Question: An AGM motion asks owners to consent to the broker receiving commission on the strata insurance. What does that mean for owners?
Our upcoming AGM agenda includes this motion under insurance for the first time:
“The owners corporation resolve that they provide their informed consent to [broker] receiving commission for the placement of strata insurance.”
We currently use an independent broker who finds the best strata insurance for our needs. What are the issues with this motion?
Answer: Giving informed consent allows the broker to charge on gross terms, meaning commission plus a brokerage fee, rather than a brokerage fee only.
Where an insurance broker charges commission, they’re required to obtain informed consent. This applies to brokers providing personal advice to retail clients, who must comply with informed consent requirements.
So what does this actually mean? In the insurance broking industry, brokers can quote on either NET or GROSS terms. With GROSS terms, commission is built into the base premium, which increases government charges and ultimately the total premium payable.
Here’s how the two compare:
| GROSS | NET | |
|---|---|---|
| Base premium | Y | Y |
| FSL (NSW applicable) | Y | Y |
| GST | Y | Y |
| Stamp duty | Y | Y |
| Underwriter fee | Y | Y |
| Brokerage fee (sits outside of the insurance premium as an additional fee for service) | Y | Y |
| Total payable | Y | Y |
| Commission (billed in the base premium) | Y | N |
In short: if you provide informed consent, you’re allowing the broker to charge on GROSS terms, meaning commission plus a brokerage fee. If you decline, they’ll charge on NET terms, applying a brokerage fee only.
This post appears in the November 2026 edition of The VIC Strata Magazine.
Eleni Svinos Cohabit E: eleni@cohabit.com.au
