At a Senate committee public hearing, Steadfast Group’s CEO Robert Kelly (pictured above) has strongly defended broker commissions. Kelly, together with general council, Christopher Sargent, appeared this morning at the government’s inquiry into the Impact of Climate Risk on Insurance Premiums and Availability.
“I’ll ask the question again,” said Senator Mehreen Faruqi, who chairs inquiry. “Will you heed ACCC’s call and ban strata insurance commissions?”
Kelly said that is a matter for the market to determine.
“I think that it's a vague statement to make about the intricacies of what a strata manager does and what a general insurance broker does together,” he said.
The Steadfast CEO said insurance all over the world is on a commission basis.
“For 300 odd years, Lloyd's has operated a system to service people all around the world on a commission-based distribution network,” said Kelly. “By just thinking you can stop commissions and reduce costs - it's erroneous to say that.”
He said payment of these services should be a negotiation “between the person who seeks those services and the person who offers those services.”
Kelly said this process should be transparent and supported recent strata legislation in NSW.
“Legislation in NSW has still left in commission, but said, you have to take that negotiation, that amount of cost, back to the executive committee [of the owners’ corporation],” he said. “That clarity, I think, leaves the decision with the purchaser of the insurance.”
The Climate Risk committee’s final report is due on November 19.
How can the industry defend broker commissions? Please tell us below
