› Flat Chat Strata Forum › The Professionals › SCs and strata managers › Insurance Commission what is standard? › Current Page
@Speidel said:
Our Owners Coporation is currently exploring changing our manager and we requrested some proposals from suitable managers. I noted in one contract that the Body Coporate Manager receives 15% commission for insurance and if the insurance the Owners Corporation chooses does not provide 15% commission to the manager, the Owners Corporation has to pay the Manger the difference. I was very surprised indeed to see such a clause and would like to find out if this is legal, if it is,it appears to me to be morally wrong. Happy to pay a fee for a service but getting three insurance quotes is not worth this amount. Given Insurance costs are one of the highest expenses of our owners corporation, 15% of our insurnace is a signficant amount.
I thought 20% commission was normal but I have never heard of the ‘make up’ clause. I guess if it is in the contract and the OC signs it, barring any legislative prohibitions that I don’t know about, a ‘make up’ clause is enforceable as the contract your OC entered into.
Our OC self manages and has insurance through a broker. The broker gets a commission of 20% but it doesn’t cost the OC anything. The commission coming from the insurer profit margin.
Our OC made enquiries about engaging a Strata Manager, from two firms. Both specified and declared in the contract, that we were to sign, that they get 20% commission if they arrange our insurance. Again the commission was to come straight from the insurance firm.
As scotlandx says, I believe it is standard and accepted industry practice.