It's common practice, for sure, but it's by no means universal or obligatory and it's certainly less prevalent than it once was.
Taking commission form insurers has long been a way of some strata managers boosting their income from buildings. To be fair, Strata Management is one of those industries where the customers often don't fully appreciate the value for money that they are getting for the services provided and when SMs try to charge for it, there's always a cowboy outfit hovering around, offering lower rates. What they don't say is that their service may also be considerably reduced.
Simple economics would suggest that what you gain on unpaid commissions, you lose on added fees but that's not always the case. Your strata manager should have the contacts to be able to find the best insurer for your building at the best rate.
How would you feel if they then offered you better insurance coverage for lower premiums and still took their commission?
The problem arises when an SM is nudging you towards an insurer who's offering you less coverage for more money. Eventually, you have to do your homework and see what's the best deal, regardless of commissions.
That said, I would rather work with a strata manager who didn't take commission. But if they did, and were the best choice for the building, and the insurance coverage was value for money, I'd still go with them.