The national body, Strata Community Association has consulted with members to ensure the response to the recent ACCC Northern Australia Insurance Inquiry reflects a fair representation of current industry practice in relation to Insurance Commissions.
SCA (NSW) had member representation during the consultation to provide information and assist with reviewing feedback. It’s now our members turn to support your industry’s views and submit a response no later than 12 April 2019 (midnight) to insurance@accc.gov.au
To assist SCA (NSW) members a draft letter has been prepared which you can place on your letterhead, sign and send to the ACCC. Strata Community Association also suggests you consider sending this to your local Member of Parliament so that the misconceptions around Strata Manager Commissions are clarified and understood before policy decisions are made.
You are welcome to amend the template letter as you see fit. Strata Community Association has an interest in bettering the strata industry for all stakeholders, including strata managers and consumers alike. But our strength lies in our numbers. The more submissions reflect the administrative component of insurance contracts, the less likely it will be that policies are made that disrupt the sector. Make our voice count by submitting a supporting letter to the ACCC by Friday.
Executive Summary of the SCA Submission:
- Strata insurance is a specialised product that is specifically tailored to the needs of owners corporations;
- The efficiency and effectiveness of strata managers helps strata insurers keep the costs of insurance lower than it would be without their assistance;
- The income received by strata managers from insurers is compensation for the work performed, including, obtaining quotes, liaising with insurers on behalf of the owners corporations and assisting owners corporations in making claims;
- If strata managers did not receive this income, then the cost of those services would be borne by owners corporations in the form of additional service fees under the strata management agreement;
- The most likely net result would be an increase in the costs of insurance to the consumer as well as an increase in their strata management fees as it would result in less efficient and more complex insurance processes;
- A regulatory regime founded on a principle of full transparency and disclosure, rather than prohibition, would be a better and fairer approach as it would enable consumers to make an informed decision on to the value of the service of the strata manager. Each owners corporation could then elect for the strata manager to receive a commission from the insurer or pay higher body corporate management fees.
- This would underpin current best practice while minimising disruption to the market and provide a mechanism for dealing with conduct that is not in line with ethical business practices and consumer expectations.