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Topic
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Our strata managers have obtained 3 quotations for insurance from their insurance broker ranging in price from $34K to $39K. We have been with the same insurer for 10 years. I had my business insurance broker get a competitive price and his price for exactly the same cover was $4K cheaper than the lowest quote and $9K cheaper than the highest. My business insurance broker got his price from the same insurer as the Strata Manager and declared in the quotation his commission would be $250.
Is there any duty of disclosure for our Strata Managers to inform the executive committee of commissions they receive for placing our business with different parties?
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Yes there is in NSW (and I suspect in other States / Territories), under S47 of the Property, Stock and Business Agents Act (2002), and Strata Managers (SM) usually show their commissions etc in a “Disclosure Schedule” forming part of the Strata Management Agency Agreement that they are required to have with Owners Corporations as their Clients.
On the basis of my experience, the SM’s commission on Strata Insurance is typically 20%, so considering your SM would likely generate more Insurance of that type and would therefore achieve a lower base premium than would a generalist Broker, that level of commission would likely account for the difference in the quotations that you’ve received.
Some Owners and knowledgeable strata managers may call yours and our strata managers Mr. 20%.
Use your own judgement! We know what we think!