Strata Insurance Commissions Explained for NSW Owners Corporations
Why transparent remuneration matters in Sydney and South Coast strata management
Insurance is one of the largest and most important annual expenses for many owners corporations. It protects the building, common property and legal liability of the scheme, yet the way an insurance premium is assembled can be difficult for owners to understand.
One question is now being asked more often at annual general meetings across NSW: does the strata manager receive an insurance commission?
The answer depends on the strata management business and its commercial model. Insurance commissions are not automatically unlawful in NSW, but the law requires much greater transparency about commissions, broker fees, relationships and the composition of insurance quotations.
Ellouise Tyrrell Strata Management (ETSM) and Essential Strata Management do not accept insurance commissions. This policy applies to the strata schemes we support across Sydney's Eastern Suburbs, Inner West and Lower North Shore, as well as communities throughout the NSW South Coast from Nowra to Eden.
Our approach is straightforward: the owners corporation should be able to see what it is paying, who is being paid and why.
What is strata insurance?
An owners corporation is generally responsible for insuring the strata building and common property. Depending on the scheme and policy, strata insurance may include building damage, public liability, shared contents, machinery breakdown, office bearers' liability, catastrophe cover and other optional extensions.
The policy held by the owners corporation is different from an individual owner's contents, landlord or personal liability insurance. Owners and tenants should consider their own cover for belongings and risks that are not protected by the strata policy.
The NSW Government's guidance on strata finances and insurance explains the compulsory and optional insurance arrangements that may apply to a strata scheme.
What is an insurance commission in strata management?
An insurance commission is remuneration connected with arranging or placing an insurance policy. It may be paid by an insurer, underwriting agency, insurance broker or another insurance intermediary. Depending on the arrangement, part of that remuneration may ultimately be paid to a strata managing agent.
The commission may be calculated as a percentage of the base premium. A quotation may also contain a separate broker fee, underwriting agency fee, GST, stamp duty, government levies and other charges.
This is why owners should compare the complete insurance quotation, rather than looking only at a single headline figure.
Under the current NSW strata legislation, the definition of commission includes an insurance broker fee for relevant strata-law purposes. The quotation must nevertheless distinguish the commission from any broker fee and identify who will ultimately receive those amounts.
Are strata insurance commissions legal in NSW?
Insurance commissions are not subject to a blanket ban in NSW strata management. A commission may be permitted where the relevant legal, contractual, disclosure and approval requirements are satisfied.
However, stronger rules commenced on 3 February 2025. The NSW Government guide to the strata law changes explains that strata managers must provide more information before and during their appointment and must make insurance quotations more transparent.
The rules include an important prohibition: a strata managing agent cannot receive an insurance commission when the owners corporation obtained the quotation and arranged payment independently, without the agent's assistance.
The position may also involve Commonwealth financial-services law. From 9 July 2025, an Australian financial services licensee or representative receiving certain commissions in connection with issuing or selling general insurance while providing, or being likely to provide, personal advice must obtain the client's informed consent. The application of those rules depends on the particular insurance service and the role of the parties. The ASIC guidance on informed consent for insurance commissions provides further information.
What must a NSW strata insurance quotation disclose?
Section 166 of the Strata Schemes Management Act 2015 requires a strata managing agent to provide the owners corporation with at least three quotations from different providers for each type of insurance proposed by the agent. If fewer than three quotations are provided, the agent must give written reasons.
The quotations or written reasons must be supplied as soon as practicable so the owners corporation can make an informed decision.
Each insurance quotation must clearly break down applicable amounts, including:
the base premium;
any commission, shown as a dollar amount and as a percentage of the base premium;
any broker fee, shown as a dollar amount and as a percentage of the base premium;
stamp duty;
government levies;
underwriting agency fees;
GST; and
other prescribed charges.
The quotation must also identify the people or organisations to whom the commission and broker fee will ultimately be paid and state whether the quotation provider is connected with the strata managing agent.
