Consumer advocacy groups are calling on the New South Wales government to proceed with its proposed ban on strata insurance commissions, arguing the reform is essential to addressing conflicts of interest and restoring trust in the sector.
The Owners Corporation Network (OCN) and the Australian Consumers Insurance Lobby Inc (ACIL) have jointly urged policymakers not to abandon the reform, despite growing resistance from within the strata management industry.
The pushback follows warnings that the changes could destabilise an already financially constrained sector.
Under the proposed reform, strata managers would no longer receive commission payments for arranging insurance on behalf of apartment buildings.
Instead, alternative compensation models – such as fixed fees – are being considered to enhance pricing clarity and remove perceived conflicts of interest.
Karen Stiles, policy director at OCN, said past reviews had revealed significant issues in how strata insurance arrangements have been handled.
“The government’s own investigations have exposed extensive misconduct in strata insurance. These practices have cost lot owners dearly – in trust, transparency, and inflated premiums. The proposed ban on commissions is a vital step toward restoring integrity in the system. We cannot allow commercial interests to undermine consumer protections,” she said.
Tyrone Shandiman, chair of ACIL, said problems with strata insurance have persisted for years.
“The problems in strata insurance are not isolated incidents – they’re the result of systemic, unethical behaviour that has gone unchecked for too long. There must be consequences. If an industry can profit through poor conduct and then lobby its way out of reform, it sends the message that the risk was worth it. That cannot be the legacy of this government’s reform agenda,” he said.
In contrast, some within the industry have expressed concern over the impact such changes could have on business operations.
Bobby Lehane, CEO of strata management company PICA Group, said removing commissions could weaken the financial viability of firms operating on already thin margins.
“The strata management sector has endured a sustained period of declining profitability and viability, so any significant changes to remuneration from insurance at this time represents an existential threat,” he said.
He also pointed to findings from a PICA Group survey conducted across NSW, Victoria, and Queensland, which found that 71% of respondents did not want their strata fees to increase. Among NSW participants, 34% supported maintaining commissions, 38% favoured a fixed fee model paid by insurers, and 29% were willing to end commissions if fees were adjusted accordingly.
“We need to ensure that strata living continues to be a sustainable, scalable, and viable housing option for all Australians. That requires the support of a profitable, vibrant, and service-oriented strata management sector and a model that is affordable to those who live, work, and own in strata,” Lehane said.
The Insurance Council of Australia (ICA) has proposed its own set of recommendations. In 2024, it published a policy paper containing 17 strategies aimed at strengthening the strata insurance market. The paper outlined concerns around premium affordability, extreme weather risks, and the complexity of insurance arrangements in strata settings.
Andrew Hall, ICA’s chief executive, said the sector’s mandatory nature makes it particularly important to regulate effectively.
“As one of the largest mandatory insurance sectors in the country, it’s important that strata is managed properly for consumers,” he said in a previous statement. “The Insurance Council acknowledges recent public interest in the disclosure practices and potential conflicts of interest associated with payments received by brokers and/or strata managers through the placement of insurance.”
