The broker peak body has told an inquiry that commissions play a key role remunerating strata managers for insurance-related work.

National Insurance Brokers Association head of policy and advocacy Allyssa Hextell said strata managers would still need remuneration for insurance services if commissions were not paid, and removing the payment arrangements is not the answer to reducing costs. 

“We would 100% support disclosure and transparency, but in terms of a mechanism to reduce premiums ... we wouldn’t see that as something that would meaningfully impact premiums,” she told the ACT inquiry.

Ms Hextell said strata manager insurance work falls under the definition of providing a financial service, and many become authorised representatives of licence holders.

“If the strata manager is an authorised representative of the broker, because they are doing a portion of the work, they will be entitled to a portion of the commission.”

The ACT Legislative Assembly’s Standing Committee on Legal Affairs held four days of hearings last week as part of its inquiry into management of strata properties.

NIBA CEO Richard Kiplin told the inquiry collaboration between brokers and strata managers enhances resilience and ensures better outcomes for property owners and residents.  

The association “supports the reforms to strengthen strata governance, improve transparency and promote effective risk management”, he said.

“We encourage the committee to recognise the distinct but complementary roles that brokers and strata managers play and to ensure that future regulation continues to support these partnerships.”

Insurance Council of Australia regulatory and consumer policy GM Alexandra Hordern said the group does not support banning commissions from insurers to brokers, but payments between brokers and strata managers do not have the same level of visibility to insurers.

“Just as a general principle, transparency is important,” she said.

Ms Hordern said the volume of work involved in brokers understanding risks, providing advice, and sourcing and explaining cover is often not understood.

“And then once a claim is being made, they do an enormous amount of work in managing lodging and facilitating that claim, and they should be remunerated for that work.”