@Dudley said:
Good Morning All,
I would appreciate some advice re our Strata Insurance.
At our last AGM I requested from the Strata Manager answers on why we had never received competitive quotes for insurance. His answer was quite evasive and not at all satisfactory. The Strata Manager decided, on his own initiative, to obtain competitive quotes for our strata insurance. The EC recently received the quotes all of which were less than our current insurance. We also received the offer that we could cancel the current insurance and re-insurance with a new company. I assumed that such a decision would leave us “out of pocket” as I don’t think a “pro-rata” refund of premium would include commissions and govt. fees and taxes. The main difference in premium amount was in Strata Manager’s commission – circa 10% verses 15% current insurance company.
My questions are,
a) Is there a designated commission level for strata managers.
b) Is is mandatory to obtain competitive quotes for insurance.
c) is it a requirement for PDS’s to be supplied with the quotes.
d) Any other pitfalls I should be aware of in reviewing strata insurance and possibly the Strata Manager.
Many thanks,
Dudley
Hi Dudley, our Owner’s Corporation (OC) made some changes to the way we are insured about three years ago. Prior to three years ago we arranged our own insurance and did our own claims. I am not sure if our experiences directly address the questions you ask but for what it is worth these were the things that we found:
Strata Mangers are required to inform of any commission they receive and that is usually done as an addendum to the management agreement they enter with the OC. From what we saw the ‘level’ of commission is negotiated between an Insurance Company and the Strata Manager, usually it is between 15% and 20%.
We didn’t find anything that required us to get competitive quotes but we did anyway.
All quotes we got did supply a PDS (Product Disclosure Statement) and companies are supposed to ‘make them available’ to you (whatever that means) before you sign. The PDS covers all the rights, responsibilities, ins and outs and clauses, conditions etc that apply to the insurance contract you are entering.
Our strata plan ended up going with an Insurance Broker. The amount we paid for our insurance policy was exactly the same whether we had an Insurance Broker or not, as the Broker takes their commission out of the premium paid to the Insurance Company. The commission to the Broker is probably exactly the same in nature as the commission paid to a Strata Manager if you insure through them.
The contract that the prospective Strata Manager wanted us to sign specified that if the Strata Manager handled any insurance claims they received additional fees from us. Whereas the contract we ended up entering with the Broker said they would do all our claims at no additional cost.