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Our strata manager has declared an increase in the commission he receives from our insurer from 10 to 20% during the time our insurances were due for renewal however the premium has hardly changed from last year. How is he benefiting?
Are we likely to save on the premium if we were to arrange our own cover?
And if so are you able to name a couple of insurers we could approach to arrange our own cover? I have a background in insurance however strata insurance seems a very closed shop.
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ozzietars – the benefit to your Strata Manager amounts to 20% of the premium paid by your Owners Corporation to its Insurer, and people like me ask what Strata Managers do consequent to receiving that benefit, and why they and their Association/s argued so strongly against a NSW State Government proposal to make such commissions illegal?
It made absolutely no sense to me why a self-managed Plan such as mine, obviously with no Strata Manager, couldn’t get 20% straight of the top of our Premium, and despite years of asking I never received a sensible or logical answer.
So last year, I wrote to our long-time insurers and asked whether, on the basis of our loyalty, our documented efforts to regularly identify and correct risks (that I supplied to them), and our good claims record, they would review our Premium.
The result was a very succinct e-mail response, advising that the Premium that they’d already provided on our “invitation to renew” would be reduced by 22%, amounting to almost $1,800; better than a poke in the eye with a blunt stick I say!
As for possible Strata Insurers, there’s one who’s banner appears in the scrolling display above the Login panel on this website, and an internet search will likely reveal four (4) others (in NSW). In my experience, base premiums seem around the same between insurers, but a couple of the more specialist ones provide optional covers that do vary both in availability, scope, and cost.
Ozzietars should carefully read the Strata Management agreement as the fees charged by a Strata Manager are often dependent on a commission being received from the Owners Corporation insurer. If there’s no commission then under the terms the Manager may charge the Owners Corporation more in fees to compensate. In the case he outlines his Strata Manager is certainly going to receive a windfall from the doubling of the commission, so there is certainly room to negotiate a reduction in fees when the agreement comes up for renewal. You’ll find that’s in itself a good reason not to enter into these agreements for too long a term.
There are arguments for and against self management of Strata Schemes, but like Whale I find that commission system is very fuzzy, but like the airlines with add-on charges for almost everything under the sun it has become entrenched, and without our governments being really committed to consumer protection, it won’t go away in a hurry.
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