Australia’s largest general insurance broker network suspends trading amid damning ABC allegations
Major strata insurance brokerage company and underwriter, Steadfast Group, has suspended trading on the Australian Stock Exchange after reports the company had allegedly misled its clients. Steadfast denies the allegations.
The share price for the $7bn company fell 6.14% on Monday morning to $5.96 after allegations were published by the ABC, ahead of a Four Corners report, that undisclosed financial arrangements between insurance companies, brokers and strata managers were driving up the cost of insurance for owners.
Among the allegations was that a Steadfast-owned broker, engaged by a Sydney owners’ corporation to provide insurance quotes for their residential building, had recommended a more expensive policy from a Steadfast-owned firm while hiding a cheaper quote from a competitor.
Steadfast is Australia’s largest general insurance broker network and insurance underwriter, responsible for brokering approximately 40% and underwriting 55% of strata insurance in the country. The company posted net profit after tax of $252.3m for the 2023-2024 financial year, up 21.8% from 2022-2023.
In a statement to the ASX, Steadfast requested the trading halt until it had made a statement in response to the ABC’s story, or the opening of trade on Wednesday morning, whichever came first.
The story also prompted the chair of the Australian Competition and Consumer Commission, Gina Cass-Gottlieb, to call for a ban on paid commissions on strata insurance, saying undisclosed systems of payments were misleading consumers.
“There are a set of hidden arrangements that are … not disclosed, but also circumvent disclosure of fees,” Cass-Gottlieb told the ABC.
“The receipt of hidden payments and commissions of whatever nature is misleading consumers.”
Enhanced disclosure obligations did not properly address the key problem, which was the financial incentive, Cass-Gottlieb said.
“Even with the disclosure, the strata manager, the insurance broker, continues to have the financial incentive, and that includes a financial incentive not to recommend lower priced insurance.”
Speaking to the ABC, Steadfast Group chief executive Robert Kelly denied the company had misled its clients. He said the payment systems had not been designed to bypass ordinary disclosure obligations by strata managers, but that it was strata managers’ jobs to disclose financial arrangements, not Steadfast’s.
Guardian Australia has approached Steadfast for comment.
