ACIL Advocates for Ban on Strata Manager Commissions

The Australian Consumers Insurance Lobby Inc (ACIL) is calling for an industry-wide ban on commissions and financial benefits to strata managers in the provision of strata insurance. It follows a series of consultations with the key strata management body the Strata Community Association (SCA) that led ACIL to conclude the industry is incapable of effectively self-regulating commissions in strata.

This move aligns with the recommendations by the Australian Competition and Consumer Commission (ACCC) and is further supported by findings from the 'John Trowbridge Independent Review of Strata Insurance Practices' commissioned by Steadfast, which exposed significant concerns regarding strata manager remuneration.

Historically, ACIL had resisted calling for a complete ban, opting instead to explore the option of self-regulation within the industry. However, recent discussions with Strata Community Australia, spanning three meetings from July to November, have not yielded the desired outcomes in addressing key consumer concerns.

ACIL's advocacy efforts were aimed at enhancing transparency, choice, integrity, and accountability within the strata management sector. Although there was mutual recognition of the need to address “bad actors”, collaborative attempts with SCA have been insufficient.

A significant point of contention has been SCA's consumer guide. While ACIL advocated for a comprehensive guide detailing industry best practices for consumer empowerment, the final document created by SCA, despite including some of ACIL's inputs, fell short of addressing critical consumer issues. Key areas of concern that were omitted include:

1. Committee Oversight on Appointments: Advocating for transparency in notifying committees on new broker appointments by strata managers.

2. Transparency in Remuneration Changes: Highlighting the need for clear communication about remuneration changes during the appointment process.

3. Timely Information Facilitation: Addressing unreasonable delays by strata managers in providing essential information for insurance tendering.

4. Clear and Accurate Role Information: Ensuring strata managers provide truthful and clear information about their role in the insurance process and to present alternative proposals honestly.

5. Consumer Guide Omissions: Concern over the lack of advocacy for the distribution of the consumer guide at crucial times.

Further outstanding concerns include issues with contract conditions in SCA Standard Agreements and bow best practices will be adopted across the industry.

Despite SCA's efforts, ACIL stresses the need for more robust oversight mechanisms and higher standards to ensure consumer protection. This has led ACIL to actively campaign for a ban on commissions to strata managers, involving media and political advocacy, and referring specific issues to regulatory bodies.

Further Analysis: For a deeper understanding of ACIL's stance on banning strata manager commissions, we've produced a YouTube video that provides a comprehensive analysis of this topic, available at: https://youtu.be/S8CEJkumRIo

About ACIL: ACIL is a leading consumer advocacy group dedicated to protecting the rights and interests of insurance consumers across Australia. ACIL actively engages with industry stakeholders, policymakers, and government representatives to address market failures, promote fairness, and improve insurance practices for the benefit of all Australians.  Further information about ACIL can be found on our website https://www.acilobby.org.au/  For more information about this media release, contact Tyrone Shandiman on (07) 3185 5256 or info@acilobby.org.au.   

Channel 7 speaks to ACIL about Cyclone Reinsurance Pool Modelling

In a recent interview with Channel 7, ACIL Chairperson Tyrone Shandiman discussed the critical issue of fairness in the modeling of the Cyclone Reinsurance Pool. ACIL, a leading voice in the insurance industry, is emphasis ing the importance of including postcodes with a history of cyclones in contributing to the pool.

Link to Story: https://fb.watch/nTWxfgcsW5/?mibextid=74l4GC

ACIL Raises Alarm About Inequitable Premium Modelling for Cyclone Reinsurance Pool

The Australian Consumers Insurance Lobby Inc (ACIL) is deeply concerned that residents in Northern Australia are subsidising free cyclone coverage for Southern parts of Australia, despite having a history of cyclones or the potential for future cyclones due to changing weather patterns.

Last month, ACIL released a comprehensive report titled "Under the Lens: ACIL's First Evaluation of the Cyclone and Cyclone-Related Flood Reinsurance Pool." The report highlighted a historical instance from January 1950 when cyclone TC119 initially made landfall on the Gulf of Carpentaria coast and eventually reached Sydney as a category 1 system approximately three days later. ACIL highlights that even though category 1 cyclone events are unlikely to cause significant wind damage, the potential for substantial water damage claims resulting from leaking roofs and buildings underscores the critical need to properly account for such occurrences.

The Cyclone Reinsurance Pool provides cyclone cover to eligible buildings Australia wide, but not all policyholders are required to pay premiums. For instance, on the east coast, only policyholders located north of Port Macquarie are obligated to pay premiums.

ACIL Chairperson, Tyrone Shandiman “Sydney gets free cyclone cover for free, even with its history of cyclone events, leaving North Queensland and Northern Australia to foot the bill. This isn't a matter of North vs South - it's about fairness. If a cyclone were to strike Sydney once more and the city accessed funds from the Cyclone Reinsurance Pool without making any contributions, it would undoubtedly spark outrage in Northern Australia. Our aim is to ensure that the North, already grappling with exorbitant insurance premiums, is not subsidising free coverage for southern regions of Australia that could have a claim.”

ACIL expressed its concerns to Assistant Treasurer Stephen Jones, who represents the Sydney electorate of Whitlam. Regrettably, the initial meeting did not result in a receptive response from the Assistant Treasurer, underscoring the necessity for heightened advocacy and increased awareness regarding this issue. ACIL has also turned to the Joint Select Committee for Northern Australia, pressing an urgent need for a revision of the modelling under the pool.

ACIL remains committed to advocating for a fair and balanced approach to the Cyclone Reinsurance Pool. We call upon the Federal Government and Australian Reinsurance Pool Corporation to review the modelling to ensure a fairer approach to the Pool.