Two Strata Management Proposals. Which One Is Really Cheaper?
Two agencies propose different annual fees, insurance arrangements and extra charges. What would you compare before recommending either one?
A strata scheme is deciding whether to appoint a new management agency. Two proposals arrive.
Agency A charges a $7,200 annual management base fee and takes no insurance commission. Renewal administration and claims work may attract separate fees under its schedule.
Agency B charges a $6,300 annual management base fee. It proposes retaining a disclosed insurance commission where legally permitted and authorised under the proposed agreement. It includes certain insurance administration services and lists other fees separately.
The chair says, “Agency B is $900 cheaper. Let’s accept it.” Another committee member says, “Agency A is commission-free, so surely it’s better value.” The committee has yet to compare actual policy quotations, service inclusions or likely additional fees.
What would you do?
- AChoose Agency B because its annual base fee is $900 lower.
- BChoose Agency A because it takes no insurance commission.
- CObtain a like-for-like comparison of costs, remuneration, services and terms before recommending an agency.
- DLeave the choice to the current or proposed strata manager.
Choose your response before opening the practical explanation.
Reveal the practical explanation
Compare the full proposals before making a recommendation
The $900 difference is in the annual management base fees. Ask both agencies for comparable service schedules and policy quotations. Compare GST, likely extras, claims support, broker fees, who receives remuneration, related suppliers, delegated authority, contract terms and service quality.
Use the gross policy amount once in each estimate. If commission is already included in a quoted gross premium, record the amount for disclosure and avoid counting it again as a separate expense. Confirm that any commission model can lawfully be offered and is consistent with the provider’s applicable policy.
This fictional NSW scenario uses invented fees. The likely cost depends on the actual quotations and agreements. This is general education.
A base fee covers only part of the decision
Different inclusions and likely extra work can change the annual cost. Comparable figures let owners see what they will receive and how much they are likely to pay.
Set up two columns using the same assumptions for cover, services, claims and extra work. Record the likely annual total for each, then bring the comparison and proposed terms to a general meeting for the Owners Corporation’s decision.
STRATA IQ takeawayCompare the total cost against the work and cover the scheme will receive.
Turn the explanation into practice.
Open the linked Guide or Academy pathway when you need the complete checks, official sources and practical learning.