The End of Strata Manager Insurance Commissions in NSW: What It Means for Your Levies

NSW has completed a major review of how strata managers are paid, examining a potential ban on insurance commissions that could save apartment owners $333 million over 15 years. The NSW Productivity and Equality Commission has published comprehensive research on the practice, examining changes that would eliminate conflicts of interest but likely result in higher base management fees.

If you’re an apartment owner in NSW, these review findings could indicate future changes to your quarterly levies and how your strata scheme selects building insurance. Here’s everything you need to know about the review findings and what they might mean for your owners corporation.

What Are Strata Manager Insurance Commissions?

Insurance commissions are payments that strata managers receive from insurers when they arrange building insurance for owners corporations. Under the current Strata Schemes Management Act 2015 (NSW), strata managing agents must disclose any commissions or other benefits they receive, but they’re still permitted to accept these payments alongside their base management fees.

The practice works like this: when your strata manager organises your building’s insurance policy, the insurer pays them a commission — typically a percentage of the premium. This creates a financial incentive for managers to recommend certain insurers or policy types, regardless of whether they offer the best value for your owners corporation.

Consider Sarah, who sits on the strata committee for a 40-unit apartment complex in Bondi. Her strata manager recently recommended switching to a new insurer with higher premiums. While the manager disclosed receiving a commission, Sarah wondered whether the recommendation was truly in the building’s best interest or influenced by the higher commission rate.

Why Did NSW Review These Commissions?

The NSW Productivity and Equality Commission published both a Strata Commissions Review and a Strata Commissions Review Final Report in March 2026, following a request from the Minister for Better Regulation and Fair Trading. The review examined the market impacts of prohibiting strata managers from accepting commissions and other conflicted remuneration.

The primary concern is conflict of interest. When strata managers earn commissions from insurers, they may not be selecting the best-value insurance for owners corporations. Instead, they might favour insurers offering higher commissions, potentially leading to:

Higher insurance premiums for your building
Less comprehensive coverage for the same cost
Reduced incentive to shop around for competitive quotes
Diminished trust between owners corporations and their managers

NSW Productivity and Equality Commissioner Peter Achterstraat AM noted that commissions “can create incentives that do not align with the best interests of owners and renters” and that the review’s options “will deliver economic benefits and further improve transparency and the function of this growing sector,” highlighting the focus on addressing these inherent conflicts.

What Options Did the Review Examine?

The review examined four options on how to address conflicts of interest in strata managers’ remuneration. The research focused on understanding how prohibition of commissions would impact the market for strata management services in NSW.

If such changes were implemented, strata managers would no longer be able to accept commissions from insurers, insurance brokers, or other service providers. This would fundamentally alter how strata management services are funded, with managers likely needing to charge higher base management fees to maintain their revenue streams.

For apartment owners, potential changes might include:

Strata managers selecting insurance based purely on coverage and value, not commission potential
Increased transparency in insurance recommendations and renewals
Higher base management fees to replace lost commission income
Potentially lower overall costs when management fees and insurance premiums are considered together

How Much Could Changes Save NSW Apartment Owners?

According to the NSW Productivity and Equality Commission’s media release, “ending commissions for strata managers could save NSW $333 million over 15 years.” This figure reflects the cumulative impact of more competitive insurance selection across the state’s thousands of strata schemes.

The potential savings would come from several sources:

Lower insurance premiums due to truly competitive selection
Reduced cross-subsidisation where commission costs are built into premiums
Greater incentive for managers to negotiate better rates and coverage
Increased competition among insurers based on merit rather than commission structures

However, individual apartment owners wouldn’t necessarily see immediate reductions in their total strata costs. While insurance premiums might decrease, management fees would likely increase to replace the commission income that managers currently receive.

What Might This Mean for Your Strata Management Fees?

If changes were implemented, the most direct impact for apartment owners would be adjustments to their strata management fees. Currently, many managers charge lower base fees because they supplement their income with insurance commissions. Under a commission prohibition, this model would need to change.

Your owners corporation might expect:

Higher management fees: Managers would need to increase their base fees to replace commission income
More transparent pricing: All management costs would be clearly itemised rather than partially hidden in insurance arrangements
Better value assessment: You’d be able to more easily compare the total cost of management services between different providers
Potentially improved insurance outcomes: Your manager’s insurance recommendations could be based purely on coverage and value for your building

Well-managed strata schemes might find that while their management fees increase, their total costs (management plus insurance) remain similar or even decrease due to more competitive insurance selection.

