NSW Strata Managers to Eliminate Insurance Commissions by 2026

Under the new policy, SCA NSW members issuing new standard management contracts will no longer accept commissions on insurance products. Instead, they will negotiate direct fees for their services with clients. This change applies to both standard contract templates and any custom agreements used by members.

Robert Anderson, President of SCA NSW, emphasised that the decision was made to deliver transparency, trust, and leadership within the industry. He noted that for owners and committees, the reform will provide clarity and accountability, while offering business certainty for managers.

Historically, strata managers have received commissions as part of the insurance supply chain. The new model replaces these commissions with direct fees for service and an expansion of agreed services, with terms negotiated in consultation with clients.

The Australian Consumers Insurance Lobby (ACIL) has welcomed the move, describing it as a step toward clearer pricing and improved alignment with owners' interests. ACIL Chairperson Tyrone Shandiman highlighted the importance of closing loopholes, particularly related-party arrangements, to ensure all financial benefits are disclosed transparently and that any savings are passed through to owners.

This commission phase-out coincides with a suite of new legislative reforms in NSW, which took effect on July 1. These reforms include enhanced transparency in contract terms, new reporting obligations for strata managers, and the integration of sustainability measures into annual general meetings.

While consumer groups have largely supported the changes, some industry leaders have expressed concern about the financial impact on strata management businesses. Bobby Lehane, CEO of PICA Group, warned that removing insurance commissions could significantly affect operating margins in a sector already facing profitability challenges.

Key benchmarks for the sector include the mandatory Strata Insurance Best Practice Disclosure Guide for SCA NSW members from July 1, 2024, the implementation of the SCA National Code of Ethics from July 1, 2025, and the elimination of insurance commissions in new contracts by SCA NSW members from January 1, 2026.

With over 91,000 strata schemes, more than 1 million lots, and a total insured property value of $486 billion in NSW, this reform marks a significant step toward greater transparency and accountability in the strata management industry.