› Flat Chat Strata Forum › Living in strata › Strata Insurance!!! › Current Page
The commission paid to strata managers by ALL insurers is a contentious issue at least from the perspective of its rationale, but I’ve been told that its supposed to reimburse the administrative time and advocacy that strata managers put into quoting and obtaining an insurance contract for a scheme, and additionally for the advantage to the insurer that arises from the strata manager’s close relationship with the O/C and of the risks associated with its scheme.
Whether or not all that’s plausible, if your O/C is additionally paying a broker then it is as I say being double-dipped; so dump the broker and either ask your strata manager for quotes from each of the insurers with whom they have a relationship or have the secretary of the executive committee do a ring-around, and have those proposals however sourced decided upon by a majority vote at a general meeting (e.g. AGM).
The legislators must also have regarded the matter of strata managers’ commissions as contentious, as the NSW Strata Schemes Management Bill (2015) once gazetted (due 11/2016) will require strata managers (S/M) to at each AGM disclose all such commissions that they received during the past year, all that they expect to receive in the coming year, and if the O/C does not consent to those payments for justifiable reasons (as yet undefined) then it can apply to the NSW Civil and Administrative Tribunal (NCAT) for those to be paid to the O/C.
Recent anticipatory amendments that I’ve seen to the standard form of the Strata Management Agency Agreement (between O/Cs and S/Ms) include a quid-pro-quo clause whereby a S/M’s “service fee” may be increased by the amount of any commissions necessarily forgone.
Slightly off-topic but by way of a heads-up for flatchatters, the new Act will repeal the present requirement for an O/C to obtain an insurance valuation each 5 years, so now all O/C’s will need to avoid the consequences of co-insurance by even more closely examining the adequacy of its compulsory building insurance in terms of replacement costs.