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Is it just me, or are others also concerned that the usual 20%~25% kickback on insurance premiums received by Strata Managers constitutes a very serious conflict of interest which few people are aware of ?
A couple of years ago our SM told us in no uncertain terms that an estimated $50k repair could not be claimed on insurance and we were not covered because of the type of damage. It was only after one of our EC members (with friends in the insurance industry) kicked up such a stink about it that eventually it was processed as an insurance job.
We've had other hassles with dodgy insurance advice from our SM so I wonder to what extent there are benefits and kickbacks from our insurance company if they steer us away from putting in claims.
It just doesn't seem right that a Strata Manager is also acting as an Insurance Agent and this is one area that I think needs some serious reform.
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Webwrx,
This is very unusual, as most the time a Strata Manager will pass the claim straight to the Broker to seek a response from the insurer rather than being the one to say ‘this is not claimable’. It is better to have someone else to be saying ‘no’.
There should not be any further incentives or commissions other than those already disclosed within the strata managers agency agreement.
Keep in mind that if strata managers are not earning an insurance commission then this renumeration will be reflected as management fees.
In your tender process for strata management (per your other post) I would suggest asking the strata managers who are tendering to do so based on not receiving an insurance commission.
For what it's worth, years ago our EC raised the subject of strata managers getting “kickbacks” and, as a result was able to get a better rate from a better insurance company and the strata manager still got their commission.
How does that work? I think it's because good strata managers will recommend low-risk clients to low-cost, high coverage insurers. It's one of those very rare win-win-win situations and it certainly worked for us.
The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
Hi,
I think the 20% insurance kickback is a levy by stealth – how many people actually look at the fine print. Last year our Executive shopped around, got our own quotes and now arrange our own insurance. I don't understand the reasoning that if they don't get the kickback that Strata fees would rise, to me that would be a corrupt practice.
Incidentally, it was difficult to get quotes initially as our Strata firm had made nearly 40 claims in an 8 year period for amounts as small as $100 – who does this ? No home owner I know would do this on their own insurance.
Maybe your problem isn't your Insurer, it's your strata manager. Good strata managers get good insurance deals with good companies. I'm not pushing the barrow for strata managers here … it's just my experience that you can get reduced rates if the right people are talking to the right people.
The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
Our SM has made numerous claims over the years that they never told us they were making. This happened when one particular person was handling this complex. Anything and everything was put through as an insurance claim, and at times for repairs we didn't even know were being done. Wouldn't you look at the amount of the repair, look at your excess and the EC make that decision. You do if you are a home owner on your own insurance. Doesn't making alot of claims on your insurance increase your premium? And as jks79 experienced it can then make it difficult to get coverage from another insurer if you are continuously making claims.
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