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I am an owner in a large (135 owners) Strata Scheme in NSW.
Our AGM is about to be held less than a month before our annual Strata Insurance falls due. But other than confirming that we have a current Strata Insurance policy in place, there is no item on the AGM Agenda asking the Owners to vote on COMPETITIVE QUOTES FOR STRATA INSURANCE for the next period of insurance. (Our annual Insurance is about $140,000.)
Our Strata Manager has advised me (in reply to a formal query from me) that Strata Insurance is “not required to be approved by way of General Meeting; quotations received from an Insurance Broker will be issued to the strata committee for review and approval.”
That advice seems to be in conflict with the requirement of Section 102 of the New South Wales SSM Act 2015 which, for large strata schemes, requires 2 quotes for any expenditure above $30,000.
This has been happening now for several years and the owners are left in the dark as about what deliberations (if any) the Committee and Strata Manager (who receives a commission from the Insurers) undertake before deciding on the preferred Insurer.
Has this question come up before? If so, what has been the consensus?
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More relevant than section 102 is
166 Strata managing agent to obtain insurance quotations
A strata managing agent must provide the owners corporation with not less than 3 quotations from different providers for each type of insurance proposed by the agent to the owners corporation or provide written reasons to the owners corporation if less than 3 quotations are provided.
Now, it could be that the SM has provided the quotes to the committee (who represent the OC) and they have decided on the best option, but they should at least be able to explain why they reached that decision.
So, rather than ambush them, tell them that you will be asking at the AGM what the other quotes were, who they were from and why they chose the one they did.
It’s a reasonable question and you and other owners are entitled to know the answers – in summary, at least. On the other hand, the AGM is not the right place to discuss the relative merits of different insurance policies in detail … unless you want it to drag on for hours as everyone gets an education on strata insurance and what it means.
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My strata plan of 25 units located in Bankstown NSW has the following figures:
Period of Insurance 9-Mar-21 to 9-Mar-22
Property Insured (through an insurer broker) main items:
- Building Sum 14,000,000
- Loss of Rent Temp Accomodation 2,200,000
- Lot owners fixtures and improvements 250,000
- Property Owners Legal Liability 30,000,000
- Office Bearer’s Liability 5,000,000
- Workers Compensation Not Included
- Premium 14,000
- UW Levy 250
- Fire Levy 1,800
- GST 1,920
- Stamp Duty 1,560
- Broker Fee 3,000
Total $ 22,530
No other quotations shown to us. (how many % in commission will broker give back to strata manager ?) I am not committee. Can an ordinary owner ask for the other two quotations, if any, for record?
An owner can certainly ask the committee to seek more quotes (although these figures are from March so that ship may have sailed). Also, you don’t know what the strata manager has communicated with the committee before they settled on this quote.
All that said and done, the strata manager is required by law to notify owners of any commissions they have received or are likely to receive (usually via the annual report for the AGM). And they must also seek three quotes for insurance or explain in writing why they haven’t.
Here are the relevant sections of the Act:
60 Disclosure of commissions and training services(1) A strata managing agent for a strata scheme must report the following at the annual general meeting of the owners corporation for the scheme—
(a) whether any commissions or training services have been provided to or paid for the agent (other than by the owners corporation) in connection with the exercise by the agent of functions for the scheme during the preceding 12 months and particulars of any such commissions or training services,
(b) any such commissions or training services and the estimated amount or value of any such commissions or training services that the agent believes are likely to be provided to or paid for the agent in the following 12 months.
Maximum penalty—20 penalty units.166 Strata managing agent to obtain insurance quotationsA strata managing agent must provide the owners corporation with not less than 3 quotations from different providers for each type of insurance proposed by the agent to the owners corporation or provide written reasons to the owners corporation if less than 3 quotations are provided.
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