ACIL Calls for Urgent Action and Investigations into Strata Insurance Services Practices

The Australian Consumers Insurance Lobby (ACIL) has called for immediate investigations and regulatory interventions into the business practices of Strata Insurance Services following a recent high-profile ABC report, which exposed alleged significant conflicts of interest between Strata Insurance Services and strata manager NetStrata. The report revealed allegations that Strata Insurance Services has been charging fees as high as 148% of the insurance premium, far exceeding the industry standard of 20%-25%, raising serious concerns about consumer exploitation.

In response, ACIL has taken the following steps:

• ASIC & ACCC Investigations: ACIL has formally written to the Australian Securities and Investments Commission (ASIC) and the Australian Competition and Consumer Commission (ACCC) requesting thorough investigations into whether Strata Insurance Services’ remuneration practices violate Australian Financial Services Licensing obligations. ACIL has raised concerns about whether these practices potentially contravene requirements to provide efficient, honest, and fair financial services, as well as potentially breaching other Australian Law.

• Insurance Brokers Code Compliance Committee (IBCCC) Investigation: ACIL has also engaged with the Insurance Brokers Code Compliance Committee, requesting an investigation into whether Strata Insurance Services has breached its obligations under the Insurance Brokers Code of Practice.

• Engagement with NIBA: ACIL is actively engaging with the National Insurance Brokers Association (NIBA) to push for industry-wide changes to its Code of Practice, addressing concerns raised by ACIL regarding transparency and fair treatment of consumers in the insurance broking industry. ACIL is advocating for the following key reforms:

  • Ensuring brokers using non-standard remuneration models demonstrate that their fees provide meaningful benefits to consumers.

  • Requiring brokers to verify valid instructions from the insured to avoid unlawful appointments by strata managers.

  • Strengthening conflict of interest provisions by prohibiting remuneration practices that create unmanageable conflicts of interest and provide clearer guidance on identifying, disclosing, and managing these conflicts, ensuring brokers uphold their duty to clients.

  • Prioritising consumer interests, and the Code to prohibit remuneration models that unfairly shift costs onto consumers, creating conflicts that undermine fairness.

ACIL’s Commitment to Reform

Tyrone Shandiman, Chairperson of ACIL, stated: “The allegations in this report are deeply troubling especially when the excessive fees and remuneration practices are described in the ABC report as a ‘betrayal of trust,’ ‘jaw-dropping,’ and ‘ripping us off.’ ACIL is taking strong steps to engage with ASIC, ACCC, IBCCC, and NIBA to ensure these practices are thoroughly investigated, and to advocate for stronger consumer protections in the industry. Our priority is to ensure transparency and fairness for consumers in the strata insurance market.”

ACIL will continue to advocate for revisions to the NIBA Code of Practice to ensure that the broking industry operates under clear and fair standards that protect consumers from unethical practices.

ACIL Chairperson Discusses Concerning Strata Insurance Remuneration Practices in ABC Investigation

ACIL pleased to share an important investigation published by the ABC today, which exposes significant conflicts of interest within the strata insurance industry. The Story highlights the concerning findings of a recent ABC investigation into NetStrata, one of Australia’s most prominent strata management firms. The story reveals that NetStrata has quietly uploaded years of past insurance invoices to its clients’ online portals, exposing brokerage fees that far exceed industry norms.

The full story by ABC can be read here, and we encourage all stakeholders to stay informed about these developments as we continue to push for reforms that enhance accountability and transparency.

ACIL remains committed to advocating for the rights of strata owners and pushing for systemic change in the insurance and strata management sectors.

Stay tuned for more updates on this issue as we continue to work towards a fairer future for all property owners.

Disappointment from ACIL Over Cyclone Pool Rates: Calls for Major Overhaul

The Australian Consumers Insurance Lobby (ACIL) has expressed its disappointment following the Australian Reinsurance Pool Corporation’s (ARPC) announcement (click here) of the premium rates for the Cyclone Reinsurance Pool, set to take effect from April 1, 2025. ACIL argues that, despite the announcement, no significant changes have been made to address the ongoing discrepancies in insurance costs for Northern Australia.

“There remain unacceptably high gaps between home insurance and strata premiums north of the Tropic of Capricorn and the rest of the country. This disparity unfairly burdens Northern Australian residents,” said ACIL Chairperson, Mr. Tyrone Shandiman.

While ACIL acknowledges that ARPC is bound by the Treasury Department’s structure for the pool, ACIL are urging a comprehensive review, noting structural deficiencies in the current arrangement.

"One of the biggest anomalies, which disappointingly remains unaddressed in the recent rate review, is the fact that policy holders south of coastal Port Macquarie, including Sydney, contribute nothing towards the Cyclone Pool, leaving Northern Australians to subsidise these areas. This is despite historical data showing that cyclones have impacted Sydney in the past," Mr. Shandiman added.

Research shows that cyclones impacted New South Wales, including Sydney approximately every two years between the 1940s and early 1970s, with a total of sixteen cyclones recorded in New South Wales during that period. These cyclones were linked to the Interdecadal Pacific Oscillation (IPO), not global warming, and recent research indicates that similar IPO conditions have returned.

In addition, warmer water temperatures measured off Sydney in autumn 2024, driven south by the East Australian Current, suggest the layered potential for future cyclones along the New South Wales coast. “Despite these risks, Sydney and areas south of Port Macquarie are effectively exempt from contributing to the pool, creating an inequitable distribution of risk and financial burden,” Mr. Shandiman said.

ACIL believes that the Cyclone Reinsurance Pool is essential for addressing affordability and availability of insurance, particularly in high-risk areas. However, without structural changes in the 2025 review, the pool will fail to meet its objectives of adequately reducing insurance premiums for Northern Australia.

“The pool needs to ensure that high-risk areas are not forced to subsidise free cover for areas with a history of cyclone activity or emerging risks,” Mr. Shandiman said. “We are calling on the government to reconsider the current structure and to adopt a more equitable spread of risk, so that all Australians share the burden fairly.”

“The government must ask itself if the status quo is acceptable. ACIL believes it is not,” Mr. Shandiman concluded. “The upcoming 2025 triennial review is an opportunity to bring fairness to the Cyclone Pool.”