Strata managers are to stop taking commissions from insurers for arranging polices for strata schemes.

From January next year, strata managing agents who are members of their professional body, Strata Community Association (NSW), will no longer offer contracts that allow them to take commissions for arranging insurance cover.

The widespread practise, under which strata managers have been receiving  commissions of 20 per cent or more for arranging insurance coverage, will be replaced by a “fee for service” arrangement and an “increase in agreed services.”

The immediate questions in the strata community have been obvious: will strata management fees go up, will insurance premiums go down and what will happen to the small companies that depend on commissions to survive?

SCA-NSW was last year rocked by scandals following highly critical coverage in an ABC TV report called The Strata Trap. The criticism was partly related to insurance commissions being concealed as so-called fees for service, often provided by subsidiary companies, with the funds going indirectly into the strata managers’ coffers.

Now the body is trying to “get in front of” the story by taking pre-emptive action, according to some observers. NSW Fair Trading Minister recently asked the Productivity Commissioner to report on the likely consequences of strata managers being denied insurance commissions as well as other kickbacks.

Meanwhile, recent changes to strata law have required strata managers to declare to owners any commissions they receive and to give a written explanation as to why the receipt of the commission was in the owners’ best interests, for insurance cover that is mandatory under strata law.

Taking the whole question of commissions off the table, it was announced this week that from January 1, 2026, SCA-NSW will begin a phased replacement of insurance commissions for strata managing agents. 

“The decision comes as part of SCA (NSW)’s ongoing commitment to raising professional standards, strengthening consumer trust, and delivering better outcomes for owners and residents living in strata communities.” a spokesperson said.

From next year, new standard management contracts issued by SCA (NSW) members will not include an option to accept commissions on insurance products and members using their own management contracts will also not offer the option. 

Remuneration will be replaced by “a combination of fee for service for insurance and an increase in agreed services, in consultation with clients.” 

“This is a milestone moment for strata,’ SCA-NSW President Robert Anderson said. “The decision to replace insurance commissions over this phased transition has not been made lightly, or quickly.”  

“Undertaking this reform is about delivering transparency, trust, and showing leadership,” Mr Anderson said. “For owners and committees, this reform will deliver transparency, accountability and pricing simplicity.”  

“For managers and their businesses, it will deliver certainty, business sustainability and improve trust and credibility with clients.” 

The immediate reaction in the strata community has been to ask if strata management fees will go up but insurance premiums will go down. And if the end result is a zero sum or better outcome, few will quibble, especially if it means more transparency.

The reality is we have recommended committees procure insurance independently of their manager for years and completely avoid any fees. However then the SCA made it standard practice to charge a “lost commission” fee for the commission they would have received.

“The commissions have never reflected the actual work required on insurance,” a spokesperson for the Strata Owners Alliance has written on the Flat Chat Forum. “The industry has overplayed it’s hand on how much work strata insurance was for years to justify the ridiculous fees and now we are likely just going to see commissions replaced by just as ridiculous fee for service to do not a lot.

“We recommend every committee go and procure its own insurance through and independent broker and see how little value your strata manager added in the process.”

However, there are concerns in the industry that some smaller strata management companies will not be able to absorb the loss of income, or compete with larger companies over fees, and this may even lead to many of them choosing to quit SCA-NSW.

This, it has been argued, could see the death of local “mum and dad” strata management firms in favour of one-size-fits-all large companies who can more easily amortise their costs.

“We know this transition may be challenging for some in the industry, however SCA (NSW) will be spending significant time and resources supporting members with training, resources and education throughout the transition, and with much more detail in the coming weeks,” Mr Anderson said.