There’s a dirty little secret tucked away in the back of a report about skyrocketing insurance premiums in northern Australia.
There’s a dirty little secret tucked away in the back of a report about skyrocketing insurance premiums in northern Australia.

Dirty little secret hits thousands of unit owners

DIRTY LITTLE SECRET

There's a dirty little secret tucked away in the back of a 560-page report released last month about skyrocketing insurance premiums in northern Australia.

Few seem to know much about the issue even though it impacts thousands of Queensland unit owners and their wallets.

In a nutshell, building managers are pocketing commissions of 15 per cent to 20 per cent on the insurance policies they source on behalf of body corporates. In some cases, incentives can reach 30 per cent for the cover, which is mandatory for common areas.

Critics, such as former insurance industry operative Margaret Shaw, say the disclosure of these payments is woefully inadequate and they create clear conflicts of interest.

Ms Shaw, who watched in horror as the cost of insuring her Airlie Beach unit block more than tripled in one year to $81,000, was among more than 420 parties who made submissions to the ACCC's three-year probe into the dysfunctional insurance mess up north.

Margaret Shaw.
Margaret Shaw.

Under Queensland law, body corporate managers have to disclose the commission they are entitled to receive. But that declaration is usually buried in management agreements and does not appear on invoices received by resident committees.

"When it comes to strata insurance, there seems to be very little transparency,'' Shaw told the ACCC. "In my opinion, body corporate managers do not always act in the best interest of their owners when it comes to insurance.''

The report backs up those concerns. It found that "strata managers are not using, or making no effort to find, the best brokers…and are instead focused on maximising their revenue.''

Not surprisingly, they are "influencing the broker's policy selection by having a bias towards those policies that generate a great commission,'' the report says.

Shaw, along with unit owner associations, are among many who have called for reforms, including easily understood invoices and the capping of commissions.

They also want to see body corporate managers banned from receiving commissions from either brokers or insurers.

The ACCC obviously got the message, with one of its 38 recommended changes urging that strata managers be remunerated only by body corporates.

But defenders of the status quo, such as industry lobby group Strata Community Association, are fighting back.

"Present remuneration structures reflect the value of the strata manager's work in the sourcing of insurance and the processing of claims,'' SCA head James Nickless told City Beat.

"Any changes to this remuneration model will simply result in higher base management fees and higher fees for additional services, which will ultimately cost consumers more.''

So will anything change? Stay tuned.

PASSION FOR DOLPHINS

The woman had a passion for dolphins and shared it with the world.

Betty Joan Osborne, who was instrumental in establishing the care and education program for the marine creatures at Tangalooma Island Resort, has passed away.

She was 81 and only retired seven years ago as Alzheimer's disease took a growing toll.

Osborne was so committed to her beloved dolphins that she would wade out at night with her team to oversee their feeding.

Betty and Brian Osborne.
Betty and Brian Osborne.

She and her husband, property developer Brian Osborne, bought the iconic resort on Moreton Island back 1980 and the family continue to manage it.

Indeed, all three of their children and six grandchildren are involved in the business, which employs about 350 staff and hosts roughly 300,000 guests a year (pre-COVID, of course).

The couple put the resort on the market back in mid-2018 but no sale eventuated.

Early last year they secured development approval to expand the scenic complex, originally built in the 1970s, with a new marina precinct and additional hotel rooms.

MIDAS TOUCH

Rich Lister Bevan Slattery has proven once again that he's got the Midas touch.

The Brisbane tech titan and serial investor tipped $2m into rental business Rent.com.au this week and he's already more than tripled his money.

Slattery's investment represented the bulk of the company's $2.75m capital raising at 5c a share.

Bevan Slattery.
Bevan Slattery.

His vote of confidence in the WA-based start-up helped put a rocket under the stock, which continued gaining ground on Wednesday as it hit a high of 22c before settling back to close at 18.5c.

"I love disruptive platforms that have the ability to scale and Rent.com.au has great potential to achieve that goal," Slattery said.

The firm, which provides a raft of online tools for both tenants and landlords, is getting ready to launch something called "RentPay" to give renters more control over payments.

While it continues to lose money, Rent.com.au has just reported a second successive quarter of positive earnings growth as its market capitalisation swells to more than $44m.

Company boss Greg Bader described Slattery's involvement as "fantastic''.

SCREWS TIGHTENING

The corporate cop continues tightening the screws on would-be Dunk Island saviour James Mawhinney, whose dream of creating a $1.6bn tourism mecca around Mission Beach has turned to ashes.

We learned this week that ASIC hopes to secure court orders to permanently restrain the boss of the Mayfair 101 funds management group from a raft of activities, including the advertisement of any financial products or solicitation of money for them.

James Mawhinney
James Mawhinney

Mawhinney, who denies any wrongdoing, is vigorously defending the case, which will be heard in court later this month.

The challenge comes as ASIC just claimed a significant win against the Mayfair group, winning court orders to wind up its M101 Nominees Pty Ltd, which had raised about $67m from investors. Liquidators had previously taken control of another entity in the group.

Mawhinney announced plans in late 2019 to buy Dunk Island for $31.5m from Peter Bond, the founder and boss of failed Linc Energy. But the Bond family has now regained control of the island and put it back on the market.

 

Originally published as Dirty little secret hits thousands of Qld unit owners



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