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Our Strata Manager receives commissions from insurance companies, trainers etc and declares these at our AGM.
My question is can we ask for these commissions to be paid to our Owners Corporation, rather than the strata manager? What is normal practice and should we be asking for these despite our strata manager no doubt not being happy about giving up a source of income.
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Also check the agency agreement. You may find it has two prices, one for exclusion of insurance commission.
I used my own business insurance broker to get a better price on the same policy and the strata manager was able to match the price and still get the commission. They did not like it much but it amounted to large ongoing future savings by moving the base policy price down YoY. The owners were delighted with my efforts.
This is a long-running debate is strata schemes, and one with no simple resolution. Insurance commissions were about to be swept away the last time the laws were changed but the smaller players in strata management ponted out that their whole business model was based ion getting these commissions and that they would go to the wall.
The result might have been that the smaller strata schemes would have been swallowed up by bigger companies, or would have lost strata management altogether, and would have suffered as a consequence.
So, yes, insurance commissions are normal practise. And yes, your strata manager will be mightily annoyed if you try to take it from them.
That said, there are larger strata management firms that give their schemes a discount equivalent to the commission.
However, if you negotiate your own strata insurance, the insurers will not give you the commission as they see it as a payment to the strata managers for doing a lot of the heavy lifting on their behalf with claims and negotiating the terms of the coverage.
Are you happy with the strata management service you are getting for the money you are paying? If not, that is the more significant question.
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