Strata insurance commission and the way it is paid is under review in New South Wales. Many owners and committee members are asking whether insurance commissions for strata managers will be banned, and what that could mean for levies, premiums and the way schemes are run.
The NSW Productivity and Equality Commission (NSW PEC) has released an issues paper on strata commissions at the same time as broader strata law reforms are reaching their final stages. Together with new benchmarking work by John Trowbridge on strata insurance broker pricing, these documents set out the facts and the options now on the table for reform in NSW.
This article walks through what is happening, why the NSW Government is looking at commissions, and what this may mean for strata owners, committees, managers and other industry participants.
Why strata insurance commissions are in the spotlight
A large and growing share of NSW residents live in strata schemes such as apartments, townhouses, villas and duplexes. Most of these schemes engage a strata managing agent to look after administration and to coordinate services, including insurance.
Strata managers are licensed professionals and owe a fiduciary duty to act in the best interests of the owners corporation, avoid conflicts of interest and not profit from the relationship inappropriately.
In practice, many strata managers receive revenue from two main sources:
- fees paid directly by the owners corporation, including a base management fee and fees for additional services, and
- commissions and other incentive payments paid by third party suppliers, with insurance commissions identified as the most significant of these.
Insurance commissions are usually paid by the insurer to the broker. It is standard industry practice for both the broker and the strata manager to take a share of that commission when a policy is placed or renewed. These commissions commonly amount to around 20 per cent of the insurance premium that owners pay, before broker fees, taxes or government charges.
NSW PEC’s issues paper notes that, on average, insurance commissions make up roughly 15 to 20 per cent of strata managers’ revenue. The paper raises concerns that this funding model can create conflicts of interest and make it harder for owners corporations to see what they are really paying for strata management and insurance.
Over the past few years, a series of inquiries and reports have highlighted these issues, including an independent review of strata insurance practices by John Trowbridge and other research into the strata insurance supply chain. More recently, consumer advocacy and media investigations have alleged that some strata managers appointed brokers from whom they receive financial benefits without fully informed owner consent, leaving owners with higher fees and commissions.
How the NSW Government has already changed the rules
The review of strata commissions is taking place in the context of a wider program of strata law reforms that has been rolled out in phases following a 2021 statutory review of the legislation.
One key reform focuses specifically on commissions and connected suppliers. New laws that commenced on 3 February 2025 aim to improve transparency and accountability. Under these changes, strata managers must:
- disclose any relationships with suppliers or developers, including the nature of those relationships
- provide detailed breakdowns of insurance quotes, including commissions and broker fees
- notify the owners corporation in writing before entering into contracts for goods or services where a commission may be paid to the manager.
If the owners source and arrange insurance and its payment independently, strata managers are prohibited from receiving insurance commissions.
The NSW Government has also provided tools through the online Strata Hub to help owners compare providers and find information. These include a strata managing agent engagement planner and the Strata Helper tool, both designed to support more informed decision making.
At the same time, the Strata Community Association (SCA) NSW has announced that it will start phasing out insurance commissions among its strata manager members. The association has said this move is intended to improve transparency, accountability and pricing simplicity for owners and committees and to support trust and business sustainability.
These initiatives mean the regulatory and industry environment has already begun to shift before any decision is made about a full ban on commissions.
The NSW Productivity and Equality Commission’s review
Against this backdrop, the Minister for Better Regulation and Fair Trading has asked the NSW Productivity and Equality Commission to review the market impacts of prohibiting strata managing agents from accepting commissions or other conflicted payments.
The review has been asked to consider whether prohibiting commissions and other conflicted payments would lead to:
- better value for money for strata owners
- higher quality services
- lower costs and simpler arrangements for strata owners, and
- any changes in market conditions.
NSW PEC will assemble and analyse data, draw on previous work, including NSW Fair Trading’s research, and consult with stakeholders such as owners, strata managers and service providers. A final report will be delivered to the Minister by 27 February 2026.
The Commissioner’s foreword emphasises that owners corporations across NSW rely on effective and transparent strata management to protect their homes and investments, and that current remuneration models can create incentives that may not always align with owners’ best interests. The review will test whether existing arrangements deliver well functioning, transparent markets and will explore practical alternatives.
The issues paper invites feedback from owners, committees, strata managers and service providers, recognising that lived experience and evidence from those directly affected will be important in understanding the impacts on costs, service quality and competition.
What the issues paper says about commissions and conflicts
The issues paper explains that strata insurance is compulsory in NSW. Owners corporations must insure buildings and common property at full replacement value and maintain public liability cover for common areas. In most schemes, the strata manager arranges insurance through specialist strata insurance brokers. To support competitive pricing, strata managers are required to obtain at least three written quotes for insurance renewal or provide reasons if this is not possible.
It is standard industry practice for both the strata manager and the broker to receive a share of the commission that the insurer pays. These commissions commonly represent about 20 per cent of the premium before additional fees and taxes.
