This article is about the need for strata managers to disclose their insurance commission in WA.
Table of Contents:
- QUESTION: Can the strata manager force the strata company to switch from a direct insurer to an insurance broker?
- QUESTION: We have repeatedly asked our strata manager to disclose the insurance premium and their commission. We’ve failed to receive satisfactory supporting documents. What is the best approach in regard to this matter?
Question: Can the strata manager force the strata company to switch from a direct insurer to an insurance broker?
Our strata company deals with a direct insurer. The strata manager wants us to transition to an insurance broker, which will see us incur a (as yet undisclosed) fee.
Our previous strata manager charged a $1500 commission on top of their management fee. We chose our current strata manager specifically because they administered our insurance directly with no additional cost apart from their management fee.
We don’t want to use a broker as our budget is already tight. Can the strata manager force the strata company to switch to a broker? Does the strata company have grounds to terminate the strata manager’s contract if it no longer performs the insurance function directly?
Answer: The council’s responsible for appointing and dismissing contractors as deemed appropriate.
The strata manager cannot compel the council of owners to switch to a broker. It is the council’s responsibility to appoint and dismiss contractors as deemed appropriate.
Review the management agreement to determine if directly arranging insurance is explicitly listed as part of the strata manager’s duties. If the strata manager ceases to perform this function, the council may argue that they are not fulfilling their contractual obligations.
If termination of the strata management contract is considered, Section 151 of the Strata Titles Act 1985 (WA) outlines the process for issuing a show cause notice. This procedure ensures the strata manager is given the opportunity to respond before further action is taken.
Jordan Dinga
Abode Strata
E: abode@abodestrata.com.au
P: 08 9368 2221
This post appears in the May 2025 edition of The WA Strata Magazine.
Question: We have repeatedly asked our strata manager to disclose the insurance premium and their commission. We’ve failed to receive satisfactory supporting documents. What is the best approach in regard to this matter?
Answer: Obligations are limited to disclosure of the amount or value of the benefit (and do not arise if the amount is less than $100).
A strata manager’s obligations in relation to disclosure of any remuneration or other benefits they receive are set out in section 147 of the Act and regulation 100 of the Regulations. Those obligations are limited to disclosure of the amount or value of the benefit (and do not arise if the amount is less than $100). Therefore, they do not necessarily have to disclose any further information.
The contract you have with the strata manager might also contain terms that are relevant. Information about the insurance premiums that a strata company is paying (as opposed to any commission that the strata manager is receiving in relation to that insurance) is information that belongs to the strata company and should be provided if requested.
From the information provided, it is difficult to say whether or not the strata manager is in breach of any of its obligations under the Act, Regulations or their contract with you. If they have and they do not respond to a formal written request, then you may have grounds to commence a SAT application.
Carolyn Meighan
Bugden Allen Graham Lawyers
E: carolyn@bagl.com.au
P: 08 9254 6304
This post appears in the June 2024 edition of The WA Strata Magazine.
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Read next:
- Nat: Strata commission during the insurance renewal process
- ‘Strata Insurance Disclosure Best Practice Guide’ Addresses Industry Commission Practices
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