These requirements help committees compare like with like. A quotation that initially appears cheaper may have a larger excess, narrower cover, additional fees or a different claims service. The lowest premium is not necessarily the best policy, but every material cost should be visible.
What must strata managers disclose at the AGM?
Strata managing agents must report at the annual general meeting on relevant commissions and training services received during the previous 12 months and those they expect to receive during the following 12 months. Current rules also require additional disclosure about connections with suppliers and the original owner or developer.
If a commission or training service is outside the management agreement and requires approval, the owners corporation must consider it at a general meeting. The motion must be accompanied by a written explanation that includes the amount or calculation method, the relationship with the provider and why approval is said to be in the owners corporation's best interests.
The NSW Fair Trading disclosure requirements for strata managing agents provide a practical summary of these obligations.
Why insurance commissions concern some owners corporations
An insurance commission does not, by itself, establish that unsuitable cover was recommended or that an owners corporation paid too much. Brokers and insurance intermediaries perform real work, and transparent remuneration may be part of the cost of accessing that service.
The concern is the potential or perceived conflict created when the person helping to arrange a policy receives remuneration linked to the insurance placement or premium. Owners may reasonably ask:
whether the recommended policy was selected because it best met the scheme's needs;
whether the manager's remuneration changes between insurers or policies;
whether a higher premium produces a higher commission;
whether the owners corporation can clearly separate the premium, broker fee and manager's share;
whether all connections with the broker, insurer or supplier have been disclosed; and
whether the committee is receiving a genuine comparison of cover, excesses and service.
Clear disclosure is essential, but some owners corporations prefer a management model that removes the manager's insurance commission altogether.
The ETSM and Essential Strata no-commission policy
ETSM and Essential Strata Management do not take commissions from insurers or insurance brokers.
This means our strata management remuneration is not increased because an owners corporation selects a particular insurer or pays a larger insurance premium. Our role is to help the committee coordinate the renewal process, obtain and present information, maintain records and implement the owners corporation's decision within our delegated authority.
Where an agreed insurance administration, renewal or setup fee applies under the agency agreement, it is disclosed separately. It is not presented as an insurer-paid commission hidden within the premium.
Our no-commission position is part of a broader commitment to transparent strata management:
no insurance commissions paid to ETSM or Essential Strata Management;
no commissions or kickbacks from tradespeople and contractors;
itemised insurance information for informed committee decisions;
separate disclosure of agreed management or insurance administration fees;
clear records and invoices; and
an independently owned and operated management team accountable to the owners corporation.
No manager commission does not necessarily mean no broker fee
This distinction is important. ETSM and Essential Strata Management may not receive an insurance commission, while an independent insurance broker, underwriting agency or another intermediary may still charge a fee or receive remuneration.
Those costs should appear clearly in the insurance quotation. Owners should ask who receives each fee, what service is being provided and whether the remuneration changes between the available policies.
A transparent no-commission strata manager does not pretend that insurance placement, claims support or professional broking work has no cost. The objective is to make the payment pathway visible and keep the manager's remuneration separate from the insurer's premium.
What should an owners corporation compare at renewal?
A strong renewal decision considers price, protection and service together.
1. Base premium and all additional charges
Check the base premium, commission, broker fee, underwriting fee, stamp duty, levies and GST. Confirm who receives each commission or fee.
2. Sum insured and replacement-cost valuation
The building sum insured should reflect an appropriate replacement-cost assessment. Construction inflation, demolition, professional fees, code upgrades, debris removal and regional rebuilding costs can create a serious underinsurance risk.
3. Policy coverage and exclusions
Review the insured events, exclusions, sub-limits and optional extensions. Pay particular attention to water damage, flood definitions, storm damage, machinery breakdown, office bearers' liability, catastrophe cover, loss of rent or temporary accommodation and shared contents.
4. Excesses
A lower premium may be accompanied by higher excesses. Committees should consider both the standard excess and any special excess applying to water damage, storm, flood, defects, unoccupied lots or repeated claims.
5. Claims service
Ask who will assist with claims, what authority they hold and what additional fees may apply. A competitive premium can lose its appeal if the scheme receives poor support during a major event.
