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Hi Lady P,
The insurance company advised us that [they] “transferred the policy to another intermediary in line the with insureds request and based on the date on the letter of appointment we will assume the policy will now be closed and paid by the new intermediary”.
The contract is the standard SCA Strata Management Agency Agreement form.
There is no agreement in the contract that the new SM is to have exclusive authority. The new SM has “Full authority subject to limitations as disclosed in Schedule A2”.
Checking our contract Scedule A2, it says “Arranging insurance cover for the scheme as instructed by the owners corporation strata committee.” It has an additional note to indemnify the agent if the OC arranges for placement of the insurance cover or engages a third party.
As the Chair/Secretary/Treasurer I have not instructed her to do anything yet…as we have only just signed the contract in early December.
Under Schedule C1 – Disclosure Schedule – it states that the agreed service fee has been determined on the basis that the agent receives an insurance commission which thereby effectively provides a cost subsidy. If no insurance commission or other agree fee is paid to the agent, the agreed fee service will increase in accordance with Clause 3.3.
Clause 3 basically says that should the OC arranges its own insurance that has the effect that the agent doesnt receive her commission then the agreed service fee shall be increased to the amount equivalent to the commission she would have received.
Whilst I understand going from self managed to being professionally managed will increase our costings….however the sharp increase of our insurance policy which includes her commission by $800 does seem unreasonable.
I have emailed our new SM of two months to ask her to clarify the “Letter Of Authority” and have yet to receive a reply.
Based on the above it appears we are contractually bound to pay her the commission regardless if we go with one of her quotes or source one of our own.
Fielding unhappy phone calls from owners who now want to return to “self managment”…as I have said to them be careful what you wish for….they wanted to go professional so be prepared to pay for it.
Thanks Lady P for your advice. 🙂