McGrathNicol Report on NetStrata Leaves More Questions Than Answers - NSW Fair Trading Must Investigate Further

The Australian Consumers Insurance Lobby (ACIL) has today released its analysis of the McGrathNicol report into NetStrata, raising serious concerns about transparency, decision-making processes, and the impact on consumers. While the report attempts to assess whether NetStrata’s wholly owned brokerage firm, Strata Insurance Services (SIS), charged excessive brokerage fees or insurance premiums, key issues remain unresolved, requiring further investigation by NSW Fair Trading.

Click the below link to access the report:

ACIL Report - Analysis of the McGrathNicol Report on NetStrata.pdf

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ACIL’s analysis raises issue with potential gaps in the report’s methodology and findings, including concerns over sample selection, unexplained cost reductions, and whether lot owners provided informed consent when engaging SIS. Most notably, the report acknowledges that 8-9% of consumers in the sample were charged brokerage fees of 47% to 69%—yet fails to assess whether this issue is more widespread across NetStrata’s entire portfolio.

"A sample of just 5% of clients may not accurately reflect broader issues. It is unclear whether the selection methodology was statistically sound or if it skewed results toward a more diverse sample that does not represent the full client base. For example, the report highlights excessive fees for buildings with premiums between $827 and $24,169—but was the sample truly proportionate to the number of consumers in this category, or does it underrepresent those most affected? It is simply not acceptable for 8-9% of consumers to be paying excessive brokerage fees between 47% to 69% without further scrutiny. If proper processes under the Strata Schemes Management Act were not followed, and lot owners did not provide informed consent, then this is a serious consumer protection issue." said Tyrone Shandiman, Chair of ACIL.

The report also reveals that insurance costs within the review sample dropped from $1,975,389 in 2023 to $1,197,526 in 2024, yet provides no explanation for this sharp decline. This coincides with ACIL referring 146 cases of overcharging misconduct to ASIC and the ACCC in February 2024, raising questions about whether NetStrata and SIS reduced fees only after facing potential regulatory scrutiny.

Given these concerns, ACIL is calling on NSW Fair Trading to take immediate action by investigating a grater dataset of strata buildings paying less than $25,000 in total insurance costs, as this segment may have a higher proportion of clients subjected to excessive fees.

ACIL understands NSW Fair Trading is currently investigating the issues surrounding NetStrata, and this report forms part of their ongoing review.  "NSW Fair Trading must now step up and prove it is a tough cop on the beat. This report does not provide the full picture, and strata owners deserve transparency, accountability, and consumer protection" Mr. Shandiman said.

ACIL urges NSW Fair Trading to conduct a comprehensive review of NetStrata’s insurance practices, ensuring that all strata owners receive fair treatment and that compliance with the law is upheld.