The information that you have received is correct. However, the Strata Manager must disclose this commission or face a penalty. Transparency is the key.
From the CHU website: “Commission payments are made to cover all of the administrative time and advocacy strata managers spend quoting and transacting an insurance contract for a scheme.”
“the commission also covers time spent on claims as, if a separate claims handling fee is set, this can become quite costly if unexpected claims lead to a high number of hours being worked.”
Both an estimated commission must be disclosed (at the AGM prior to the commission being paid) and the actual commission paid must be disclosed (at the following AGM).
“Strata managing agents must report at each Annual General Meeting whether any commissions or training services have been provided to, or paid for, by the agent in the preceding 12 months, and provide the particulars of those commissions or training services.
“The agent also has to set out an estimate of any commissions they expect to receive in the following 12 months. If an agent doesn’t do this, they are subject to a penalty of up to $2,000, so it’s an offence for an agent not to make this disclosure.”
See this link (from the Strata Mangers’ perspective):
https://www.reinsw.com.au/Web/Posts/Latest_News/201709/Advice_on_strata_insurance_commissions.aspx
and this link (from the OCs’ perspective):