What does the insurance commission ban mean?

NSW strata managers’ decision to phase out insurance commissions is a little odd, if only in its timing.

It was just a couple of weeks ago that Fair Trading Minister Anoulak Chanthivong announced that he was asking the Productivity Commissioner to look into what would happen if commissions and other kickbacks paid to strata managers were completely removed.

Now Strata Community Association NSW, the strata managers’ professional body has pre-empted any changes by saying they will cut them out of their contracts from January next year.

But don’t celebrate too soon. It could take the best part of three years for schemes that have recently renewed their strata management contracts to see any difference.

SCA-NSW says it plans to replace the commissions with a fee for service. Will that mean lower levies? Or, as with Donald Trump’s tariffs, will the people who are supposed to benefit from these radical moves be the ones who end up paying?

And will smaller, more commission-dependent strata management firms go bust?

“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,” the body’s president Robert Anderson said in a press release.

The move is purportedly about integrity and transparency, which are good things. And a fee for service has to be better value than a percentage of the premium. Writing a letter or making a phone call doesn’t take longer if the sum being discussed is higher.

So far we haven’t heard anything from the insurance industry but we can reasonably assume that they’d be glad to disconnect from these tawdry deals.

Apart from that, there are questions that need to be answered. Will insurance premiums come down? If so, by what amounts, and how much will strata management fees and charges increase?

That, it’s fair to say, is all that most strata owners want or need to know.

These editorials (or a version of them) go out with our newsletter every Friday. The following week we re-post them here for those who missed out. If you want to get them fresh, just subscribe (for free) below. – JimmyT

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11/09/2025 at 10:28 am #81092 Reply | Quote
Jimmy-T
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NSW strata managers are to stop taking commissions for arranging strata insurance – but with what, if anything, will they replace the lost revenue?

[See the full post at: What does the insurance commission ban mean?]

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12/09/2025 at 8:38 am #81122 Reply
dy
Flatchatter
Lots of money in the commission game – our insurance broker in NSW pays commission to the strata manager and keeps a share for himself. Wonder what the insurance companies think about all this ?

The strata manager says this way he can charge us a lower strata management fee (to his credit he is quite transparent about the amounts).

So suppose now we will be just charged a flat fee of $2,500 to ‘manage’ the insurance renewal.

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12/09/2025 at 8:46 am #81126 Reply
Jimmy-T
Keymaster
Chat-starter
dy wrote:

So suppose now we will be just charged a flat fee of $2,500 to ‘manage’ the insurance renewal.

I’m guessing that means, if the SM is claiming they have done work that deserves remunaration, then they have to show that a) the work was done and b) their efforts made a difference in getting the best policy for the owners.
It certainly opens the door for strata schemes to organise their own insurance cover then ask the SM to remove that fee for service charge.

Just be aware that this only applies to members of SCA-NSW and to contracts signed after January 1. You may have trouble convincing aa non-SCA-NSW strata manager to waive commissions and you will probably have a struggle getting some SCA members to adjust contracts that still have a couple of years to run.

If you want to be alerted when anyone replies to your posts or responds to this topic, please register and login, then you will be able to subscribe to the topic. The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers. NB: Longer threads may spill over to additional pages - look for the numbers on the bottom right, under the last post.

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12/09/2025 at 3:13 pm #81127 Reply
kaindub
Flatchatter
Our building, up to 2 years ago, used to pay commissions to the strata manager

We have a very good and responsible insurance broker, who also was not comfortable with paying a commission. We negotiated a brokerage fee with the broker that excluded any commission to the strata manager.

As we all know, commissions are used to disguise low strata management fees. Discussion between the committee and the strata manager ensued (as we were otherwise satisfied with the services we were getting) and in return for the strata manager not taking any commissions they got an uplift in their management fee at the last renewal.

I think all around this was a very satisfactory result (the strata manager is not a member of SCA BTW)

I am also associated with two other building (being properties owned by my daughters) and these strata managers do not take any commissions , and have never done so.

As a contrast, one of these buildings was managed by a large strata management group (whom I cannot name but are well known) and of course they were taking commissions. That was until their contract was not renewed.

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13/09/2025 at 4:42 pm #81134 Reply
nixjet
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Many will try to use preferred facilities maintenance providers – plumbing, grounds, caretaking, electrical, painter, repairs, fire safety – that they either own or have an interest in.

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