Early this month, the Strata Community Association NSW (SCA NSW) surprised industry stakeholders. The SCA announced a ban on the insurance commissions that have sustained members’ livelihoods for decades but led to exorbitant costs and unethical business relationships with insurance brokers. Consumer groups regard it as a vital step towards greater transparency and accountability in strata. However, Richard Klipin (pictured above), CEO of the National Insurance Brokers Association (NIBA), said the sector’s issues are more complex than remuneration. He said the focus of ongoing reform efforts needs to stay on payment structures.
“I think transparency and clarity around payment structures is really important in this debate,” Klipin told Insurance Business. “Consumers have a right to know and they should expect to know where the money is flowing and who's getting paid what - I think that's the central part of the conversation.”
Some industry stakeholders, including the broker led Australian Consumers Insurance Lobby (ACIL), have expressed concerns that banning commissions will not in itself solve the underlying issues of unethical conduct and a lack of transparency. ACIL has also questioned whether the ban includes all financial benefits that strata managers receive and not just those labelled “commission.”
“If this is the only change, loopholes remain,” said chair Tyrone Shandiman. “For example, related-party arrangements or re-badged fees, including referral fees, marketing allowances, admin/placement charges and soft-dollar benefits.”
Klipin said these compensation and remuneration issues are important but suggested that “a bigger discussion” is the way towards meaningful reforms that improve outcomes for strata owners.
“This is a nuanced conversation because a lot of owners and owners' committees need good advice and they need good services and they need organisations who can guide and advise them to the right outcome,” he said.
Brokers are central to that advice with risk reports that assess how a building’s age, location, amenities and occupancy types impact the insurance costs. They also check that cover is complaint under legislation and look out for coverage gaps. Their advocacy during the claims process and ability to secure competitive quotes from a broad market are also vital services for owners’ corporations
As the strata sector continues its rapid growth, others have expressed concern that the main issues are, at best, only partially solved by the ban on commissions and the government’s ongoing reform efforts. Ensuring service providers effectively deliver genuine value and meet the evolving needs of owners and committees, they say, is the challenge ahead. The sector’s increasing complexity means that many owners expect not just administrative support, but expert advice, risk management and transparent advocacy.
Other stakeholders have also warned that moving from a commission-based model to a fee-based system is no guarantee that strata owners will pay less for their insurance. They argue that management firms may raise direct fees to offset lost commission income. There’s a major question mark over how to fairly remunerate strata’s service providers, including strata managers.
Meanwhile, strata reforms are in progress. The NSW government introduced stricter disclosure laws in February that require strata managers to reveal all supplier connections, broker fees and commissions, with penalties up to $110,000 for non-compliance.
This month, the Planning System Reforms Bill 2025, was tabled in the NSW Parliament. The bill aims to modernize the nearly 50-year-old Environmental Planning and Assessment Act with reforms designed to cut red tape, reduce delays and streamline housing and infrastructure delivery across the state. The reforms are expected to accelerate the construction of new housing - much of that housing is strata apartments.
The ripple effects will be felt across the strata sector, including by insurance brokers.
Are you an insurance broker involved in strata? What reforms would you like to see? Please tell us below.
