The Australian Consumers Insurance Lobby (ACIL), formerly known as the Northern Australia Insurance Lobby (NAIL), has welcomed the strata reforms recommended in the John Trowbridge report.
During 2016/2017 market conditions, insurance premiums were reduced by 20% in many cases. However, some consumers did not see the benefit of these reductions because their strata manager moved their policy from a 20% commission arrangement to one that included a 20% commission and a 20% fee. Some consumers were unaware of the changes because their premium invoices did not reflect the increase.
ACIL claimed that consumers would have been better protected from these questionable practices if the strata insurance industry had adopted the Trowbridge report’s recommendations at that time.
“Remuneration structures in strata insurance has been a long-running concern for the strata industry, and this report brings to light those issues,” said Bradley Von Xanten, ACIL Treasurer and former chairperson of the Unit Owners Association of Queensland. “In my experience, working with strata buildings as both the chairperson of several body corporate buildings and in my advocacy with the Unit Owners Association of Queensland Inc., I’ve seen many arrangements entered into that do not benefit the consumer.”
Von Xanten further explained that strata managers’ decision to enter an insurance policy with commissions and fees accounting for 40% of insurance cost is outside consumers’ interest, especially considering that the industry standard commission is 20% of the premium.
“We welcome any recommendations that cap or limit the level of remuneration that can be received on a policy, and we also support the measures that encourage greater transparency into the remuneration structures provided such disclosures are forthcoming at the time a buying decision is made,” he said, adding that ACIL hopes the industry will adopt the recommendations to rebuild consumer trust.
ACIL was established as a consumer representative group for insurance availability and affordability in Northern Australia. With its priorities changed for the coming year, its members voted to change the association’s name at the annual general meeting (AGM) in June. Recently, it welcomed an insurance giant’s decision to join the cyclone reinsurance pool for household insurance by January 2023.
