and cost owners more.  In this article, we would like to debunk a few myths that are circulating the industry and have been put forward in support of such a ban.

Why do insurance companies pay insurance intermediaries such as insurance brokers or agents (e.g. strata managers) a commission?

Insurance companies traditionally employed large teams of sales and distribution staff to go out and sell their insurance offering.  Over time, Insurers recognised that Insurance Brokers and Agents had better relationships with their clients, understood the risks well, and having them sell the insurer’s offerings and paying them a commission was far cheaper than employing teams of staff.

Most administrative functions could be taken care of as well.  So this form of distribution still dominates most product lines apart from basic household insurances where the internet (direct sales) is increasing in popularity for domestic purchases.

What else should I know about what this commission payment can cover?

Training – Under financial services laws, in order to provide financial services (providing advice and arranging or otherwise dealing in insurances) Strata Managers need to be trained and then appointed as a representative (distributor or authorised representative) by an Australian Financial Services (AFS) Licensee.  The Owners Corporation is the beneficiary of the knowledge gained through the process.

Supervision – Once appointed, and depending on the level of authorisation, Strata Managers are the subject to ongoing training, monitoring and supervision (including audits).  This provides a direct benefit to Owners Corporations because the AFS Licensee cannot abrogate responsibility through this mechanism.

Insurance – AFS Licensees must provide professional indemnity (PI) insurance protection for the activities of Strata Managers they have appointed as representatives where they are acting within the authority provided by the Licensee.  This provides a direct consumer protection benefit to Owners Corporations through having the AFS Licensee business and assets standing behind the Strata Manager in the event of any acts, errors or omissions.

Advocacy – Strata Managers have a fiduciary responsibility to owners, so they need to give general advice to effectively meet owners’ expectations.  They can only do this if they are trained and properly appointed in accordance with legal requirements.  Importantly, in times of adversity, they need to collaborate with many insurance representatives.

Data & Transactions – Strata Managers need to collect, hold and present the data of a building to insurance markets, whether via a Broker, or direct to Insurers or specialist Underwriting Agencies.

These activities include:
»  Maintaining risk data and claims histories to negotiate best options;
»  Maintaining a schedule of business activities for commercial premises;
»  Organising/Updating insurance valuations;
»  Completion and lodgement of documentation;
»  Collection and payment of premiums;
»  Receipt of certificates;
»  Assistance with obtaining certificates of currency;
»  Coordination of repairs and administrative activities in the event of a claim.

Repairs – Strata Managers will perform work when damaged common property needs repair.  The cause of damage is not always obvious, and any issues around causation – i.e. accidental damage (covered by insurance) or maintenance-related (a scheme cost) are generally sorted out after all the work has been completed. The Strata Manager is in the best position to quickly act on such matters, which is efficient and cost effective for owners.