6. Insurer strength and policy suitability
Price matters, but so do the insurer's terms, claims capability and suitability for the building's construction, location, history and risk profile.
7. Quote availability
If fewer than three quotations are provided, request the written reasons. Some buildings attract limited insurer appetite because of defects, claims, combustible cladding, coastal exposure, building age or incomplete risk information.
Sydney strata insurance considerations
Owners corporations in Sydney's Eastern Suburbs, Inner West and Lower North Shore manage a wide range of buildings, from older walk-up apartment blocks to large complexes with lifts, pools, gyms, basements and mixed-use areas.
Insurance pricing and availability may be affected by:
the replacement cost of building in metropolitan Sydney;
ageing roofs, balconies, plumbing and waterproofing;
water-damage frequency and claims history;
lifts, mechanical equipment, pools and shared facilities;
building defects or unresolved remedial works;
combustible cladding or fire-safety concerns;
heritage features and restricted site access; and
commercial or mixed-use occupancies.
ETSM supports strata communities across Coogee and the wider Eastern Suburbs, the Inner West and the Lower North Shore. Our no-insurance-commission policy helps Sydney committees separate the cost of professional strata management from the cost of the insurance product.
NSW South Coast strata insurance considerations
Strata insurance on the NSW South Coast has a different combination of risks. Coastal apartment buildings, retirement communities, townhouse schemes, holiday destinations and mixed resident-and-visitor complexes can face:
salt exposure and coastal corrosion;
severe storms, wind-driven rain and water ingress;
bushfire exposure and access constraints;
regional rebuilding and contractor mobilisation costs;
older buildings with deferred maintenance;
swimming pools, retaining walls and shared driveways;
holiday letting and periods of reduced occupancy; and
owners who live in Sydney, Canberra or interstate.
Essential Strata Management supports owners corporations from Nowra, Jervis Bay, Milton, Mollymook and Ulladulla through Batemans Bay, Moruya, Narooma and Bermagui to Bega, Tathra, Merimbula, Tura Beach, Pambula and Eden.
Local knowledge helps the committee explain the building accurately to brokers and insurers, identify unresolved maintenance risks and coordinate the information needed for a proper renewal comparison.
How good strata management can support better insurance outcomes
A strata manager cannot control insurer pricing, guarantee that three insurers will quote or promise that every claim will be accepted. However, disciplined scheme management can improve the quality of the information presented to the insurance market.
Practical steps include:
Start the renewal process early enough to gather information and consider alternatives.
Maintain a current replacement-cost valuation where required or appropriate.
Keep the building's maintenance, fire-safety and compliance records organised.
Address water ingress, roof, balcony and plumbing issues before they become repeated claims.
Provide accurate details about construction, occupancy, commercial use, holiday letting and shared facilities.
Review claims history and demonstrate what has been repaired or improved.
Compare policy wording, sub-limits and excesses as well as price.
Record the committee's recommendation and the owners corporation's decision clearly.
This work is especially important for buildings undertaking remedial projects. An insurer or broker may require clear scopes, engineering reports, progress updates and evidence that risk-reduction works are being completed.
Questions to ask your strata manager about insurance
Owners and committee members should feel comfortable asking:
Does the strata manager receive any insurance commission, broker share, referral fee or other benefit?
Is the amount shown in dollars and as a percentage of the base premium?
Who ultimately receives the commission and broker fee?
Is the broker, insurer, underwriting agency or quotation provider connected with the strata manager?
Were at least three quotations obtained, and if not, what are the written reasons?
Does the manager's remuneration change depending on the policy selected?
Are any insurance administration or claims fees charged separately under the agency agreement?
What cover, exclusions, excesses and sub-limits differ between the options?
Who will support the scheme if it needs to make a claim?
The answers should be clear enough for an owner to understand without needing to reverse-engineer the premium.
Frequently asked questions about strata insurance commissions in NSW
Do ETSM or Essential Strata Management receive insurance commissions?
