Unit owners are being ripped off by up to five layers of commissions and kickbacks being added to strata insurance premiums, allege advocates.

And already high costs are exacerbated by “fictional” risk assessments that bear no relation to actual potential hazards, say Queensland body corporate owners.

The Unit Owners Association of Queensland (UOAQ) alleges that body corporates across the state are being systematically overcharged through hidden commissions and inflated premiums, with some cases showing commission rates exceeding 40% of policy costs.

The allegations stem from revelations in a special edition newsletter by the Townsville Lot Owners Group, which analysed the Insurance Council of Australia’s (ICA) 2024 policy paper and recent regulatory investigations into Queensland’s $245 billion strata sector.

According to UOAQ, strata insurance operates through a “convoluted five-tier intermediary structure” that can embed up to five layers of hidden payments before premiums reach lot owners, with body corporate managers positioned as the primary customers rather than the property owners themselves, even though it’s the latter who pay the bills.

Fictional Risk

UOAQ, the peak body for apartment owners in Queensland, claims insurance renewals remain “detached from actual, evidence-based risk,” with insurers relying on broad climate-based assumptions to justify surging premiums without providing credible assessments of localised risk.

“This violates core consumer protection principles and yet continues unchecked,” UOAQ claims.The organisation points to cases where commissions embedded in policies can reach 40% – double what they describe as an already excessive industry standard of 20%.

In some instances, they allege strata managers receive tens of thousands of dollars for simply forwarding quotes and processing invoices.

Enforcement Gaps

UOAQ criticises Queensland’s Body Corporate and Community Management (BCCM) office for introducing Form 35 to disclose commissions but failing to enforce its provisions. The regulator claims it lacks legal authority to investigate insurance misconduct, leaving enforcement to volunteer committees.

This creates what UOAQ describes as a paradox, noting that the ICA’s own policy document portrays body corporate committees as “unqualified and mentally ill-equipped to engage in insurance decisions.”

The allegations gained traction following ABC Four Corners and Australian Competition and Consumer Commission investigations that confirmed widespread commission structures in the strata insurance market. Insurance broker Steadfast was quoted telling the ABC: “It is their SM [Strata Manager] agent who writes the cheque… Committees have no idea!”

UOAQ highlights that federal and state regulators have admitted they lack accurate data on how many properties are insured or uninsured across Australia, leaving Parliament “uninformed of the true scope of the insurance affordability crisis.”

The organisation claims this has resulted in reactive and poorly-informed policy responses to what they describe as an affordability crisis affecting the strata sector.

Industry Reform

UOAQ is demanding comprehensive reform including insurance sold only on substantiated risk assessments, full transparency in commission structures, and strengthened regulatory enforcement.

The group describes the current system as a “sales gravy train” that prioritises intermediaries over consumers, and is offering free remuneration comparisons to demonstrate how buildings could benefit from more transparent insurance models.

The Insurance Council of Australia and the BCCM office have been contacted for comment on the allegations.

UOAQ’s insurance tender service can be accessed at uoaq.org.au/insurance-tender-service/