Read this full story including all the myths and facts 

strata management news insurance



Strata & Community Living Autumn 2021

2021 Autumn Edition

Strata & Community Living Summer 2020

2020 Summer Edition

Strata & Community Living Winter 2020

2020 Winter Edition

Strata & Community Living Autumn 2020

2020 Autumn Edition
sca covid-19

The Great Strata Challenge: COVID-19

SCA (NSW) - A Complete Guide

Coronavirus - We’re All In This Together

Important Message
conti strata australian fires

Australian Fires - A Message from Rural NSW

"A Huge Heartfelt Thank You"
news farmers conti strata

$10,000 Donation Scratches the Surface of Need in Rural NSW

Let's Support Our Farmers
conti strata community living spring

Strata & Community Living Spring 2019

2019 Spring Edition

Strata & Community Living Winter 2019

2019 Winter Edition
conti strata community living autumn19 b

Strata & Community Living Autumn 2019

2019 Autumn Edition

Strata & Community Living Summer 2018

2018 Summer Edition

Strata & Community Living Spring 2018

2018 Spring Edition
conti strata community living a

Strata & Community Living Winter 2018

2018 Winter Edition
conti strata community

Brightening Anabela’s World

Let's Support Anabela
conti strata community living

Strata & Community Living Autumn 2018

2018 Autumn Edition
strata community & living spring 2017a

Strata & Community Living Spring 2017

2017 Spring Edition
conti strata

Conti Strata - Introducing Our New Name & Look

New Company Branding
strata laws fair trading

Your Strata Law Questions Answered

Strata Law Questions Answered
strata & community living

Strata & Community Living Autumn 2017

2017 Autumn Edition
Strata & Community Living Summer 2016

Strata & Community Living Summer 2016

2016 Summer Edition
conti strata owners

New Strata Law Reforms

Joe Conti | Principal & MD
conti strata reforms

Strata Reform Myth Busters

NSW Government | Fair Trading
strata laws

Major Changes to Strata Laws

NSW Government | Fair Trading

Strata & Community Living Winter 2016

2016 Winter Edition
strata management news

Strata & Community Living Autumn 2016

2016 Autumn Edition
strata pool compliance

Swimming Pools Laws Have Changed

NSW Government | Fair Trading
strata owners

Strata Owners Day

Strata Community Australia (NSW)
strata managers conti

Anabela the Little Warrior

Let's Support Anabela

Small things that matter so much

Miss Isabella

Strata & Community Living Summer 2015

2015 Summer Edition
nsw strata law reforms

It's Happening. NSW Government's Strata Law Reforms.

NSW Government | Fair Trading
strata management news

Strata Law Reforms

The Rules are Changing

Meet Conti Strata’s Newest Talent

Introducing Mary Toutzaridis

Strata & Community Living Summer 2014

2014 Summer Edition
strata management concord

Hello Concord! It's Carnival Time.

Proud To Be A Part of Concord Carnival 2014.
strata management news sos

Let's Support the Amazing Work of Save Our Sons

Snap, Share, Show You Care! #Link4DMD

New Strata Laws for Windows - The Lawmakers.

Parliament of New South Wales
strata manager legislation window

New Strata Laws for Windows - The Government.

NSW Government | Fair Trading
strata manager nsw fair trading

New Strata Laws for Windows - The Minister.

Minister for Fair Trading | Anthony Roberts MP
strata manager laws window locks

New Strata Laws for Windows - The Hospitals.

NSW Health | Children's Hospital at Westmead
Strata Community Australia Regulatory Reform

Inside Strata Magazine: Regulatory Reform Edition

Strata Community Australia
trata management sydney coastrek

C'mon Team, Only 17 More Hours to Victory

Congratulations Sydney Coastrek
strata management news

Join Us, Trekking To Restore Sight

Supporting Sydney Coastrek
strata management news

Brighter Days Ahead for Isabella

Goodwill Bash | Miss Isabella
strata management sydney

Strata & Community Living Summer 2013

Strata Community Australia (NSW)
strata management new

Reform of strata and community scheme laws.

NSW Govt. | Dept. of Fair Trading
strata management apartments

Naming rights or naming wrongs? Apartment Branding. | Susan Wellings
strata management apartments

The Only Way Is Up. Sydney's High-Rise Apartment Living. | Toby Johnstone
Strata Community Australia NSW

Strata & Community Living Spring 2013

Strata Community Australia (NSW)
strata management news insurance

Strata Insurance Commissions: Mythbusters

CHU Underwriting
strata management news apartments

Micro living in the big city is not for everyone | Marika Dobbin
strata management news levies

Misleading strata levies prompt calls to protect buyers | Sue Williams
strata management news rugby

Junior Wolves triumphant in Benny Elias Shield

Concord Burwood Rugby League
strata management news pets
strata management news

Strata manager gets World's Greatest Shave

Conti | The World's Greatest Shave
strata management news laws

New window lock laws for NSW strata buildings

AAP | Liam Howitt
strata management news

Strata & Community Living Autumn 2013

Strata Community Australia (NSW)
strata management news laws

Doctors calls for new building legislation | Marnie O’Neill
strata management news

Changes to the law on smoke-free outdoor areas

Media Release | Jillian Skinner MP
strata management news

Strata & Community Living Summer 2012

Strata Community Australia (NSW)
strata management news

Strata & Community Living Spring 2012

Strata Community Australia (NSW)