CEO Responds to Proposal to Ban Strata Insurance Commissions: Advocates for Market-Based Decision Making
The CEO of Steadfast Group emphasized the importance of considering the relationship between strata managers and insurance brokers before enforcing a complete ban.
During a Senate Committee hearing, it was suggested that the government should not outright ban commissions for strata insurance, but instead allow the market to determine how body corporates are compensated.
This recommendation followed a proposal made by the chair of the Australian Competition and Consumer Commission (ACCC) in response to a report by ABC’s Four Corners program that suggested banning commissions in the strata insurance sector.
The report alleged that Steadfast Group, an insurance broker network, had engaged in a scheme to provide undisclosed kickbacks to strata managers, thereby artificially inflating insurance prices.
Insurance Group Denies Allegations
Steadfast Group has refuted these allegations, claiming that the report did not present a complete picture and omitted crucial information.
At an inquiry on Oct. 9, Steadfast Group CEO Robert Kelly opposed the ACCC chair’s suggestion, stating, “I believe this should be determined by the market.”
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He stressed the importance of engaging in meaningful discussions before implementing a broad ban, saying, “There needs to be complete interaction between both sides before rushing to ban commissions.”
Kelly elaborated on the role of strata managers and the need to recover costs through commissions from insurance premiums, which require negotiation with the strata committee.
He highlighted that the commission-based model for insurance is a global practice, stating, “Insurance worldwide operates on a commission basis, with the exception of Denmark, a country with fewer people than Sydney.”
Kelly also endorsed legislation that enhances transparency in charging commissions to consumers. He cited a bill in New South Wales that mandates strata managers to disclose any kickbacks received and obtain approval from the strata’s executive committee.
He emphasized, “The legislation ensures full transparency, making it clear to both brokers and strata managers that any payments for services provided must be communicated to the committee.”
