A national body representing strata owners has dismissed claims insurers are paying property managers large secret commissions.

Strata Community Australia CEO Mark Lever told insuranceNEWS.com.au the claims about secret commissions are “not new” and are untrue.

“All property managers are subject to the financial services regulations and in all contracts any commissions that are paid are disclosed,” he said.

“Many managers charge a fee for service, and that includes arranging insurance with any commissions disclosed.”

Mr Lever admits there will always be a property manager that doesn’t disclose a commission, but the competitiveness of the industry means more disclose.

“Managers will charge a flat fee to strata owners or reprice their service fee to include insurance costs,” he said.

The subject of commissions paid to strata managers was raised at a recent hearing of the House of Representatives inquiry into strata insurance.

National Insurance Brokers Association CEO Dallas Booth told the committee that the strata managers sold a “lot of insurance” and insurers were paying commissions.

Asked if he knew how much, he said he was “not aware of the level of commission which might be directly paid to strata managers”.

Mr Booth told insuranceNEWS.com.au a number of strata managers have become authorised representatives for insurance companies, but he doesn’t know the exact number.

“Quite a few of our members do sell strata insurance and they bring a broader perspective in terms of risk assessment rather than an authorised representative,” he said.

“The broker will probably find cover for a better price.”

Zurich GM SME & Packages Shaun Feely also argued the use of a broker is better than relying on a manager tied to one insurer.

“Those involved in selling [residential strata insurance] should be giving independent advice,” he told insuranceNEWS.com.au.

“If this doesn’t happen, strata managers are breaching their obligations to their customer and also run the risk of bringing scrutiny and even further regulation into the intermediated general insurance market.”

Mr Feely argues the best way to maintain competiveness in the strata market is for body corporate managers to appoint a broker to handle their insurance needs.

But Mr Lever believes too much attention has been given to the subject of strata managers selling insurance. “It’s a bit of a red herring.”