No. Ellouise Tyrrell Strata Management and Essential Strata Management do not accept insurance commissions from insurers or insurance brokers.
Are strata insurance commissions illegal in NSW?
No blanket prohibition applies to every insurance commission. A commission may be permitted where the relevant agreement, approval, disclosure and other legal requirements are satisfied. A strata manager is, however, prohibited from receiving a commission when the owners corporation independently obtained the quotation and arranged payment without the manager's assistance.
How many strata insurance quotations should a manager obtain in NSW?
Section 166 generally requires at least three quotations from different providers for each type of insurance proposed by the strata manager. If fewer are provided, the manager must give the owners corporation written reasons.
Does the cheapest strata insurance quotation provide the best value?
Not necessarily. Owners should compare cover, exclusions, excesses, insurer suitability, claims support and all fees, as well as the final premium.
Can a broker still be paid when the strata manager takes no commission?
Yes. A broker or other insurance intermediary may charge a fee or receive remuneration even though the strata manager receives none. The quotation should clearly identify those amounts and who is paid.
Can an owners corporation arrange its own strata insurance?
An owners corporation can consider its own insurance arrangements, subject to its statutory duties, decision-making requirements and any delegated authority. If it obtains the quotation and arranges payment independently without the strata manager's help, the strata manager is prohibited from receiving a commission on that insurance.
What is an insurance administration fee?
It is a separate fee that may be charged under a strata management agreement for agreed work connected with insurance renewal, administration or claims. It should be distinguished from an insurer-paid commission and clearly disclosed in the agreement or fee schedule.
Why might a building receive fewer than three quotations?
Insurers may decline to quote because of claims history, defects, unresolved maintenance, cladding, coastal or bushfire exposure, building use, incomplete information or limited market appetite. The strata manager must provide written reasons when fewer than three quotations are supplied.
How can a committee check what its current manager receives?
Review the agency agreement, insurance quotation breakdown, AGM disclosures, financial records and invoices. Ask the manager to identify every commission, broker fee, referral benefit and connected supplier in writing.
Why choose a no-commission strata management model?
It separates the manager's remuneration from the insurance premium and removes one potential source of perceived conflict. Owners still need to assess cover, broker remuneration and total policy cost, but the manager's financial position is easier to understand.
Transparent strata management across Sydney and the NSW South Coast
Owners corporations deserve clarity about insurance costs and the relationships behind them.
For strata management in Sydney's Eastern Suburbs, Inner West or Lower North Shore, learn more about Ellouise Tyrrell Strata Management.
For local strata management from Nowra to Eden, visit Essential Strata Management.
Both businesses follow the same central principle: we do not take insurance commissions, and agreed fees should be clearly disclosed.
Looking for transparent strata management with no insurance commissions? Explore ETSM strata management in Sydney or contact Essential Strata Management on the NSW South Coast to request a tailored proposal for your owners corporation.
The following official resources support the legislative and regulatory information in this article:
NSW Government - Guide to strata law changes for committees and owners
NSW Fair Trading - Disclosure requirements for strata managing agents
NSW Government - Managing strata finances and insurance
NSW Legislation - Strata Schemes Management Act 2015, section 166
NSW Legislation - Strata Schemes Management Act 2015
ASIC - Informed consent for insurance commissions
ACCC - Insurance monitoring reports
Insurance Council of Australia - General Insurance Code of Practice
General information only. NSW strata and insurance laws can change, and insurance, broking, licensing and financial-services obligations may apply differently depending on the parties and services involved. This article is not legal, insurance or financial advice. Owners corporations should obtain advice appropriate to their scheme and review current policy wording, quotations and contractual documents.
General information only: This article has been prepared by ETSM and Essential Strata Management for general information and educational purposes only. It does not constitute legal, financial, insurance, building, taxation or other professional advice. NSW strata legislation, regulations and industry requirements may change, and their application will depend on the circumstances of each strata scheme. While reasonable care has been taken to ensure the information was accurate at the time of publication, readers should obtain independent professional advice relevant to their circumstances before acting on this information.
