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  • #71279
    booloo
    Flatchatter

      Hi my strata manager claims they get 20% commission when sourcing out insurance. I was wondering if the insurance company pays them the commission or does that get tacked on top of our insurance policy? Our manager claims we don’t pay for it but another member in community claims we pay for it, is that right? We live in nsw

      • This topic was modified 5 months, 1 week ago by .
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    • #71285
      woodg62
      Flatchatter

        For my property, the commission is paid by the insurance company to the strata manager. If there was no commission paid, then the insurance might be cheaper. For me, the strata manager attends to all insurance claims and doesn’t charge any extra fees because they get the commission.

        #71298
        tina
        Flatchatter

          Hi my strata manager claims they get 20% commission when sourcing out insurance. I was wondering if the insurance company pays them the commission or does that get tacked on top of our insurance policy? Our manager claims we don’t pay for it but another member in community claims we pay for it, is that right? We live in nsw

          Here is my understanding of it.  The commission is tacked on top of the insurance policy.  Strata managers are no longer permitted to receive a commission from the insurance company.  They get around it like this.  The insurance company receives all the money.  Then:

          .  The insurance company pays the commission to the insurance broker.

          .  The insurance broker pays the commission to the strata manager.

          .  The strata manager pays something back to the insurance broker.

          My owners corp received an invoice from an insurance broker as follows:

          Base Premium $4000

          Fire / SES Levy $600

          GST (10% of the above two items)

          Stamp Duty $500

          Insurers administration fee $220

          GST administration fee $0

          Broker Fee $1700

          GST broker Fee $170

          Strata Manager Commission $0

          Total:  about $8,000

          The commission is roughly 20% of the total cost:  If you google “strata insurance” and call a few companies for a direct quote, you would be quoted something closer to the base premium.

          #71305
          Jimmy-T
          Keymaster

            Strata managers are no longer permitted to receive a commission from the insurance company.

            Really?  Why then does the law say that any commissions have to be declared? Also, most insurance companies will not discount the premium by the amount of the strata managers’ commission even if you negotiate directly.

            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.
            #71293
            kaindub
            Flatchatter

              Insurance commissions are one of the biggest and most understood scams in strata.

              Let’s start at the beginning. If an OC goes directly to an insurer it will pay $x for a policy.

              If the OC goes to a broker, they will pay $x for their policy. The insurance company pays the broker a “ spotters” fee.
              Some brokers will then charge an additional brokerage fee. It can be justified if it requires additional work for the broker to find your insurance.

              Then in some cases the broker will split this extra commission with the strata manager. Essentially a kickback to the strata manager for choosing thst broker.

              In any of the above cases, the OC is paying the commission or broker fees.
              My recommendation is get the committee to find a broker who does not charge an extra fee above what the insurance company pays them.

              #71297
              Boronia
              Flatchatter

                However it is worked out, you end up paying for it.

                #71338
                tina
                Flatchatter

                  Strata managers are no longer permitted to receive a commission from the insurance company.

                  Really? Why then does the law say that any commissions have to be declared? Also, most insurance companies will not discount the premium by the amount of the strata managers’ commission even if you negotiate directly.

                  You’re right.  I should have read Strata Schemes Management Act 2015 (NSW) Section 60.

                  In my defence, when we still had a strata manager, the strata manager said that his employer was no longer allowed to receive a commission for insurance.  Either he was wrong or I misunderstood the message.

                  I agree that if I dealt directly with an insurance company, who is already working through a broker, they would not exclude the broker’s commission.  However, it is different with insurance companies who are not working through a broker.  There is no broker commission.

                  I found some strata insurance companies.  I called them for quotes.  I saved almost $5,000.  We also got a premium reduction because we excluded “common contents” from the cover.  When the insurer asked if we had “common contents”, I said “yes we have letter boxes in a brick wall”.  The insurer said that’s already covered by the building policy.  Since we don’t own anything else (e.g. chairs, tables, computers, tv, garden tools etc.) we excluded common contents and saved a bit more.

                  I mention this because we had common contents cover for decades when the strata manager + insurance broker arranged our insurance for us.  It makes me wonder why we would pay a professional to organise our insurance if they don’t even consider our specific needs.

                  #71346
                  Jimmy-T
                  Keymaster

                    n my defence, when we still had a strata manager, the strata manager said that his employer was no longer allowed to receive a commission for insurance.  Either he was wrong or I misunderstood the message.

                    Some large strata management firms choose not to accept the commission as they can absorb the “loss” and it gives them a commercial advantage over smaller firms that may not have that luxury

                    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.
                    #71347
                    Jimmy-T
                    Keymaster

                      n my defence, when we still had a strata manager, the strata manager said that his employer was no longer allowed to receive a commission for insurance.  Either he was wrong or I misunderstood the message.

                      Some large strata management firms choose not to accept the commission as they can absorb the “loss” and it gives them a commercial advantage over smaller firms that may not have that luxury

                      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.
                      #71421
                      StuMcL
                      Flatchatter

                        Question if you have an agreement with a strata manager that says they can accept commissions can the OC resolve to obtain independent quotes and have the Strata Manager use that insurance company?

                        #71427
                        Jimmy-T
                        Keymaster

                          Yes, absolutely.  The OC is the client and pays the bills, not the strata manager.

                          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.
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