A report examining NetStrata’s insurance brokerage practices has raised concerns over transparency, prompting calls for further scrutiny from NSW Fair Trading.
The Australian Consumers Insurance Lobby (ACIL) argues that the McGrathNicol report fails to fully address whether NetStrata’s brokerage arm, Strata Insurance Services (SIS), overcharged clients and whether lot owners were properly informed about fees. However, ACIL has questioned the report’s methodology, particularly its reliance on a 5% sample of clients, which it argues may not be representative of the broader customer base.
“A sample of just 5% of clients may not accurately reflect broader issues. It is unclear whether the selection methodology was statistically sound or if it skewed results toward a more diverse sample that does not represent the full client base,” ACIL chair Tyrone Shandiman said.
One of the report’s key findings was that 8% to 9% of sampled clients were charged brokerage fees between 47% and 69%, but it did not assess whether this practice extended across NetStrata’s entire portfolio. Shandiman said further scrutiny was needed, particularly if lot owners had not provided informed consent under the Strata Schemes Management Act.
The ACIL also highlighted a sharp decline in insurance costs within the review sample, from $1,975,389 in 2023 to $1,197,526 in 2024. The report did not explain this drop, which coincided with ACIL referring 146 cases of alleged overcharging to the Australian Securities and Investments Commission (ASIC) and the Australian Competition and Consumer Commission (ACCC) in February 2024.
ACIL is urging NSW Fair Trading to expand its investigation, particularly into strata buildings with total insurance costs below $25,000, as this group may have been disproportionately affected by high fees.
“NSW Fair Trading must now step up and prove it is a tough cop on the beat. This report does not provide the full picture, and strata owners deserve transparency, accountability, and consumer protection,” Shandiman said.
NSW Fair Trading has confirmed that it is reviewing NetStrata’s practices, with the McGrathNicol report forming part of its ongoing inquiry. ACIL is pushing for a more in-depth examination to ensure compliance with consumer protection laws.
