After all the independent studies, headlines, television exposés and industry reflection, strata insurance professionals are bracing for two reports that could have a dramatic impact on how they operate.

At the end of this week, the NSW government should receive the final report from the state Productivity and Equality Commission’s strata remuneration review.

The Victorian government’s independent review of strata legislation was due to provide its report by December 1 last year, and that is also expected to be made public soon. 

Both states are considering banning strata managers from accepting insurance commissions.  

It’s a potential move that has been described as “draconian” and “short-sighted” by one industry leader.

Nevertheless, some insiders believe “the writing could be on the wall”.

“In NSW at least, it’s not a matter of if they ban commissions, but how and when,” one told insuranceNEWS.com.au.

The NSW review’s consultation document outlined three options – self regulation, prohibition of agents accepting commissions, and banning them from buying goods and services involving commissions.

Option two is what most are expecting, albeit a recommendation will need to be approved by the government and go through a legislative process.

Self-regulation could be considered fraught with difficulty, as demonstrated by Strata Community Association NSW’s ultimately frustrated attempt to push through a ban on members taking commissions.

And option three – which could prevent managers from doing business from brokers that take commissions – might be a step too far.

Doing nothing is unlikely to sit well with community expectations, amid heightened scrutiny and demands for action. The media storm that blew up in 2024 and peaked with the ABC’s Four Corners program is yet to run out of steam.

Melbourne’s The Age newspaper this weekend ran with the prominent page three headline: “Ethically indefensible” kickbacks cost apartment owners thousands.

The article begins: “Strata managers are pocketing secret kickbacks of up to 20% from the insurance companies they present to apartment owners – and the practice is perfectly legal.”

Some might question whether “secret kickbacks” is an accurate descriptor, but the article makes clear the continued unease that surrounds commissions in the strata sphere.

The Victorian review’s consultation document notes that “concerns persist about the scale and structure of commissions” and asks: “Should managers’ commissions on insurance or any other financial benefits be banned?”

With former Australian Securities and Investments Commission deputy chair Karen Chester having joined the expert panel, speculation is rife that “substantial change” is likely in the state.

There’s some irony that it was the insurance industry that first flagged strata remuneration concerns, with Steadfast commissioning consultant John Trowbridge to carry out an independent report.

Mr Trowbridge concluded in 2022 that “opaque” commission arrangements should be phased out, but for the most part, this has not happened.

If change is warranted, it appears governments will have to act. Until the reports are published, we’re still guessing at what that might mean, but it looks like years of uncertainty are coming to an end.

Many in the industry still don’t see an issue with properly disclosed, reasonably set commissions, but a significant number seem resigned to change regardless, so long as there is an appropriate transition to avoid sending managers reliant on commission to the wall.

As CHU CEO Kimberley Jonsson noted at October’s NIBA Convention, it might be best for everyone if the industry can move past this debate once and for all.