bangles,
You ask: “Insurance Companies do not pay commissions to Owners Corporations and if it did not go to SM it was retained by Insurance Company. Is this correct? ”
Technically I think that is correct. The insurance charged to the strata would be the same even if it arranged it itself. Our strata goes through an insurance broker and they get our trailing commission. We would pay the same price with or without the broker.
In my view what the strata should be looking at is what does SM charge otherwise for what they do. The trailing commission is money in the SM’s pocket. The strata should be looking at the other fees the SM gets and adding the trailing commission. If they believe that when added together the SM is over rewarded then the strata should (at the appropriate time eg when the SM’s contract is up for renewal) negotiate on the SM’s other charges/duties.
Our insurance broker adds an extra layer of security in case of the insurance company going under. Also the insurance broker does all our negotiation with the insurance company, this has resulted in us getting our payouts on two occasions when the insurance company were trying to deny payment.
As with anything is all about the overall value you get!