Strata Community Association NSW has confirmed its phased replacement of insurance commissions is voluntary.

Last month, the strata management peak body announced members would begin phasing out the sharing of insurance commissions and broker fees from the start of next year.

It said new SCA NSW standard management contracts will not include an option to accept commissions on insurance products, and members using their own management contracts “will also not offer the option”.  

The word “voluntary” did not appear in the original announcement.

Last week, insuranceNEWS.com.au reported leading strata management business PICA Group was considering cancelling its SCA membership over the body’s stance. 

The company supports reform but is concerned about shifting costs to consumers and proposes an alternative approach whereby a fixed fee, paid by insurers and adjusted to the consumer price index, replaces commission-based payments.

SCA NSW said today it “acknowledges the feedback and concerns raised by some members”. However, it says the change in wording is not in response to PICA Group’s comments, and SCA members have already been given clarity over the voluntary aspect of the reform.

“Members are encouraged to begin a voluntary phased replacement of the current commission-based model from January 1 2026, transitioning to a commensurate fee structure over a three-year period as existing management agreements lapse,” the association said today.

President Robert Anderson says the peak body has “listened carefully” to its members.

“Our focus is on supporting a responsible, well-paced transition that protects both businesses and the communities they serve,” he said.

PICA Group MD and CEO Bobby Lehane today told insuranceNEWS.com.au he welcomes the clarification but concerns remain.

“I know the SCA has the best intentions and while ‘voluntary’ is a great start, it’s the replacement mechanisms that are actually critical to the solution and need to be properly thought through,” he said.

“For SCA, that appears to be consumer pays and to trust that the insurance chain passes on savings in full based on netting.

“Unfortunately, with no legal mechanism to enforce this and in an insurance landscape that is constantly changing, any savings are likely to be short-lived and gradually absorbed in the insurance chain, ultimately leaving the consumer worse off.”

Australian Consumers Insurance Lobby chair Tyrone Shandiman told insuranceNEWS.com.au the group had already formed the view that SCA members could not be forced into reform by the peak body.

“The clarification is good, but it just confirms what we knew all along,” he said. “The only way for consumers to be properly served is for the government to take action. If the industry is to move away from insurance commissions, then it has to be everyone.”

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