The NSW insurance commission ban: 1 January 2026.

What an insurance commission actually is

A strata insurance commission is a payment from an insurance broker or underwriter to a strata managing agent in connection with placing or renewing the owners corporation's insurance policy. The commission is calculated as a percentage of the premium — typically between 10% and 20% — and is paid by the broker or insurer out of the premium that the owners corporation has paid in full.

For an owners corporation paying an $80,000 annual building insurance premium, a typical 15% commission represents $12,000 paid annually to the strata manager, on top of management fees. Across 94,659 NSW schemes, the aggregate market for insurance commissions has historically been worth hundreds of millions of dollars per year — paid by owners, received by managers, often without owners knowing the amount.

The fundamental issue with the practice is conflict of interest. A manager who receives a percentage of the premium has a financial incentive to place the policy that pays the highest commission, not necessarily the policy that offers the best coverage at the best price for the owners corporation. In a 2024 ABC Four Corners investigation, this conflict was identified as a structural driver of premium inflation in the Australian strata insurance market.

What the SCA NSW reform changed

From 1 January 2026, SCA NSW began phasing out the acceptance of insurance commissions through three specific changes.

New SCA NSW standard management contracts no longer include a commission option. The standard contract used by SCA NSW members has been amended so the option to accept commissions on insurance products simply does not exist. Members issuing new contracts must use the new template.

SCA NSW members using their own contracts must also exclude commissions. Members using non-standard contracts cannot offer the commission option to owners corporations.

Phased application to existing contracts. The reform commenced on 1 January 2026 with new contracts. Existing contracts will roll off the commission model over the following renewal cycles, with the overall direction being the elimination of the practice across the SCA NSW membership.

The broader picture: how we got here

The reform did not appear in isolation. Over the past five years, a coalition of consumer advocates, strata-industry insiders, and journalists has steadily built the public case that insurance commissions in strata are a structural problem rather than a normal feature of the market.

Key milestones in that build-up include:

March 2021 (Queensland). BCCM regulation modules tightened so body corporate managers must disclose the actual monetary amount of any commission, not just a percentage. The previous practice of saying "we receive 10% of the premium" without showing the dollar value was no longer compliant.

2024 (national). The ABC Four Corners investigation into strata commission practices brought the issue to mainstream audiences. The investigation showed that managers were sometimes receiving commissions of 20% or more on building insurance premiums while owners were unaware of the size of the payment.

February 2025 (NSW). The Strata Managing Agents Legislation Amendment Act 2024 commenced, requiring detailed insurance quote breakdowns including all commissions and broker fees, with penalties up to 500 penalty units for breach.

September 2025 (NSW). SCA NSW announced the phased commission ban, taking effect from 1 January 2026.

2025 (Victoria). The Insurance Council of Australia's submission to the Victorian Expert Panel called for similar governance reforms, identifying poor strata governance as a structural driver of premium increases for the one in five Victorians living in strata.

What this means for owners corporations

For owners corporations and their committees, the SCA NSW ban has three immediate practical implications.

Insurance pricing should improve at next renewal

If your scheme is in NSW and your manager is an SCA NSW member, your insurance renewal in 2026 onward should reflect the absence of the manager's commission. If your premium does not drop on renewal — or your manager's fee structure does not change to reflect the loss of the commission income — it is worth asking specifically how the commission has been treated. Has it been re-routed to a different mechanism? Has the manager's flat fee been increased to compensate? Owners are now entitled to a direct answer.

Manager fee structures will shift

Strata managers operating under the previous model relied on commissions as a meaningful revenue line — sometimes 15-30% of total practice revenue, particularly for managers with insurance-heavy portfolios. Expect to see clearer fee-for-service pricing emerging, with management fees, disbursement fees, and rate cards for additional services becoming more explicit. This is broadly positive for owners — it makes the cost of management visible — but it also means quarterly budgets may need to be re-examined as the structure changes.

Differentiation between transparent and opaque managers becomes sharper

Managers who have already moved to commission-free fee-for-service models (a growing minority, including Strata Choice and others) will benefit from being able to demonstrate compliance with the new SCA NSW framework. Managers who were operating with high commission income face a harder transition. For owners corporations tendering new management contracts in 2026, this difference is now an explicit selection criterion.

What this means in Queensland

The NSW commission ban does not directly apply in Queensland — SCA Queensland is a separate body and Queensland is governed by the BCCM Act and its regulation modules. However, the direction of travel is consistent.

QLD body corporate managers have been required since March 2021 to disclose the actual monetary amount of any commission or benefit they receive before the body corporate decides to enter into a contract. The percentage-only disclosure that allowed commission size to be obscured is no longer compliant. While there is no equivalent of the SCA NSW outright ban in Queensland yet, regulatory and industry pressure continues to build, and committees in Queensland schemes are now well within their rights to ask their manager directly about insurance commission arrangements.

Frequently asked questions

Does the SCA NSW ban apply to all NSW strata managers?

The ban applies to SCA NSW members on new standard management contracts from 1 January 2026, and to members using their own contracts. Non-member strata managers in NSW are not bound by the SCA decision, though they remain subject to the statutory disclosure obligations under the Strata Managing Agents Legislation Amendment Act 2024.

Can my strata manager still take commissions on existing contracts?

The reform applies to new contracts from 1 January 2026, with existing contracts transitioning at renewal. Owners corporations on existing contracts that include commission options should review the next renewal carefully and request that the contract be brought into line with the new standard.

What if my manager is not an SCA NSW member?

Non-members are not bound by the SCA decision but remain subject to the statutory disclosure obligations. Your owners corporation can independently require the manager to commit to commission-free arrangements as a condition of contract renewal.

Will premiums actually go down?

That depends on whether the previously-commission-bearing portion of the premium is genuinely refunded to the owners corporation, or whether brokers and insurers retain it. SCA NSW and consumer advocates have argued that owners should see direct benefit. The reality will be tested at renewal cycles through 2026 and 2027.