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Topic
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Is a 20% commission on a net premium fairly typical for a Strata Manager who is acting as an authorised representative for an Insurance company? Can a lower commission be negotiated in the Agency Agreement. Is it acceptable to seek and get insurance that the Strata Manager is not an agent for?
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I think 15 to 20% commission is fairly usual for most strata managers (and contributes to their management fees). Legally, any commission should be declared, and declaration details included in the contract.
If it IS included in the contract, I’m not sure you can legally get your insurance elsewhere, if you’ve signed a contract that includes your strata manager as your broker. (Maybe someone else can advise on this). Also if you get your own insurance then you have to consider how you’d pay your strata manager for assisting with any claims and communication with the insurer.
If your contract is due for renewal you could try negotiating with your strata manager about the commission and or about what is included and not included in standard services.
Some Strata Managers don’t charge a commission (their other fees may be higher though), and some offer a range of management option packages that include ones where you obtain your own insurance.
Check your contract. If it doesn’t include agreement that the strata manager will obtain insurance, you could get your insurance elsewhere. You’ll need building details and claims history.
We saved about 17% off our premium this year by going through Strata Fair insurance broker, who were recommended by the Owners Corporation Network. To be double sure, we voted on it at an EGM and formally authorised with a letter signed by committee officers, for the new broker to act as sole broker on our behalf. They were then able to obtain all necessary info on our behalf.
Newb is correct when he/she wrote about commissions. These are often included in strata agreements with agents on the understanding that they offset the alleged “low contract price” offered by the agent to manage the strata scheme. Newb is also right claiming that such commissions must be declared and are not always taken by agents.
Good for newb getting a better deal and saving 17%, which could be seen as the strata scheme pocketing the commission instead of the agent. Newb should watch out for a possible forthcoming hike in the agent’s management fee as this trough has been removed from his snout.
Some years ago I tried to place the same strata insurance cover directly with the insurer but was politely knocked back. The insurer said that her firm only deals with brokers or reps, such as strata agents. It was made as clear as a bell that no matter who places the insurance, eg a broker or strata agent, the commission “sweetener” will not change.
@TrulEConcerned, getting our own insurance through Strata Fair coincided with us moving to self management, so our strata manager won’t be getting anything more. As it is they have nearly cleaned us out already and it will take some time to recover.
Strata Fair brokers charged a simple low fee to basically renew our insurance with the same insurer (still with provided other quotes).
Despite having been instructed that we were not renewing our management contract and explicitly not to renew our insurance, our strata manager actually provided us insurance quotes and still tried to renew our insurance (lucky that Strata Fair acted very quickly to transfer the brokerage), so we saw exactly how much we saved by not going through them. Incidentally in their 4 or so years of managing our scheme, our SM has never declared any kind of commissions, insurance or otherwise.
Thanks for the reply. Good info you supplied.
@TrulEConcerned no worries.
I did actually contact another broker months ago and they were not very helpful – required claims history which our strata manager held and we didn’t. I then later rang our current (at the time) broker before I contacted Strata Fair, and said our Owner’s Corporation had voted and we were moving to self management and I needed our claims history, and they told me our strata manager is their client, not our owners corporation, so we would have to ask our strata manager. I immediately rang Strata Fair and they were extremely helpful and told me that as we had voted for self management and getting our own insurance, and also had access to the seal, all we needed to do was sign a letter to transfer the brokerage, effective immediately, and they’d be able to access the claims history and all required info.
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