Insurance industry consultant John Trowbridge (pictured above) has just released phase 2 of his independent review of strata insurance. In the report, Trowbridge said he’s identified three conflicts of interest involving brokers and strata managers (SMs).
“Following analysis of these conflicts, I have come to the view that the commission rebate/broker fee system should be phased out,” he said.
Broker commissions, he said, is a “manageable conflict.” However, Trowbridge said the two other conflicts that comprise the commission rebate/broker fee system “need to be addressed.”
“These two are where (1) the SM agrees with the broker on a share of commission to be rebated to the SM and (2) the broker agrees with the SM on a broker fee that is additional to the commission,” he said.
Trowbridge said this fee system should be phased out in three stages.
In his report, Trowbridge said “the overarching goal for all intermediaries (SMs and brokers) has to be to achieve value for the customer.”
He said the main goal of this part of his review is to “encourage improved practices” and ensure “the remuneration system delivers best outcomes for owners and simultaneously maintains the benefits of the current SM-broker ecosystem.”
