A report prepared by National Insurance Brokers Association (NIBA) consultant John Trowbridge recommended focusing on existing disclosure and self-regulatory reforms before implementing proposed tiered sector pay changes.
The first phase of an independent review of Strata Insurance’s practices, commissioned by Steadfast, focused on disclosure, while the second phase recommended phasing out some convoluted broker and strata manager commission and fee arrangements that were unclear to owners.
NIBA CEO Phil Kewin says the new brokerage code of practice addresses issues such as terms of engagement, conflicts, remuneration and disclosure.
“It was approved, and effectively closed again at stage 1 of Mr Trowbridge’s report,” he said. “Similar disclosure measures are supported in the proposal paper on conflict pay from the consultancy’s quality review.”
Mr Kevin says the full effect of those reforms will start to take effect next year.
“NIBA will have to evaluate the Phase 2 recommendations and changes [Trowbridge] Give full details,” he told the insurancenews.com.au.
“Recognizing that brokers are already implementing self-regulatory change and that further change is likely to follow from the quality assessment of advice, any change recommended in stage 2 of the report appears premature.”
The Strata Community Association (SCA), which formed the SCA National Strata Insurance Taskforce in 2020, says it does not support the Phase 2 recommendations, citing existing safeguards, the industry’s code of practice and the duty to act in the best interests of owner groups. , and the range of models available in the market.
“The SCA is committed to improving further transparency and disclosure practices, and will review the impact of these changes in 2024, understanding the role of each party in the strata insurance products they take and the strata insurance supply chain,” a spokesperson said. said.
Underwriting agency CHU says in its 45 years in the industry, strata projects have evolved from simple duplexes to complex multibillion-dollar developments, and insurance requirements are complex.
“More than a product, Tiered Insurance is an entire ecosystem, with multiple parties contributing fully,” said CEO Kimberly Johnson.
“It is often underestimated how complex a claim can be within a tiered title building when tens or hundreds of insureds and tenants are all affected by the same event, all requiring communication during the life cycle of the claim.”
Ms Johnson says professional advice is needed from both insurance and body corporate perspectives, and both brokers and strata managers are integral to managing policies and claims.
“CHU fully supports transparency in disclosure procedures to empower corporates to make informed decisions about their insurance policies. This includes a more robust disclosure process for intermediary remuneration,” he said.
“However, encouraging this product disruption through financial incentives may have negative consequences for consumers over time.”