Naked Strata Insurance

Naked Strata Insurance Strata Insurance broker Zero Commission and lower taxes means cheaper body corporate strata insurance

Allianz Global Corporate & Specialty have recently released their Global Claims Review for 2022.
03/08/2022

Allianz Global Corporate & Specialty have recently released their Global Claims Review for 2022.

21/07/2022

Insurance News.com reports today that,

"The Trowbridge review of strata insurance has highlighted that cover offered to owners corporations (OC) for residential buildings should be treated as retail policies “with all their associated disclosure and other regulatory obligations”.

The retail classification would apply unless the complex has more than 50% of its floor space developed to commercial lots, in which case the OC could be regarded as a wholesale client.

The 50% criteria is not referred to in the Corporations Act or regulation, but the report says precedents include the definition in the new cyclone reinsurance pool legislation, and the approach should apply irrespective of whether there are 2, 200 or 2000 lots.

Report author John Trowbridge recommends that “for the avoidance of doubt over the retail client status of OCs” the National Insurance Brokers Association (NIBA) should modify Clause 6.1 (a) of the new Code of Practice on disclosing remuneration by adding an explicit reference to OCs.

Currently, the clause, which will take effect from November next year following a 12-month delay, refers to whether the client is an individual or a small business.

Mr Trowbridge says that during his review it was also not always evident to brokers that the client was the OC, rather potentially being both the OC and the strata manager, or just the strata manager.

“It should be evident to all that the insured, being the OC, is the client but there is a common misunderstanding otherwise,” the report says.

The report recommends standard templates that contain a minimum set of eight items should be introduced to improve disclosure around broker and strata manager fees and commissions, as well as other costs of insurance.

Brokers and strata managers should ensure “timely transmission of quotations and invoices” to the owners during the annual renewal process, it says, and there should be more information on the scope of services provided by the intermediaries and a full explanation of commercial relationships."

Industry expert John Trowbridge has released the findings and recommendations paper from Phase 1 of an independent revie...
20/07/2022

Industry expert John Trowbridge has released the findings and recommendations paper from Phase 1 of an independent review of the strata insurance market.

20/07/2022

Insurance News.com reports, An independent review of strata insurance practices has recommended standard templates and definitions as part of a self-regulatory solution to provide greater transparency around costs and remuneration paid to brokers and strata managers.

The report, produced by consultant John Trowbridge, says insurance quotations should be accompanied by a statement of scope of services by strata managers and brokers and a full explanation of commercial relationships.

The National Insurance Brokers Association (NIBA) and Strata Community Association (SCA) should consider the report’s recommendations in detail and give effect to decisions they take on a self-regulatory basis by establishing guidance notes or practice standards for members, it says.

"The Trowbridge report says that, where strata managers and brokers are both involved, the unorthodox structure of the strata insurance market is confusing, with frequently part or all of the commission paid to the strata manager and a separate fee charged to remunerate the broker.

Issues are compounded in many cases by opaque or incomplete disclosure to the owners’ corporation of insurance-related transactions, it says.

Mr Trowbridge proposes that the items to be disclosed should include the base premium, commission, broker fee, emergency services or fire services levies, stamp duty, other fees, goods and services tax and the allocation to the strata manager and broker of the total of the commission plus broker fee."

The 2022 Insurance Brokers Code of Practice has been recently updated. From 1 November 2022, NIBA members must disclose ...
27/04/2022

The 2022 Insurance Brokers Code of Practice has been recently updated.

From 1 November 2022, NIBA members must disclose the total amount (in dollars) of commission they expect to receive from the insurer. This information should be provided to Clients at the same time as the advice. If the amount is not known at the time of the provision of advice an estimate needs to be provided and the
actual amount must be provided as soon as possible.

It is important to note that this must be provided at the same time that the advice/quotation is provided and, in the format, i.e. verbal, in writing etc.

The Code introduces new obligations that significantly increase the disclosure of remuneration in pursuit of a more transparent
relationship between brokers and their clients.

2022 Insurance Brokers Code of Practice update.NIBA have expanded remuneration disclosure requirements to include all in...
14/04/2022

2022 Insurance Brokers Code of Practice update.

NIBA have expanded remuneration disclosure requirements to include all individual and small business clients, not just those that fall under the definition of retail clients (as defined under the Corporations Act). For the purposes of the Code, a small business means a business employing less than 20 people, or if the business involves the manufacture of goods less than 100 people.

John Trowbridge writes, "This paper explains how the current insurance market for strata insurance works and why. It in...
03/04/2022

John Trowbridge writes, "This paper explains how the current insurance market for strata insurance works and why. It includes a brief history of the market that outlines the origins of the unorthodox position where insurance brokers pass most or all of their commission to a second intermediary, being the SM, and then invoice the OC, via the SM, for a ‘broker fee’ to remunerate the brokers for their services. Strata insurance in Australia is a growing class of insurance business as a result of the rising popularity and development of multi-owner properties across the country.

• strata managers commonly receive rebates of broker commissions and simultaneously brokers charge fees to owners’ corporations: both of these practices are confusing and controversial
• affordability and availability of strata insurance are problematic for some segments of the strata insurance industry.

This system is poorly understood for two main reasons. One is the lack of transparency for OCs and the other is the complicated nature of the arrangement compared with other types of insurance transactions.

It is the unusual features of the strata insurance business and its current market structure that indicate the two key issues to be dealt with regarding SMs and brokers and which dictate this three phase approach. These two key issues are disclosure practices and remuneration practices.

NIBA have advised that, "Industry expert John Trowbridge has today released an independent consultation paper to review ...
03/04/2022

NIBA have advised that, "Industry expert John Trowbridge has today released an independent consultation paper to review current strata insurance practices. The independent review, which has been commissioned by the Steadfast Group, will be undertaken in three phases to evaluate the strata insurance-related elements of strata management, insurance broking and insurance underwriting.

The independent consultation paper is the first phase of the review and outlines the disclosure practices of intermediaries and is aimed at overcoming the limited understanding of current practices.

John Trowbridge said ‘’The market structure for strata insurance is different from that of all other insurances because of the multi-owner nature of strata properties and the participation of strata managers in the chain from insurer to client.”

“This paper is aimed at generating an understanding of current practices, a critique of those processes and proposals for improved future practices’’, added Trowbridge.

The second phase of the independent review will include possible reforms to remuneration and other intermediary practices and the third phase will include competition, affordability and availability of strata insurance."

Zero Commission and lower taxes means cheaper insurance for Body Corporate Strata insurance. Naked Strata Insurance acts...
21/02/2022

Zero Commission and lower taxes means cheaper insurance for Body Corporate Strata insurance. Naked Strata Insurance acts in the best interests of the insured/client when providing appropriate personal advice.

28/11/2021

Zero Commission and lower taxes means cheaper body corporate strata insurance! Find out how.

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