The Australian Competition and Consumer Commission has flagged concerns around strata insurance intermediary remuneration in its latest cyclone reinsurance pool monitoring report.

The federal government announced the $10 billion-backed pool in 2021 to tackle rising premiums in northern regions, but debate continues over the level of savings provided for home, strata and SME insurance customers.

In its third monitoring report, the ACCC says the pool is “beginning to deliver premium relief”, but this is offset by other cost increases and premiums remain “very high”.

The report addresses concerns over the impact of strata commissions.

“In our targeted engagement with strata groups about insurance prices and the impact of the pool, various groups have continued to raise with us their concerns about instances where the end total premium (the insurance premium plus taxes and commissions) paid by the consumer has remained high and comparable to previous years,” the ACCC says.

“For example, a strata insurance consumer advocacy group has raised concerns about conflicts of interest that can arise through the intermediated nature of strata insurance markets.

“The group considered that these conflicts can lead to excessive commission payments to strata managers, which may dilute the savings achieved through the pool from being passed on to the end consumer.”

The ACCC says its Northern Australia Insurance Inquiry, which issued its final report in 2020, examined relationships between strata managers and insurance brokers. 

“We found that strata managers’ remuneration agreements create conflicts of interest with their role providing services to a body corporate, and made a number of recommendations to address this conflict, including for strata managers to be remunerated by body corporates only.

“As the popularity of strata living continues to grow, these concerns raised from strata groups highlight the importance of affordable and available strata insurance, and the need for confidence in professionals within the strata industry.”

Click here to read the pool monitoring report.