The fallout from the ABC’s 4 Corners investigative story, The Strata Trap, continues to simmer in the halls of government both in NSW and in Canberra.
Insurance News this week reported confidential discussions with industry stakeholders and NSW government about banning strata insurance commissions altogether. They report that some in attendance thought it was a foregone conclusion. I’ve heard that before but this time, things could be different.
I’ve written about two of these reasons before; the federal government agency, the ACCC is now involved, and we are in the midst of two national crises – cost of living and housing affordability. The Feds are all over high strata levies as part of their response and seem convinced that commissions to strata managers increases levies. As recently as Wednesday, Robert Kelly, CEO of Steadfast Insurance (who had a shocker on the 4 Corners story) was in Senate Estimates facing some more tough questions. This issue is not going away.
There’s another reason why the battle might be lost this time. Whatever criticisms I’ve had of Strata Communities Association Australasia (SCA) in recent years, and there are many, for decades they have excelled as a lobby group to protect strata managers’ rights to insurance commissions. Time and time again, they have fought the fight and come up victorious, against great odds. But again, this time is different. SCA is presently weakened by the involvement of former directors and national office bearers in the Steadfast Insurance brokerage scandal. As the equity law maxim goes, when looking for a fair deal, you must ‘come with clean hands’.
For some time, I’ve argued that smart managers will approach this matter pragmatically, hoping for the best but preparing for the worst. It’s a simple equation. Determine your current insurance commission and divide by the number of lots you manage and that’s the amount by which you must increase your revenue and / or decrease your costs to maintain your status quo.
Do the mathematics. It might be a painful realisation but fore warned is fore armed.
Michael Teys advises strata management businesses on improving profitability through professionalisation and streamlined operating systems.
He has more than 30 years’ experience as a strata lawyer and academic and has owned 11 strata management agencies throughout Australia. He has a Master of Philosophy (Built Environment) and Bachelor of Laws. He lectures and writes widely about strata management issues in Australia and internationally.
.png)