Owners corporation (OC) managers are legally permitted to receive commissions from insurance providers when arranging insurance policies on behalf of the OC. However, strict disclosure and conduct requirements are in place to ensure transparency and protect the interests of lot owners.
Disclosure of Insurance Commissions
OC managers must disclose any commissions, payments, or other benefits they receive from suppliers, including insurance providers, to the chairperson of the owners corporation. The aim is to prevent situations where a manager might be, or appear to be, influenced to select an insurance policy based on the commission offered rather than the best interests of the OC.
Professional Conduct Obligations
Under the Owners Corporations Act 2006 and the Australian Consumer Law and Fair Trading Act 2012, OC managers must:
- Act honestly and in good faith.
- Avoid conflicts of interest.
- Disclose commissions and benefits.
- Seek competitive prices for goods and services.
Best Practices for Owners Corporations
- Request and review written disclosure of all commissions.
- Ensure insurance providers and the manager hold proper licenses.
- Seek multiple insurance quotes where possible.
- Keep discussions about insurance on the AGM agenda.
Benefits to Insurance Companies
- Access to a broad client base: Managers often represent multiple OCs, giving insurers access to a volume of policies.
- Lower acquisition costs: Commissions reduce the need for direct marketing or sales staff.
- Streamlined administration: Managers handle paperwork and claims assistance, reducing the insurer's workload.
- Ongoing policy retention: Relationships with OC managers can help insurers maintain long-term policy renewals.
Benefits to Owners Corporations
- Convenience: Managers handle all aspects of policy comparison, placement, and renewal.
- Claims support: Experienced managers can streamline the claims process and advocate for the OC.
- Access to market rates: Managers can often negotiate competitive pricing by leveraging their portfolio.
- Compliance assurance: Professional managers help ensure the OC meets statutory insurance obligations (e.g., reinstatement value cover).
Financial Services Licensing
Managers who provide financial services relating to insurance must be either:
- Licensed under an Australian Financial Services (AFS) licence, or
- An authorised representative of an AFS licensee.
Best Practices for Owners Corporations
- Request and review written disclosure of all commissions.
- Ensure insurance providers and the manager hold proper licenses.
- Seek multiple insurance quotes where possible.
- Keep discussions about insurance on the AGM agenda.