NAT: ACCC Northern Australia Insurance Inquiry Final Report Release (30 November) SCA Actions

This Media Release about the ACCC Northern Australia Insurance Inquiry Final Report Release (30 November) SCA Actions has been provided by Shaun Brockman, SCA National Policy Manager, SCA.

Feb 2021: We have published an updated article on this topic here – What does the ACCC’s final report into insurance in Northern Australia mean for strata?

On Monday 30 November 2020 the Australian Competition and Consumer Commission (ACCC) is scheduled to hand the Northern Australia Insurance Inquiry final report to the Treasurer, The Hon Josh Frydenberg.

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The inquiry focused specifically on strata insurance and is critically important to future regulation, legislation and policy by federal, state and territory administrations. As a result, SCA would like to take the opportunity to:

• Recap the inquiry’s purpose
• Highlight our submissions to and involvement in the inquiry
• Underline our positions and messages
• Identify the advocacy actions SCA is currently undertaking
• Outline what actions we have planned moving forward and
• Explain how you can get involved in our future activities in this space.

Background

On 25 May 2017, the Australian Government directed the ACCC to conduct a wide-ranging inquiry into the supply of residential building (home, contents and strata insurance in Northern Australia).

The Northern Australia Insurance Inquiry commenced on 1 July 2017 and was tasked broadly with identifying and addressing concerns about insurance availability and affordability.

The ACCC released its First Interim Report for the inquiry in December 2018 and its Second Interim Report in December 2019.

SCA has been proactive at each step of the inquiry, providing insight and expertise at each stage of the process, including:

• SCA Issues Paper Submission in January 2018
• SCA First Interim Report Submission in April 2019
• SCA Second Interim Report Submission in September 2019
• SCA Supplementary Submission sent to the ACCC on 16 October 2020
• SCA (Qld) branch submissions to the First Interim Report (Qld) and the Second Interim Report (Qld).

SCA Actions and Positions

SCA has been strong and consistent in its positions through the submissions to the inquiry over its two-and-a-half-year length. SCA has consistently represented that any future decision-making and changes to legislation, regulation or policy undertaken by the Australian Government, State and Territory Governments and State and Territory regulators should strongly draw from our positions, most importantly that:

• Strata insurance is critically important to strata owners and residents and the industry and government must explore and adopt policies and methods to ensure affordability and accessibility to appropriate strata insurance.
• Governments and regulators explore financial and regulatory solutions at the federal and state levels to improve affordability and availability including measures such as consideration of the Australian Reinsurance Pool Corporation (ARPC), government-funded low-interest loans for below standard buildings, the removal or reduction of stamp duty, introducing a natural disaster levy or the ability to enter the market at a lower level of insurance.
• Strata insurance is a specialised product that is specifically tailored to the needs of bodies corporate.
• The efficiency and effectiveness of strata managers helps strata insurers keep the costs of insurance lower than it would be without their assistance.
• The income received by strata managers from insurers is compensation for the work performed, including obtaining quotes, liaising with insurers on behalf of the bodies corporate and assisting bodies corporate in the claims process.
• If strata managers did not receive this income, then the cost of those services would be borne by the bodies corporate in the form of additional service fees under the strata management agreement.
• A regulatory regime founded on a principle of full transparency and disclosure, rather than prohibition, would be a better and fairer approach as it would enable consumers to make an informed decision on the value of the service of the strata manager. Each body corporate could then elect for the strata manager to receive a commission from the insurer or pay higher body corporate management fees.

What is SCA doing now?

SCA National has driven the establishment of the SCA National Strata insurance Taskforce, a body of 12 strata management and strata insurance representatives from across Australian jurisdictions.

The taskforce has the scope to formulate industry positions, action plans, make recommendations and provide representation and input into strata insurance advocacy. As one of its first actions, the taskforce commissioned an extensive report into the strata insurance with a focus on highlighting the value of the strata manager in the strata insurance project.

The report will be the first complete document giving a comprehensive summary of the insurance taxes, duties and law across jurisdictions in Australia as they relate to strata insurance, as well as conducting and analysing a strata manager survey, in-depth interview and insurance data analysis.

The report, which will be handed to SCA and the taskforce on 31 April 2021, will act as the bedrock for future industry advocacy to government, regulatory and industry stakeholders to fairly represent the strata industry’s role in the insurance process.

How can you get involved?

Regulation of strata insurance affects everyone in the industry and the research project the SCA National Strata Insurance Taskforce has commissioned is trying to draw on the experience of as many people within the strata industry as possible.

We have already had great feedback from members when asking via survey if the goals we have established were appropriate, and very positive feedback when asking for management agreements to undertake a comparative analysis.

The research project has three phases left that require industry participation and we welcome your participation:

• Strata managers survey questionnaire (February 2021)
• Strata owners survey questionnaire (February 2021)
• Senior managers / owners interviews (March 2021)
• SCA will put out calls for involvement, and the surveys itself through member communication in the lead up to these dates.

Please contact Shaun Brockman, SCA National Policy Manager, shaun.brockman@strata.community for more information and if you would like to receive emails asking for your participation in the project and periodic updates between now and 31 April 2021.

Shaun Brockman
E: shaun.brockman@strata.community
SCA

This post appears in Strata News #434.

This post appears in Strata News #434.

Have a question about the ACCC Northern Australia Insurance Inquiry Final Report Release (30 November) SCA Actions or something to add to the article? Leave a comment below.

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