Strata insurance brokers: what they do and how they are paid

A strata insurance broker arranges the building's insurance on behalf of the owners corporation: gathers the building's details, puts them to an insurer, explains the quote, places the policy and helps when there is a claim. The broker works for the owners corporation, and is usually paid by commission from the insurer.

Many strata schemes buy insurance through a broker, often one chosen by the strata manager. That arrangement has been under scrutiny for several years, mainly over who is paid what. This guide explains what a broker does, how brokers are paid, what to ask one, and how Quick Strata works.

What does a strata insurance broker do?

• Presents the building. Collects the plan, construction, facilities, sum insured and claims history that an insurer needs.
• Obtains terms. Puts the building to one or more insurers or underwriting agencies and gets a price and conditions.
• Explains them. Sets out what is covered, the excesses, and the documents the owners corporation needs to read.
• Places the policy once the owners corporation decides, and issues the certificate of currency.
• Handles changes and claims during the year.

A broker can give general advice, which is about the product, or personal advice, which takes the scheme's own circumstances into account. Quick Strata gives general advice only.

Who is the broker's client?

The owners corporation. Not the strata manager, even when the manager chose the broker and deals with them day to day. The policy is the owners corporation's, the premium comes from the owners' levies, and the duty is owed to them.

How are strata insurance brokers paid?

Usually by commission: a percentage of the premium, paid by the insurer. Some also charge a broker fee. An independent review of the industry found broker commission is "typically 20% of the premium", and that where a strata manager shares in it, the manager's part is "frequently 15% to 20% of base premium" (John Trowbridge, Phase 2 report, December 2022).

Because commission rises with the premium, the same review recommended the system be phased out, and governments in several states have since tightened disclosure. Our news explainer on commissions in strata insurance follows what has changed.

What should a committee ask a strata insurance broker?

• What is your commission on this policy, in dollars, and do you charge a fee as well?
• Does our strata manager receive any of it?
• Which insurers did you approach, and which declined?
• Are you related to our strata manager or to the insurer?
• Is your advice general or personal?
• Who do we call when there is a claim?

How does Quick Strata work?

• Online. A committee member, owner or manager enters the building on a form. A wholly residential building with a registered plan and current insurance is usually priced in a minute or two.
• One insurer today. Strata quotes on this site are priced by Strata Community Insurance, which issues its policies as agent for Allianz Australia Insurance Limited. We are not a comparison of several insurers, and a committee is free to seek other quotes.
• A broker checks it. Nothing is placed automatically. A broker reviews the quote and the answers before the policy is arranged, and buildings the insurer will not price online are handled by a broker.
• Paid in the open. We receive commission from the insurer and charge a broker fee. Every quote shows both in dollars before you buy.
• Licensed. Quick Strata is a brand of Gary, a trading name of Lang Broking Co Pty Ltd, a Corporate Authorised Representative (No. 1323797) of Australian Broker Network Pty Ltd (AFSL 253131).

Our guide to what strata insurance costs shows a real quote with every component, including the commission.

Can a strata manager arrange insurance without a broker?

Some managers arrange insurance directly with an insurer or underwriting agency. Either way, the rules on disclosing commission to the owners corporation apply, and they differ by state: see our guides for New South Wales, Queensland, Victoria, Western Australia and South Australia. NSW goes furthest: an agent there must provide three quotes, each showing the commission and who receives it.

A building with shops or offices is a different exercise, covered in our guide to commercial strata insurance, and a committee thinking about its own exposure can read about office bearers liability insurance.

General information only. It does not take into account your objectives, financial situation or needs. Read the Product Disclosure Statement and Target Market Determination before deciding about a policy, and our Financial Services Guide for how we are paid.