Independent review of strata insurance practices – phase 2 released

In July 2022, industry specialist John Trowbridge released an independent consultation paper, commissioned by the Steadfast Group, which offered findings and recommendations on disclosure practices of intermediaries (strata managers and brokers). This paper was Phase 1 of three phases of an independent review, commissioned by the Steadfast Group.

On Thursday 8 December, the Phase 2 findings on the Remuneration of intermediaries and possible reforms have been released. The recommendations are not binding on any parties and purely recommendations.

“Phase 1 of the independent review highlighted the important role brokers and strata managers play in addressing the strata insurance needs of the Owners Corporation. The relationship among the three parties, including the Owners Corporation can be complex and requires good communication”, said Philip Kewin, NIBA Chief Executive Officer.

“In March this year, prior to the drafting of the independent consultation paper, NIBA introduced proactive self-regulation through the 2022 Code of Practice, which addresses issues such as terms of engagement, conflicts, remuneration and disclosure. This is recognised, and effectively covered off again in phase 1 of the report from Mr Trowbridge. Similar disclosure measures are also supported in the proposals paper on Conflicted Remuneration from the Quality of Advice Review. The full effect likely not start to make an impact until 2023 and likely not fully effective until 2022.

“NIBA will need to assess the recommendations and ramifications of phase 2 of the report in full detail. Recognising that brokers are already implementing self-regulatory change, and will likely further change emanating from the Quality of Advice Review, any further change, which appears to be recommended in phase 2 of the report, would seem premature,” he added.

A copy of the report is available at www.johntrowbridge.com.au/strata-insurance/phase-2/