Consumer groups have welcomed broker code changes that strengthen strata protections compared with the draft version and the previous document.

Australian Consumers Insurance Lobby chair Tyrone Shandiman says the outcome reflects the seriousness of issues raised with the National Insurance Brokers Association for years.

“What is particularly significant about NIBA’s final code is the level of attention it gives to strata insurance,” he told insuranceNEWS.com.au.

“In a code designed to govern insurance broking across Australia, strata appears to have received more specific consumer protection requirements than any other individual insurance sector.”

Significant code of practice changes include requiring a broker engaged through a strata manager or another party to “take reasonable steps” to confirm it is appointed with the owners’ corporation’s authority.

The final document improves wording to ensure remuneration disclosure is extended to any covered services provided to an owners’ corporation, whether or not it is a retail client.

An added clause says disclosure must include any commission, fee, rebate or other benefit paid to the strata manager or other owner-authorised party, and should identify that person or entity, and the amount or the basis of calculation.

“That responds to NSW Fair Tradingʼs recommendation and addresses a gap: under the 2022 code a payment to the clientʼs own agent was not visible to the client,” a NIBA document on decisions behind the new code says.

In July, the consumers lobby, the Owners Corporation Network and the Unit Owners Association of Queensland criticised “incremental improvements” in the draft code and questioned if self-regulation could achieve the required reforms.

“NIBA has listened and it deserves credit for the meaningful improvements made to the final code,” Mr Shandiman said this week.

OCN co-MD David Glover says the reforms are an important step towards greater accountability.

“Owners’ corporations have the right to know who is being paid, how much they are receiving and whether financial arrangements could influence insurance decisions,” he said.

The groups say areas where further action is needed include dual arrangements where a strata manager is acting as a broker authorised representative while also representing an owners’ corporation. They also seek stronger action around complex commercial relationships.

NIBA has said strata was a clear pressure point in developing the new code, with issues identified by the ombudsman, the Insurance Brokers Code Compliance Committee and state-based inquiries.

---

From the latest Insurance News magazine: Why mould is a growing problem for property insurers

---