For instance, a strata scheme in Sutherland was charged a brokerage fee amounting to 148% of the base insurance premium. Typically, industry standards suggest brokerage fees should range between 20% to 25% of the base premium. Such discrepancies have understandably led to dissatisfaction among property owners.
Alison Steele, treasurer of a strata committee in Camperdown, expressed her dismay upon discovering brokerage fees as high as 115% of the base premium for her complex. She described the situation as a "real betrayal of trust," emphasizing the expectation that strata managers should act in the best interests of the property owners they represent.
Further investigations revealed that Netstrata's insurance arm, Strata Insurance Services (SIS), was responsible for these charges. The Australian Consumer Insurance Lobby (ACIL) has highlighted that fees exceeding 40% are considered excessive and unreasonable. The lack of transparency in disclosing these fees has raised questions about the ethical practices within the strata management industry.
Former employees of Netstrata have indicated that the firm often utilized "full delegated authority" contracts, granting them extensive decision-making powers on behalf of strata committees. This arrangement allowed Netstrata to appoint SIS as the insurance broker without explicit approval from the property owners, leading to potential conflicts of interest.
In response to these revelations, Netstrata has stated that SIS has been disclosing its brokerage fees in dollar values on invoices since its inception. However, the timing and manner of these disclosures have been called into question, with many clients only recently gaining access to this information.
These findings underscore the importance of transparency and accountability in strata management. Property owners are advised to diligently review their strata agreements, seek clarity on all fees and commissions, and ensure that their interests are being adequately represented. As the strata living model continues to grow in popularity across Australia, maintaining trust and integrity within the industry is paramount.
