Brought to you by:

ACIL strata survey uncovers ‘bad actors’ 

The Australian Consumers Insurance Lobby (ACIL) says responses to its survey on strata sector problems has identified “bad actors” including five brokers. 

It says the online survey, launched last month to gain further information after it highlighted “questionable practices”, received 87 responses including from industry insiders.  

“In the course of analysing survey responses, a pattern emerged that pointed to specific entities within the industry – namely, five strata managers and five insurance brokers – being repeatedly identified as engaging in potentially questionable practices,” a report on the responses says. 

ACIL says it is looking into the reported activities and anticipates its investigation will warrant referral to regulators such as the Australian Securities and Investments Commission and the Australian Competition and Consumer Commission. 

The ABC has separately reported on excessive insurance premium fees and “kickbacks” in the strata sector, including at properties managed by NSW firm Netstrata.

“The growing prospect of a government inquiry and heightened media scrutiny into strata insurance practices, poised to expose misconduct and identify the bad actors within the sector, amplifies the need for industry bodies to formulate and enact a substantial plan of action,” ACIL says. 

“This critical juncture demands a departure from complacency. Industry associations and businesses alike must rigorously evaluate their response mechanisms to consumer grievances.” 

ACIL has called for more action by the Strata Community Association (SCA), the National Insurance Brokers Association and the Insurance Council of Australia. 

The Insurance Council says it acknowledges the concerns around strata management and its impacts on the protection gap. 

“We continue to engage with our industry partners, regulators and other key stakeholders to address this,” a spokesperson told today. “The Insurance Council and its members value the ongoing collaboration with ACIL regarding insurance-related matters and look forward to continuing this engagement.” 

SCA says it continues to take positive and proactive steps to improve the strata sector, for the benefit of consumers and industry actors alike, including through a six-point plan to reinforce public confidence in strata.

"SCA wants to see a genuine attempt at broader stakeholder collaboration between brokers and insurers, among others, to address the significant challenges faced by our sector," a spokesman said.

ACIL says its survey findings show there is confusion about which body properly regulates the strata sector, underscoring the need for clarity on governance and oversight. ACIL is calling for a streamlined framework with a single body overseeing the strata management industry. 

“Findings indicate a troubling industry environment where ethical conduct is often penalised, and questionable and unlawful practices are incentivised, pointing to a systemic issue that goes beyond individual bad actors,” it says. 

Some strata managers who participated in the survey, and others engaged with, express a strong preference for greater transparency and a shift away from commission-based operations, ACIL says. 

“Feedback indicates that insurance brokers who have maintained relationships with strata managers or buildings yet refused to engage in a race to the bottom by adopting excessive commission models and questionable practices detrimental to consumers frequently find themselves sidelined. 

“This not only disrupts professional relationships but also delineates a worrying trend where unethical and potentially unlawful practices yield financial gain for some, at a considerable cost to others and the integrity of the profession as a whole.” 

ACIL has ratified its conflict of interest policy after it heard suggestions that board members may be leveraging their positions to further personal interests. The group has rejected the criticism and says Chairman Tyrone Shandiman and Secretary Eva Jones have consistently prioritised consumer interests, reflecting a commitment to ACIL advocacy goals. 

“The issues emerging are real consumer concerns,” Mr Shandiman said. “Despite the personal challenges involved in advocating for this cause, I am proud to contribute my experience and knowledge in support of ACIL and the consumers we serve.” 

Mr Shandiman is also the owner and MD of brokerage Strata Insurance Solutions and employs Ms Jones as Operations Manager.