A New South Wales review into strata commissions is getting support from insurance brokers on some reforms, but strong opposition on one key proposal affecting how brokers are paid.
The National Insurance Brokers Association (NIBA) said it backs parts of the NSW Productivity and Equality Commission’s Strata Commissions Review report, especially measures meant to improve disclosure and accountability in the strata sector. But it said Recommendation 2, which proposes restricting commission-based pay for insurance brokers providing strata-related services, could make it harder for strata communities to get professional advice.
According to NIBA, insurance brokers should not be grouped with supply chain intermediaries, arguing that brokers work under a different set of rules as Commonwealth-regulated financial services professionals. It said brokers operate under Australian Financial Services Licences, ASIC oversight, and the Insurance Brokers Code of Practice, with existing requirements on disclosure, conflict management, and compliance.
The association was more supportive of Recommendation 7, which proposes removing the requirement for strata managers to seek three insurance quotes at the end of the transition period. NIBA said this rule can be difficult to meet, especially for hard-to-place risks where three genuine quotes may not be available.
It said removing that requirement would ease compliance pressure and better reflect how the market works in more complex cases.
NIBA also pointed to the 2022 Quality of Advice Review Final Report by Michelle Levy, which kept the exception to the ban on conflicted remuneration for general insurance products. The group said the review recognised that clients turn to brokers for independent advice and may not always be willing or able to pay a separate fee for it.
The issue matters as more people live in strata properties across the state. NIBA noted that around two million people in New South Wales now live in strata dwellings, with strata expected to make up almost half of all homes in metropolitan Sydney by 2041.
“NIBA welcomes the Commissionʼs focus on building trust, transparency and better consumer outcomes in the strata sector. These are important objectives, and we support reforms that improve disclosure and accountability where conflicts genuinely arise. But it is critical that policy responses remain targeted and proportionate,” NIBA chief executive Richard Klipin said.
NIBA said brokers help owners corporations manage a complicated insurance market, arrange suitable cover, and support claims when needed. It said changes that wrongly classify brokers as supply chain intermediaries could reduce consumer choice and access to advice.