The paper describes an “information asymmetry” between strata managers and owners corporations. Many owners and committees do not fully understand how commissions and management fees relate to each other, or how commissions affect the total cost of services. This makes it difficult to compare different managers and service providers and can harm trust in the sector.
In discussions with strata managers, NSW PEC heard from businesses with a range of models, including those that accept commissions, those that do not, and those that are transitioning away from commissions. Some managers who still rely on commissions expressed concern about losing clients to competitors with lower base management fees, even if those lower fees are subsidised by higher commissions embedded in insurance premiums.
Managers who had moved to fee for service models reported that they could explain the different funding structure to clients and that owners were able to see the benefits of reduced insurance premiums and greater transparency.
Options being considered for reform
The issues paper presents three broad options to address commissions and conflicted payments. These are framed for discussion and analysis and do not represent government decisions.
Option 1: Self regulation and industry phase out of insurance commissions
Under this option, industry associations would lead the change. Relevant NSW industry association members, such as SCA NSW, would phase out insurance commissions over time and move to alternative remuneration structures. Enforcement would rely on self regulation by those associations.
This option aligns with SCA NSW’s announced plan to replace insurance commissions for its strata manager members, using new agency agreements as they are negotiated.
Option 2: Legislative ban on commissions paid to strata managers
Option 2 would involve a legislative ban on commissions from all service providers to strata managers, not only insurance. This would cover commissions and similar payments from service providers such as insurers, brokers, trades and other contractors. NSW Fair Trading would enforce the ban, including through penalties for non compliance.
This option would not prohibit brokers from earning commissions on strata insurance policies, but strata managers would no longer be able to receive those commissions. Owners corporations and managers would need clear information about broker charges, and disclosure requirements could help encourage “shopping around” for better value.
Option 3: Legislative ban on all commissions in the supply chain
The third option would go further by prohibiting strata managers from accepting commissions and from procuring certain services on behalf of owners corporations where commissions are paid anywhere in the supply chain.
This would create a positive legal obligation for strata managers to negotiate supply arrangements that do not involve commissions. It would be more complex to implement because managers would need to understand whether commissions were being paid further up the chain, and the NSW Government’s ability to regulate all supply chain participants may be limited.
For each option, the issues paper sets out expected impacts, including:
- better consumer value from more effective competition, as owners gain clearer information about the true cost of services and can compare managers and products
- lower compliance costs if commissions were prohibited and some existing disclosure rules became unnecessary
- transition costs for businesses, committees and government, including changes to contracts and education for owners, and
- how savings from commission removal might be passed through to owners.
What does the Trowbridge benchmarking report add?
How owners and committees can use the report
The report has been prepared to give owners of strata properties and their strata committees benchmarks for the fees and charges paid to strata managers and brokers. It is intended to help them assess whether the amounts included in their insurance proposals are fair and in their best interests, rather than simply accepting the charges put to them.
In practical terms, owners and committees can use the report to:
- Check whether all fees and charges are clearly disclosed in the insurance proposals they receive, so they have enough information to form an informed view about the arrangements.
- Compare the remuneration of both their strata manager and broker with the benchmark ranges described as “market competitive” in the report and ask whether each party is charging at, above or below “market”.
- Consider, where charges appear above the benchmark range, whether the owners corporation and strata committee are aware of that position and genuinely satisfied with it.
- Look at the total insurance related charges as a percentage of the gross base premium and compare this with the typical 25 to 30 per cent range for mid scale properties, as an indication of whether their scheme sits within or outside the competitive range identified in the report.
- Use the discussion of open market and closed market pricing to understand whether their scheme is operating with transparent, consumer oriented pricing or under more closed arrangements where fees are largely determined between the strata manager and broker.
By working through these questions with their strata manager and broker, owners and committees can use the report as a reference point in discussions and negotiations about how their insurance is arranged and how intermediaries are paid.
To support this policy work, NSW Fair Trading commissioned John Trowbridge to prepare an independent report on “Benchmarking Strata Insurance Broker Pricing.” The report aims to provide benchmarks for what open market pricing looks like and to help owners corporations and committees assess whether the remuneration paid to intermediaries is reasonable.
The report distinguishes between two broad approaches to pricing in the strata insurance intermediary market:
- open market pricing, where consumers and suppliers are well informed about financial arrangements. This is described as a consumer oriented approach and a necessary condition for fairness and acting in clients’ best interests
- closed market pricing, where strata managers and brokers decide remuneration between themselves and present it to the owners corporation without genuine consultation or transparent disclosure. This approach can worsen conflicts of interest and compromise fiduciary duties.
Trowbridge notes that intermediaries sit along a spectrum between these approaches, but closed market practices are associated with higher prices and greater conflicts.
The report then sets out benchmarks for three categories of intermediary pricing: commission rebate with a broker fee, fee only arrangements where the fee is shared between manager and broker, and fee only models where only the broker is paid and there is no commission or allocation to the strata manager.
For mid scale properties, with gross base premiums roughly between 5,000 and 40,000 dollars, Trowbridge’s evidence from 2022 to 2024 suggests that:
- market competitive commission rebates paid to strata managers have typically fallen within a percentage range of the gross base premium, and
- market competitive charges retained by brokers have usually sat within another percentage range, combining any residual commission and a supplementary fee.
