Managing Director of Sure Insurance, Bradley Heath said recommendations from the ACCC report suggested there existed a range of questionable long-term practices that may have contributed to inflated residential strata insurance prices.
“It’s a market that is long overdue for a shake-up with many stories emerging of hidden and excessive fees, secret commission arrangements and a lack of financial transparency,” said Mr. Heath
Key residential strata insurance points from the ACCC third and final report include:
- Extend the ban on conflicted remuneration to insurance brokers – Commissions and other benefits given to insurance brokers can give rise to an unacceptable conflict of interest.
- Strata managers to be remunerated by body corporate only – Strata managers should be required to negotiate any fees or payments for arranging insurance directly with the body corporate they are servicing. This would encourage remuneration arrangements that better align the interests of the strata manager and their clients.
“We recognised there was a perpetuating residential strata insurance affordability crisis, primarily driven by a lack of competition and a lack of transparency in selecting insurance cover under some current body corporate management structures and practices.”
“Sure Insurance does not pay commissions to Brokers or Body Corporate Managers on residential strata insurance. Instead, we operate a transparent remuneration model for their services paid directly from the Body Corporate where the Committee decide how much remuneration is fair and who should receive it,” he said.
“By investigating all options to reduce premiums – ultimately price will be driven downwards.”
“The ACCC Report has identified the issues and now is the time to address the worsening strata affordability crisis by immediately enhancing transparency around the process of how body corporates consider and select their strata insurance cover,” said Mr Heath.
“Sure Insurance firmly believes body corporates should have multiple or at least a minimum of two residential strata insurance quotes presented to them annually by their insurance Broker.”
In an extremely positive move the Commissioner for Body Corporate and Community Management (BCCM) has overseen regulatory changes through the
Body Corporate and Community Management (Standard Module) Regulation that comes in to effect 1 March 2021, requiring:
- ‘The Committee will need to supply 2 insurance quotes if the cost of the insurance policy is above the major spending limit for the scheme.’
“Body corporate managers should not under any circumstances exclusively control the process of the selection of insurance, and that any broker commissions or incentives paid to body corporate managers are fully disclosed to the body corporate.”
“The selection of insurance is a critical aspect of a Body Corporate’s role and Sure Insurance believes Brokers are best placed to provide professional advice in that process.”
“Sure Insurance urges body corporates to always ask questions of and fully involve professional insurance brokers, and not fail to obtain at least two residential strata insurance quotes inline with the approaching regulatory changes,” said Mr. Heath.
Sure Insurance will continue to work closely with regulators and all levels of government to ensure fair and transparent residential strata insurance arrangements.
For further information contact Mike Sopinski 0421 052 598.