The Australian Consumers Insurance Lobby (ACIL) has called for immediate investigations and regulatory interventions into the business practices of Strata Insurance Services following a recent high-profile ABC report, which exposed alleged significant conflicts of interest between Strata Insurance Services and strata manager NetStrata. The report revealed allegations that Strata Insurance Services has been charging fees as high as 148% of the insurance premium, far exceeding the industry standard of 20%-25%, raising serious concerns about consumer exploitation.
In response, ACIL has taken the following steps:
ASIC & ACCC Investigations: ACIL has formally written to the Australian Securities and Investments Commission (ASIC) and the Australian Competition and Consumer Commission (ACCC) requesting thorough investigations into whether Strata Insurance Services’ remuneration practices violate Australian Financial Services Licensing obligations. ACIL has raised concerns about whether these practices potentially contravene requirements to provide efficient, honest, and fair financial services, as well as potentially breaching other Australian Law.
Insurance Brokers Code Compliance Committee (IBCCC) Investigation: ACIL has also engaged with the Insurance Brokers Code Compliance Committee, requesting an investigation into whether Strata Insurance Services has breached its obligations under the Insurance Brokers Code of Practice.
Engagement with NIBA: ACIL is actively engaging with the National Insurance Brokers Association (NIBA) to push for industry-wide changes to its Code of Practice, addressing concerns raised by ACIL regarding transparency and fair treatment of consumers in the insurance broking industry. ACIL is advocating for the following key reforms:
Ensuring brokers using non-standard remuneration models demonstrate that their fees provide meaningful benefits to consumers.
Requiring brokers to verify valid instructions from the insured to avoid unlawful appointments by strata managers.
Strengthening conflict of interest provisions by prohibiting remuneration practices that create unmanageable conflicts of interest and provide clearer guidance on identifying, disclosing, and managing these conflicts, ensuring brokers uphold their duty to clients.
Prioritising consumer interests, and the Code to prohibit remuneration models that unfairly shift costs onto consumers, creating conflicts that undermine fairness.
ACIL’s Commitment to Reform
Tyrone Shandiman, Chairperson of ACIL, stated: “The allegations in this report are deeply troubling especially when the excessive fees and remuneration practices are described in the ABC report as a ‘betrayal of trust,’ ‘jaw-dropping,’ and ‘ripping us off.’ ACIL is taking strong steps to engage with ASIC, ACCC, IBCCC, and NIBA to ensure these practices are thoroughly investigated, and to advocate for stronger consumer protections in the industry. Our priority is to ensure transparency and fairness for consumers in the strata insurance market.”
ACIL will continue to advocate for revisions to the NIBA Code of Practice to ensure that the broking industry operates under clear and fair standards that protect consumers from unethical practices.
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