Together, the total insurance related charges to the owners corporation in these mid scale cases typically fall between 25 and 30 per cent of the gross base premium.
These benchmarks do not set regulated caps. Instead, they offer reference points so that owners and committees can better understand how much they are paying to intermediaries, and use that information in discussions and negotiations with their strata manager and broker.
How might moving away from commissions affect levies and premiums?
A central concern for owners is what a move away from commissions would mean for the bottom line.
The issues paper explains that commissions are not a free benefit to owners corporations. They are built into the price of goods and services, especially insurance premiums, which means owners ultimately bear the cost.
If strata managers no longer received commissions, they would likely need to increase management fees to cover the cost of running their businesses. The paper illustrates this with a hypothetical example of a small scheme where part of the cost of management is initially hidden in the insurance premium. In the fee for service model, the management fee is higher and more reflective of true costs, but this is offset by a lower insurance premium. In that example, the total cost to the owner is similar, but the funding model is more transparent.
The paper suggests that addressing the incentive problem created by commissions could support more effective competition and may lead to lower levies over time. However, the actual impact will vary between schemes. It will depend on factors such as how dependent the current manager is on commissions, the cost of managing the scheme, and how capable owners corporations are of analysing and comparing management and insurance contracts.
The Commission also notes that if commissions were removed, service providers such as insurers and brokers would save the amounts they currently pay out as commissions to strata managers. It expects that competition and negotiation could help ensure those savings are passed through to owners, but also flags a risk that some savings might be retained where owners and managers have limited ability to compare providers. In that case, government could consider tools such as price monitoring or reporting to ensure lower commission costs result in lower premiums.
So, will insurance commissions be banned in NSW?
At this stage, no final decision has been made to ban strata insurance commissions in NSW.
The NSW Productivity and Equality Commission’s issues paper puts forward options for discussion and seeks input from owners, committees, strata managers, brokers and other service providers. The Commission will use submissions, data and analysis to model the costs and benefits of different approaches and will provide recommendations to the Minister and the Treasurer in its final report due in February 2026.
In parallel, SCA NSW has already committed to phasing out insurance commissions among its members, which means many strata managers may transition away from commissions regardless of the eventual legislative outcome.
For now, the key changes that are already in place relate to transparency and disclosure. Strata managers must clearly disclose relationships with suppliers, provide detailed breakdowns of insurance quotes that show commissions and broker fees, and cannot receive commissions where owners arrange insurance independently.
The Trowbridge benchmarking report provides additional guidance for owners corporations and committees that want to understand how intermediary remuneration compares to typical market ranges and to engage in informed discussions with their manager and broker.
Given the importance of strata to housing supply and the number of people who live in strata in NSW, the outcome of this review is likely to have significant implications for owners, managers and the wider insurance and broking industry.
Have your say on the review
The NSW Productivity and Equality Commission has made it clear that real world experience from the strata sector is essential to this review. Owners corporations, committee members, strata managers, brokers and other suppliers all see different parts of the system and understand how current remuneration models work in practice.
If you work in or with strata in NSW, you can play a direct role in shaping the outcome by reading the issues paper and related NSW Fair Trading material and then providing feedback within the consultation period. Make sure you lodge your submission or response by the deadline set out in the issues paper and on the NSW Fair Trading website.
The decisions that flow from this process will influence how strata management is funded, how insurance is priced and how transparent the system is for years to come. Adding your voice now helps ensure that the final recommendations reflect the realities on the ground and support a fair, workable outcome for owners, committees and the wider strata industry.
Have your say: Strata Commissions Review
The LookUpStrata Team
This post appears in Strata News #771.
Have a question or something to add to the article? Leave a comment below.
Resource list:
- Productivity and Equality Commission releases Issues Paper for review into strata managing agents
- Strata Commissions Review: Assessing the market impacts of payments to strata managers Issues paper
- Benchmarking Strata Insurance Broker Pricing – John Trowbridge
- Strata overhaul reaches final milestone as fourth reform bill is introduced to NSW Parliament
- Benchmarking strata insurance broker pricing – an expert report by John Trowbridge
Read next:
- NSW: Insurances, Commissions, and Kickbacks in Our Strata & Community Title Schemes
- NSW: Q&A Strata Manager Insurance Commissions
- NAT: Strata Insurance Commission in Australia: Is transparency enough?
Visit our Strata Insurance OR NSW Strata Legislation.
Looking for strata information concerning your state? For state-specific strata information, take a look here.
Are you not sure about some of the strata terms used in this article? Take a look at our NSW Strata Glossary to help with your understanding.
After a free PDF of this article? Log into your existing LookUpStrata Account to download the printable file. Not a member? Simple – join for free on our Registration page.
I would be very happy to see the NSW outcome, and trust Victoria will take some action to respond to this ongoing gouging of Insurance premiums and eccessive Broker fees.