John Trowbridge OAM, who has recently been awarded the Medal of the Order of Australia (OAM) in recognition of his contributions to the financial services sector, has shared his perspective on the recent decision by the Strata Community Association (SCA) New South Wales to phase out insurance commissions for strata managers.
The change, which applies to all SCA NSW members, marks a significant development in the way strata managers are compensated and reflects broader regulatory trends in the sector.
The longstanding practice in New South Wales has involved strata managers receiving a portion of insurance commissions or broker fees, often as part of their overall compensation. This arrangement has drawn scrutiny due to concerns about conflicts of interest and the transparency of remuneration structures in the strata insurance market.
Trowbridge, who has published recommendations on intermediary remuneration since 2022, noted that the SCA NSW’s move is a direct response to these concerns.
“The SCA initiative, while labelled ‘phasing out of commissions,’ is actually the phasing out of the practice of strata managers accepting a share of commissions and/or broker fees paid to insurance brokers,” he said.
He described the change as a logical progression from recent disclosure requirements introduced by the NSW Parliament.
The transition away from commission-based remuneration is expected to influence several stakeholders in the strata insurance process:
Underwriters will be expected to adjust premiums by removing the commission component, which could result in a reduction of around 20% from the base premium.
Brokers who have traditionally shared commissions with strata managers will need to revise their broker fees to reflect only the services they provide, with typical fees anticipated to fall within 10% to 13% of the net premium.
Brokers who operate on a fee-only basis and share those fees with strata managers may need to reduce their fees by 50% to 60%.
Strata managers will likely seek to replace lost commission income by increasing management fees, with the expectation that these increases will be offset by savings in insurance premiums and broker fees for property owners.
Trowbridge highlighted the importance of clear information flows between brokers and strata managers, noting that strata managers often rely on brokers for details about premiums, commissions, and fees.
SCA NSW president Robert Anderson recently commented that the reform is intended to enhance transparency and meet evolving expectations within the industry.
“The decision to make this phased transition in relation to insurance commissions has not been made lightly, or quickly. Undertaking this reform is about delivering transparency, trust, and showing leadership,” he said.
He added that the changes are designed to provide clarity and accountability for property owners, while also supporting business certainty for strata managers.
The SCA NSW’s decision comes in advance of anticipated legislative changes from the NSW Commissioner of Fair Trading, who has indicated plans to prohibit strata managers from receiving commissions or broker fee shares related to insurance.
This move is consistent with broader reforms that took effect in July 2025, which introduced new transparency requirements for contract terms, expanded reporting obligations for strata managers, and incorporated sustainability measures into annual general meetings.
Under the new regulations, strata managers are now required to provide owners corporations with detailed written reports every six months, outlining their contractual activities and financial arrangements.
