This article discusses the section 164 Accommodation Module two quote requirement for insurance renewal and when one or two quotes are needed.
Question: Can a committee meet the two quote requirement for major spending by getting both quotes from the same insurance broker?
I am seeking clarification on how a committee should apply section 164 of the Body Corporate and Community Management (Accommodation Module) Regulation 2020, in relation to major spending quotes.
Section 164(3) requires that before the committee moves a motion to spend above the major spending limit, the committee must obtain and consider at least two quotations. Can the committee meet this requirement by obtaining both quotations through the same insurance broker, even though the insurers are the broker’s clients?
Section 164(5) also provides that where it is not practicable to obtain two quotations, the committee must obtain and consider at least one quotation. If the committee relies on section 164(5) and obtains only one quote, must the committee record an explanation for why it was not practicable to obtain a second quote?
Answer: Obtaining two quotations for the same scheme through the same insurance broker is not prohibited, provided the quotations represent genuine alternative offers and the committee properly considers them when making its decision.
Section 164 of the Body Corporate and Community Management (Accommodation Module) Regulation 2020 requires that, before a committee decides a motion involving major spending, it must obtain and consider at least two quotations, unless it is not practicable to do so for exceptional reasons.
Question 1 – Two quotations obtained through the same broker
Section 164 does not prescribe who must source the quotations, nor does it require that the quotations be obtained from different intermediaries. The requirement is that the committee obtain and consider at least two quotations.
Accordingly, obtaining two quotations for the same scheme through the same insurance broker is not prohibited by section 164, provided the quotations represent genuine alternative offers (for example, from different insurers) and the committee properly considers them when making its decision.
However, the committee should be satisfied that the quotations reflect a genuine comparison and are not merely nominal alternatives. The committee’s obligation is not only to obtain quotations, but to act reasonably and transparently in considering them.
Question 2 – Single quotation where two are not practicable
Section 164(5) permits the committee to obtain and consider a single quotation where, for exceptional reasons, it is not practicable to obtain two quotations. The Act does not expressly require the committee to record its reasons for being unable to obtain a second quotation.
That said, as a matter of good governance and risk management, the committee should record the reasons why it was not practicable to obtain two quotations. Doing so provides evidence that the committee has properly relied on section 164(5) and has acted reasonably if the decision is later questioned or challenged.
Tyrone Shandiman
Strata Insurance Solutions
E: tshandiman@iaa.net.au
P: 1300 554 165
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 Advisenent Australia AFSL No 240549, ABN 15 003 886 687.
This post appears in Strata News #780.
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