The Insurance Council of Australia has pushed for full transparency and disclosure on strata commissions and fees as one of 17 recommendations made in a policy paper released today.

It says the proposals will improve outcomes for strata residents and owners’ corporations, which often lack relevant expertise or experience with strata managers, brokers, underwriting agencies, building maintenance or insurance.

“This lack of knowledge or experience risks poor outcomes for consumers,” the paper says.

ICA says it welcomes recently passed laws designed to improve strata insurance outcomes, including requiring brokers to obtain consent from retail clients to receive commissions from July next year and the expansion of disclosure obligations for strata managers in NSW from February.

But more can be done to improve commission and fee transparency, according to the paper.

ICA says the NSW government should review the impacts of existing legislation requiring a strata manager to seek at least three insurance quotations for an owners’ corporation.

And the National Insurance Brokers Association should continue its work addressing remuneration and fee disclosures by ensuring standardised granular disclosure of insurance premiums, duties, taxes, remuneration to brokers and strata managers, and other fees, and should adopt informed consent obligations taking effect next July.

“Full transparency of fees and commissions paid through the purchase of insurance and the flexibility for owners’ corporation to determine the number of insurance quotations to source can give owners’ corporations the opportunity to make informed choices that can lower the overall cost of insurance,” the paper says.

ICA says its recommendations encourage a co-ordinated effort at all levels of government and among stakeholders across the strata value chain.

The paper says strata premium rates have risen steadily in recent years, driven by factors including extreme weather events such as the 2022 floods and 2019-20 bushfires.

“As one of the largest mandatory insurance sectors in the country, it’s important that strata is managed properly for consumers,” ICA CEO Andrew Hall said. “The Insurance Council acknowledges recent public interest in the disclosure practices and potential conflicts of interest associated with payments received by brokers and/or strata managers through the placement of insurance.

“The recommendations outlined in this policy paper have been developed in consultation with our members, and the industry looks forward to collaborating with our stakeholders to ensure a future with a resilient, efficient and strong strata sector.”

ICA’s other recommendations include appropriate land use planning and release at local government level, so buildings are placed out of harm’s way; improving design and construction compliance in each state and territory; and insurance tax reforms.

Click here for the paper.