#18634

I have done a lot of research in this area and I would like to set the records straight regarding the flow on effect if strata managers are prohibited from receiving insurance commissions.

I would like to point out an erroneous assumption.. That is, that the insurance premium will reduce if there is no payment of commission to a strata manager – the premium will remain the same. The owners corporation will still have to pay the same amount for the premium but the strata manager will increase their fees to offset the loss of income. The service fees, in some instance, could even be more than the amount the commission would have been,

There are also several unintended consequences if insurance commissions are prohibited:
. additional expense to lot owners (increased levies) and increased rent for tenants
. loss of jobs – several smaller strata companies would be forced to close due to the loss of revenue
. reduction in competition in the marketplace due to closure of many smaller companies resulting in
larger strata management companies having a larger percentage of the market – reducing the amount of choice
available to owners corporations

A disclosure is required under the Property Stock & Business Agents Act if any commission is received. This is usually contained in the Strata Managing Agency Agreement, a copy of which is served on the owners corporation. There is full disclosure and the owners corporation is made fully aware of this.

Provided there is full disclosure there is no issue – but I feel if the receipt of insurance commission to the strata managers is prohibited – all round, nobody wins!!

bye for now,
Strataman