For guidance on what constitutes reasonable management fees in NSW, consider reviewing how much you should pay for strata management fees and whether you might be overpaying for your current management services.

How Might This Affect Your Building Insurance?

If implemented, changes to commission arrangements could significantly improve how your building’s insurance is selected and managed. Without commission incentives, strata managers would focus purely on finding the best coverage at competitive rates for your specific building and circumstances.

Potential improvements might include:

Unbiased recommendations: Insurance suggestions based on coverage quality, claims handling reputation, and premium competitiveness
Better claims outcomes: Managers selecting insurers known for fair and efficient claims processing rather than high commissions
Comprehensive coverage reviews: Annual insurance renewals focused on your building’s changing needs rather than commission maximisation
Competitive market pressure: Insurers competing on service and value rather than commission rates

Such changes would be particularly beneficial for larger or more complex buildings, where insurance decisions have significant financial implications and where commission-driven recommendations could be most costly.

What’s the Current Status of These Potential Changes?

As of March 2026, no commission ban has been legislated. The NSW Productivity and Equality Commission has completed its assessment and published its findings, but any government decision on implementation remains to be announced.

The government would need to determine whether to proceed with changes and, if so, what implementation approach to take. This process may involve further consultation with industry stakeholders, including the Strata Community Association (NSW), the peak body for the strata sector in NSW, and consideration of transition arrangements.

Apartment owners should monitor government announcements about any decisions regarding the review recommendations.

What Should Your Owners Corporation Do Now?

While any potential legislative changes remain uncertain, there are practical steps your owners corporation can take to ensure you’re getting good value from both your strata management and insurance arrangements.

Review your current arrangements: Examine your existing management agreement and insurance policies to understand what commissions your manager currently receives and how your insurance was selected. For a framework on what to look for, see our guide to auditing your strata management fees.

Ask questions: At your next strata committee meeting, ask your manager to explain their insurance selection process and whether they’ve compared multiple providers recently.

Budget planning: Consider how potential changes to management fees might affect your administrative fund planning for future years.

Stay informed: Monitor announcements from the NSW government about any decisions following the Productivity and Equality Commission’s review.

Industry Response and Market Implications

The review findings represent significant research into strata management practices and potential reforms. Professional managers and industry bodies are likely considering the implications of the findings for their business models and client relationships.

For apartment owners, the key consideration is long-term value rather than short-term cost impacts. The research suggests that changes to commission structures could deliver benefits through better insurance selection and transparent pricing for most buildings.

The review process demonstrates the NSW government’s interest in examining transparency and potential conflicts of interest in strata management, following similar reforms in other areas of property services.

Frequently Asked Questions

Will my strata levies definitely increase if changes are implemented?

Your total strata costs may not increase significantly. While management fees would likely rise to replace commission income, your building’s insurance premiums might decrease due to more competitive selection. The net impact would depend on your current management arrangements and your building’s specific insurance requirements.

How might this affect my strata manager’s service quality?

Removing conflicts of interest in insurance recommendations could improve service quality by ensuring your manager focuses on finding the best insurance value for your building. However, management fees would need to increase to maintain service levels without commission income.

When might these changes take effect?

As of March 2026, no changes have been legislated following the NSW Productivity and Equality Commission’s review. Any future implementation timeline would depend on government decisions that haven’t yet been announced.

Would all NSW strata schemes be affected equally?

Larger and more complex buildings might see greater benefits from unbiased insurance selection, while smaller schemes might notice management fee increases more prominently. The overall impact would vary based on your current manager’s commission arrangements and your building’s insurance requirements.

Should we change strata managers in anticipation of potential changes?

Focus on your manager’s overall service quality and value rather than making changes based on uncertain future regulations. Prioritise managers who demonstrate transparency and competence in insurance selection and general strata management, regardless of potential regulatory changes.

Understanding how potential changes to strata manager remuneration might affect your building is just one aspect of effective due diligence when buying or managing apartment properties. StrataClear helps property buyers and owners corporation members review complex strata documents faster by turning lengthy report packs into clear, structured summaries. Our platform identifies key issues including management arrangements, insurance details, and financial health indicators, making it easier to understand what matters most for your property decisions.