Strata Community Association NSW will begin phasing out insurance commissions for managing agents from the start of next year amid a regulatory focus on transparency.

Contracts will not include a commission option and remuneration for insurance-related work will be provided under fee-based arrangements, in consultation with property owner clients.

“The decision to replace insurance commissions over this phased transition has not been made lightly, or quickly,” SCA NSW president Robert Anderson said. “Undertaking this reform is about delivering transparency, trust, and showing leadership.”

NSW reformed strata regulations after the ABC reported last year on conflicts of interest and high insurance fees and commissions, which have often subsidised management charges quoted to owners.

Last month, Fair Trading commissioner Natasha Mann said the agency had advised on why commissions were problematic and how they could be phased out, and the next step was to understand the impacts of a ban.

The NSW government has asked the state’s productivity commission to report on potential impacts by February 27.

Mr Anderson says messaging is clear and the industry wants to take the lead; owners are suspicious of commissions and regulations have added difficulties.

Owners’ corporations should not be worse off under the shift, while strata managers will be transparently remunerated for insurance-related work, he says.

“Insurance commissions have been an important part of revenue for strata managers for 40 years or so, and it’s important that revenue is replaced,” he told insuranceNEWS.com.au.

“We’re setting the standard rather than waiting for government to step in, and it strengthens trust with our clients.”

SCA says it has commissioned research and engaged across the sector, and it will provide training and resources for members during a transition that may be challenging for some.

The group says its members manage 75% of NSW strata lots.

Mr Anderson says SCA supports the productivity commission continuing its review and wants a widening of the terms of reference to include emergency services levy impacts.

The Australian Consumers Insurance Lobby has welcomed SCA’s move, while urging the government to ensure the reform does not become a “Trojan horse” workaround where conflicts emerge under different labels in the face of an inevitable commissions ban.

“The key now is closing loopholes, particularly related-party arrangements, and making sure all financial benefits are captured by the rules, disclosed transparently, and that any savings are passed through to owners,” chair Tyrone Shandiman said.

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