Question: When organising our strata insurance, are we entitled to know the rate of insurance commission paid to the broker or the Strata Manager?
Answer: What you may not find disclosed fully is that there can be profit shares that are not classed as commissions
The broker has a duty to disclose this to you. You should definitely ask what the commission structures are. In NSW, it’s a requirement for the commission structure to be disclosed on the AGM papers. What you may not find disclosed fully is that there can be profit shares which are not classed as commissions, which are buried in financial services guides, but if you know the commission and broker fee the broker gets, that will help inform you around whether it is or isn’t reasonable.
The standard industry commission within Australia policy is 20%. But what we are finding at the moment is that some Commission’s are as much as 20% commission and 20% fee, and obviously that has a very, very big impact on the cost of insurance for the lot owners. So, I would always suggest informing yourself, asking the strata manager and broker to provide transparency around their fees and commissions.
I know that there are strata managers out there who don’t take commissions and are happy to discuss the fee, and maybe what it means is their fees differ from those managers that do include commission in their strata management fees.
I think the point I’m making is, know what your fees and commissions are. Your contracts come up every one or three years and those are things you can discuss with your strata manager when renewing the contract.
This post appears in the July 2021 edition of The NSW Strata Magazine.
Tyrone Shandiman Strata Insurance Solutions E: tshandiman@iaa.net.au P: 07 3899 5129
This information is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. Shandit Pty Ltd T/as Strata Insurance Solutions strongly suggests that no person should act specifically on the basis of the information in this document, but should obtain appropriate professional advice based on their own personal circumstances. Shandit Pty Ltd T/As Strata Insurance Solutions is a Corporate Authorised Representative (No. 404246) of Insurance Advisernet Australia AFSL No 240549, ABN 15 003 886 687.