Strata insurance: testing the broader market
14 June 2016
This article about strata insurance quotes has been supplied by Wayne
Stevens President of Unit Owners Association of Queensland (UOAQ).
First, a nice, feel-good story… one where the owners finally backed a winner.
A recent Adjudication contains an interesting backstory about the
benefits of outsourcing strata insurance to an independent broker… see
WAVES  QBCCMCmr 132i.
It is true, they’d messed up their 2015 Statutory Insurance Motion by
not including it at all, thereby earning themselves an EGM compliments
of the Adjudicator. But at least they’d set themselves on the path to
significant annual savings off their insurance premiums.
Dating from their registration about 10 years ago, WAVES’ strata
insurance was normally handled by their Body Corporate Manager (BCM).
Also, the one insurer had been able to supply the most competitive quote for every one of those years.
There is nothing unusual about any of this: it is a very common (and lucrative) practice for BCMs to provide this service.
they take a commission, generally up to 20% of the base premium
They are tasked to find the most competitive quote each year and in
return they take a commission, generally up to 20% of the base premium.
same insurer being able to provide the most competitive quote
And, even the same insurer being able to provide the most competitive
quote year after year…this is also quite familiar phenomena.
For the 2015 AGM however, the WAVES’ Committee decided to break the
mould and go directly to an independent broker. This broker was known
by the Treasurer, an accountant, to provide a very professional service.
It is standard practice for independent brokers to approach a wide
range of insurers for quotes. Brokers understand the market is
constantly changing: so they know they have to constantly test the
broader market if they want to get the best on offer at the time.
Unfortunately, this is not necessarily a standard practice with some
BCMs. Some tend to favour just two or three insurers (including the
insurer they are associated with as an Authorised Representative), and
often simply approach these same few insurers, from one year to the
It is also understood that some strata insurers will deal only with
brokers…and not with BCMs. This means the insurers’ market is normally
broader, and more competitive, than the one trawled by BCMs.
The WAVES’ broker approached eight insurers, including the incumbent insurer.
The broker reported back to the Committee with a range of responses from these insurers, including a recommended option.
The incumbent insurer was not so competitive this time: their quote was about 20% higher than the recommended, and lowest quote.
The three best quotes were properly included, as Alternatives, in the
2015 AGM Insurance Motioniii; the Committee supported the broker’s
recommendation; the owners voted accordingly.
The 2014 premium was $34,031; the 2015 premium was $27,301; everyone was happy.
Ok, this is nice for them…but what about us?
It is true that ‘One swallow does not a summer make’. The WAVES’ experience does not, in itself, prove a pattern.
But, WAVES is not Robinson Crusoe.
It is our experience that when Bodies Corporate are persuaded to deal
directly with independent brokers, they are generally rewarded with
For some time now, we have been recommending Bodies Corporate look
seriously at using independent insurance brokers, preferably those who
specialise in strata insurance.
One particular broker we have been recommending is Strata Insurance
Solutions (SIS)iv. As their name suggests, strata insurance is their
Many Bodies Corporate have followed our recommendation: we in turn have
followed these Bodies Corporate, to ensure our recommendation is
an average savings of around 18%
The pattern to date confirms an average savings of around 18%.
Ok, 18% sounds nice… but 18% of what?
The reality in strata insurance is that the ‘what’ is a lot of money.
You only have to look at any complex’s annual budget to see that their
strata insurance premium is one of the biggies.
Every complex is different of course, ranging from the very small to
the very large… and the size of the overall premium for the complex
varies accordingly. But regardless of the size of the complex, strata
insurance normally involves a whole lot of $$$s per owner.
Strata insurance is also annual. On-going savings like 18% each year,
year after year, can quickly add up to a significant amount.
This means real potential for keeping the levies down; and this, in
turn, helps keep the value of the units up. Nothing can cruel the value
of your unit more, than high levies.
Do yourself a favour
Take your strata insurance to an independent broker: find out how much you can save.
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