Steadfast in damage control as ‘kickback’ allegations on strata insurance refuted

The investigation, which also drew the concern of the Australian Competition and Consumer Commission, alleged that Steadfast has been party to “opaque schemes to channel insurance kickbacks to strata management firms”.

It further alleged that Steadfast-owned insurance brokers had “buried” offers of cheaper insurance from a rival company and recommended a higher priced policy from its own wholly owned firm.

The Four Corners investigation also aired concerns over the growth of Steadfast’s strata-title division via acquisitions since the company listed on the ASX a decade ago, with that side of the business now generating more than 20 per cent of the group’s profits.

However, in a statement to the ASX last night, Steadfast has refuted the allegations and voiced its disappointment alleging that “important information has been selectively presented” by the ABC current affairs program.

Steadfast, with a market capitalisation of $6.6 billion and a network of 418 brokerages, has clarified that its equity-owned strata insurance brokers contributed about 5 per cent of group EBITA in FY24, with operating margins “consistent with non-strata products”.

Steadfast also points out that the ABC program made no mention of an independent review the group commissioned in 2021 to “help identify how remuneration, transparency and disclosure practices can be improved for the benefit of customers and industry participants”.

“Steadfast provided the ABC with information on 29 August and 4 September 2024, which was not included in the coverage to date,” says the company.

The company notes that the final report prepared by insurance expert John Trowbridge was published in May 2023 and is available publicly, while also being distributed to relevant government and industry bodies at the time.

“Steadfast holds itself to high professional and ethical standards,” says the company.

“We reject any suggestion that our businesses operate unethically and, in particular, that Steadfast improperly channels any business to its related entities.”

Steadfast today has given a detailed response to a specific case study presented by Four Corners which alleged that a Steadfast subsidiary misled the body corporate of a building on Sydney's lower north shore.

The investigation revealed that the owners' corporation of the building earlier this year received a report from Steadfast subsidiary Body Corporate Brokers (BCB) which said only one underwriter was willing to offer an insurance policy on the building – namely CHU, which is also owned by Steadfast.

However, Four Corners says it had confirmed that rival underwriter, Strata Community Insurance (SCI), had offered the broker a policy that was “thousands of dollars cheaper for the owners — but that offer was never passed on to them”.

In its response to the ASX, Steadfast says that an insurance broker is required by NSW law to obtain a minimum of three quotes “which BCB did in this case”.

“The SCI quote required confirmation in advance that the building did not have any defects,” says the company.

“This was not required by the customer’s existing insurer. Therefore, on 28 February 2024, BCB requested that the customer confirm in writing ‘there are no known building defects to this plan’.”

Steadfast says that at the time of renewal presentation on 12 March 2024, there was no confirmation that the customer could accept conditions confirming the building contained no defects.

“As such at this time, BCB (the broker) did not believe it was appropriate to present quotes requiring this confirmation,” it says.

“On 26 March 2024, two weeks after renewal presentation, BCB received confirmation that there were no outstanding works/defects at the property. On the same day, SCI provided an updated quote.”

Steadfast says that on 28 March 2024, BCB held coverage with SCI only to be instructed by the customer on 3 April 2024 to maintain coverage with their existing insurer.

“The only additional clarification we can now confirm beyond the above is that BCB on 12 March 2024 did not present alternative terms excluding coverage for defects, as the customer at that time had not confirmed this condition could be met.

“Therefore, BCB deemed it material to provide only quote options that matched the expiring coverage which included coverage for defects.”

Steadfast CEO Robert Kelly, who was interviewed for the Four Corners investigation, today says that the company is “naturally concerned about any case that may fall short of our standards and expectations”.

“Should instances be raised that require further action, we will of course investigate and act to rectify any shortfalls in our processes and procedures,” says Kelly.

“Steadfast supports the NSW Government’s strengthening of current legislation, and increased oversight over the strata industry.

“Steadfast will continue to monitor developments on this matter and inform the market as appropriate.”

 Shares in Steadfast were placed in a trading halt yesterday pending an announcement in response to the ABC story.