New Broker Code Raises the Bar for Strata Insurance Transparency

The most relevant change for strata communities is that remuneration disclosure is being extended across strata insurance services provided to an owners corporation, whether or not the client is treated as a retail client. This matters because many strata schemes sit in a practical grey zone: individual lot owners pay levies that fund the premium, but the insurance is usually arranged at owners corporation level, often through a strata manager and an insurance broker.

The code also strengthens the focus on authority. Where a broker is engaged through a strata manager or another party, the broker is expected to take reasonable steps to confirm that the appointment has the owners corporation’s authority. For committees, that makes renewal governance more than a paperwork exercise. Minutes, instructions, tender records and disclosure documents may become increasingly important if there is later a dispute about how the policy was arranged.

In practical terms, owners corporations may wish to look for clearer answers to several questions before renewal decisions are made:

• What commission, fee, rebate or other benefit is being received by the broker?
• Is any amount being paid or shared with the strata manager or another authorised party?
• Is the amount shown in dollars, or is the basis of calculation clearly explained?
• Has the owners corporation formally authorised the broker appointment?
• Do the renewal documents explain the options considered, not just the recommended placement?

The change does not tell an owners corporation which strata insurance policy to choose, nor does it remove the need to consider cover limits, exclusions, excesses, claims history, building defects and catastrophe exposure. It is also important to recognise the code’s limits: it is a professional code for subscribing brokers, not a complete replacement for state and territory strata laws, Australian financial services obligations or owners corporation decision-making duties.

Even so, the timing is significant. Strata insurance has faced scrutiny over affordability, conflicts, disclosure and claims outcomes for several years. The new code suggests the market is moving towards a more documentable standard of trust. For lot owners, the practical benefit should be better visibility. For committees, the lesson is to treat disclosure as part of risk management, not as a formality left until the premium invoice arrives.