Strata Insurance: Strata Manager takes commission, it this kosher.

Dear All

We recently got an investment that is strata. First one strata in and established old set of units. Very inactive body corporate.

Anyhow the AGM is coming up and notes show the strata insurance was renewed by the strata managers for $5M cover for a fee of $5k.

OK but the Strata Managers took a 20% commission (which they declared) so $1k.

Is this common, and if so, was the price paid fair?
Seems to me to be blatant conflict of interest.

Advice.... Peter 14.7:confused:
 
Not sure it helps... but..

We thought ahead when tendering for our strata manager and the responses ranged from:

1. We don't get commission (!?!)
2. We are independent and don't receive commission
3. We will split it 50/50 with you
4. We will keep it all

The selected manager happened to offer (3). All of this is in the strata management agreement.


Dear All

We recently got an investment that is strata. First one strata in and established old set of units. Very inactive body corporate.

Anyhow the AGM is coming up and notes show the strata insurance was renewed by the strata managers for $5M cover for a fee of $5k.

OK but the Strata Managers took a 20% commission (which they declared) so $1k.

Is this common, and if so, was the price paid fair?
Seems to me to be blatant conflict of interest.

Advice.... Peter 14.7:confused:
 
This is the industry norm in NSW and by law has to be disclosed in the agency agreement. If managing agents don't receive commission, or choose to pass it on to the owners, they will generally charge a higher management fee.

The commission does not increase the premium price ie if the owners corp goes directly to the insurer they won't get the policy any cheaper. The agent should be able to show the owners corp comparison quotes each year, and provide a copy of the policy doc so owners can see exactly what they are covered for.

Wake
 
Dear All

We recently got an investment that is strata. First one strata in and established old set of units. Very inactive body corporate.

Anyhow the AGM is coming up and notes show the strata insurance was renewed by the strata managers for $5M cover for a fee of $5k.

OK but the Strata Managers took a 20% commission (which they declared) so $1k.

Is this common, and if so, was the price paid fair?
Seems to me to be blatant conflict of interest.

Advice.... Peter 14.7:confused:

Common, I know in a commercial strata group we have some involvement with, the Strata Managers pass it back to the owners
 
Common, I know in a commercial strata group we have some involvement with, the Strata Managers pass it back to the owners

That what I would have thought was acceptable.

I work as a Commercial Facility Manager as our policy is we work for our CLIENTS and any kickback or bonus is there's, although we don't want them we simply want the best price first time. We even avoid free lunches.

From what I can see 3 quotes where not provided as evidence so it screams , same as last year approach, oh, thanks for the $1k.

Call me naive but you cannot act in the best interests of your client should a dispute arise when you are pocking 20% of the fee.

Any other comments on what most places do, refund I hope.

I want to raise this at the meeting next week.

Regards & Thanks

Peter 14.7
 
Read the management agreement carefully as some agencies will charge the strata plan the commission fee regardless whether the commission is paid by the insurance company.
 
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