The Owners Corporation Network of Australia says aspects of the $2 billion strata insurance market raise questions on ethics in the broking industry and the role and performance of the code.
Its submission to the industry’s code review notes ABC reporting last year examined issues such as common ownership of underwriting agencies and brokers, and lack of transparency.
The network says the code does not articulate what represents a conflict of interest and leaves it to companies to identify if one exists and can be managed, which is “clearly inadequate and out of step with community expectations”.
The group recommends the code include explicit guidance that common underwriter and broker ownership is a conflict of interest that must be fully disclosed, and that any incentives or preferential policies are in breach.
It recognises that brokers provide important services to owners’ corporations and accepts that commissions from insurers are an established part of their remuneration, but it has long called for an end to commissions paid to strata managers.
Strata managers’ receipt of commissions is incompatible with their fiduciary duties and is a conflict that cannot be managed by disclosure, it argues.
