Claims

How Strata Agencies Handle Claims

ClaimsGateway

22 Oct 26

•

min read

A strata underwriting agency writes strata insurance for an insurer under a binder, and often handles claims for it too. The binder sets claims authority limits; claims above them go back to the insurer. The agency reports every claim to the insurer through bordereaux and audits. Strata makes this harder because losses are large and involve many parties.

This article is general information, not legal or compliance advice. Check the current text of the code, standard or legislation, and take advice for your situation.

Key takeaways

Strata underwriting agencies write cover and often settle claims on behalf of an insurer, within limits set in a binder.
Strata agencies write for major insurers: Longitude is backed by Chubb, QUS by AIG and Strata Unit Underwriters by CGU, according to Insurance Business.
According to the Underwriting Agencies Council, its more than 130 member agencies are responsible for over $10.5 billion of premium a year.
According to ASIC, handling and settling insurance claims has been a financial service needing an AFS licence since 1 January 2022.
Large losses, defects and many parties make strata claims the hardest place to keep within authority.

What is a strata underwriting agency?

A strata underwriting agency is a specialist that designs, prices and sells strata insurance on behalf of one or more insurers, called capacity providers. The insurer carries the risk. The agency works under a written authority, usually a binder, and often handles claims as well as underwriting. Much Australian strata cover is written this way.

The market is concentrated in specialists. According to Insurance Business, in July 2026 the commercial strata market included Longitude, backed by Chubb, QUS, backed by AIG, and Strata Unit Underwriters, whose products are underwritten by CGU. CHU is another established strata specialist.

Agencies are a large part of Australian insurance generally. According to the Underwriting Agencies Council, its more than 130 members are responsible for over $10.5 billion of premium a year. The guide to underwriting agencies explains how agencies work across lines.

How is claims authority delegated to a strata agency?

Claims authority is delegated through the binder. The binder says whether the agency may settle claims, up to what amount, and which claims must be referred to the insurer. Claims authority is a separate grant from underwriting authority, and it usually carries a settlement limit, referral triggers and named approvers above the limit.

The Corporations Act defines a binder as an authorisation that lets a party enter into insurance contracts, settle claims, or both, on an insurer's behalf. So the same document can grant underwriting power, claims power, or both. The delegated authority explainer covers the detail.

Referral triggers are where judgement comes in. A claim may need referral because of its size, a suspected fraud, a disputed cause or an expected large loss. For strata, a storm affecting a whole building can cross a limit within days.

Licensing applies too. According to ASIC, handling and settling claims has been a financial service needing an AFS licence since 1 January 2022. The binders and coverholders guide covers how agencies hold that authority.

What does the insurer need back from a strata agency?

The insurer needs a regular, accurate record of every claim the agency handles in its name. That usually means monthly claims bordereaux, with status, reserves and payments, plus referrals of claims above the agency's limit and access for audits. Because the insurer stays accountable, it checks the agency's work against the authority it granted.

Bordereaux are the routine part. They list each claim and its numbers, so the insurer can reconcile its own records. The bordereau explainer sets out what one should contain.

Audits are the periodic part. The insurer samples files to test whether limits, referrals and procedures were followed. A strata agency with well-kept files, showing each decision and who made it, passes audits more easily.

Why does strata make delegated claims harder?

Strata makes delegated claims harder for three reasons. Losses are often large, so they reach referral limits quickly. Damage and defects are hard to separate, so liability decisions take judgement. And each claim involves many parties, from the strata manager and committee to owners, tenants and builders.

Large losses test the referral rules. A water leak in one apartment can be settled within authority. A storm that damages a whole tower may need the insurer's approval at several points as costs grow. The agency must notice the moment a claim crosses its limit.

Defects test judgement. Insurance covers sudden damage, not poor building work. Telling them apart may need an engineer, and the decision often goes to the insurer. Meanwhile, owners are waiting, so communication matters as much as the decision.

Catastrophes test capacity. A single storm can bring many strata claims at once, each with its own referral, assessor and builder. As a result, agencies need processes that hold up under volume, not just on an ordinary week.

What do strata agencies need from their claims system?

Strata agencies need a claims system that holds each insurer's rules, routes claims for referral above authority, tracks payments to builders and contractors, and keeps a record every insurer can audit. Because an agency may write for more than one insurer, the system has to apply each binder's rules to the right claims.

Configurable workflows help most. When a binder changes, the agency should be able to change its process without waiting for a vendor. Payment control matters too, because strata claims often involve several contractors on one loss.

ClaimsGateway (claimsgateway.com) is one example of that kind of platform. Its workflows are configured without developers, with changes owned by the business. It handles property and liability claims among others, and builds in payment set-up, tracking and reconciliation. The ClaimsGateway underwriting agencies page describes its approach.

ClaimsGateway suits strata agencies that want a claims platform beside their policy system. However, agencies that want policy administration and rating in the same system as claims will be better served by an MGA platform.

Frequently asked questions

What is a strata underwriting agency?

A strata underwriting agency is a specialist that designs, prices and sells strata insurance on behalf of an insurer, under a written authority called a binder. The insurer carries the risk. Many agencies also handle claims for the insurer, settling them within agreed limits and referring larger ones back.

Do underwriting agencies settle claims?

Many do. If the binder grants claims authority, the agency can assess and settle claims on the insurer's behalf up to an agreed limit. Claims above the limit, or with features such as suspected fraud or a disputed cause, are referred to the insurer. Some agencies pass all claims to the insurer or a TPA.

What is a claims authority limit?

A claims authority limit is the most an agency can pay on one claim without the insurer's approval. It is set in the binder, alongside referral triggers for claims that need the insurer's input regardless of size. Claims that exceed the limit, or are likely to, must be referred to the insurer.

What is a claims bordereau?

A claims bordereau is a regular report, usually monthly, that an agency sends its insurer listing the claims it handled under the binder, with each claim's status, reserves and payments. The insurer uses it to monitor the agency's claims and to reconcile its own records against the agency's.

Who regulates underwriting agencies in Australia?

ASIC regulates underwriting agencies as financial services providers, and handling and settling claims has needed an AFS licence since 2022. The insurers that give agencies authority are regulated by APRA and remain accountable for claims handled in their name. The Underwriting Agencies Council is the industry body.

About the author

ClaimsGateway builds cloud claims management software for insurers, underwriting agencies, brokers, TPAs and self-insured organisations in Australia and New Zealand. Every regulator figure in this article links to its source, and every vendor fact was checked on the vendor's own site on the date shown.