NSW is becoming more measured in its approach to strata remuneration reforms but the removal of commissions from building managers remains on the cards, CHU Underwriting CEO Kimberley Jonsson has told an investor briefing.

Ms Jonsson said NSW Fair Trading, which has been consulting on changes, has grown more aware of the importance to the strata management sector of commissions, which are subsidising fees paid for their services.

“Those businesses do not sustain themselves without insurance commission at the moment. We can’t have a failure of that market, because that’s not a good customer outcome either, and so I think they’ve become more measured in what they’re doing at Fair Trading,” she said.

“If I’m reading the tea leaves – does commission go, I think it probably does, but they need to give some runway to the strata managers to replace that income.”

Whitbread Insurance Brokers CEO Michael Giansiracusa said strata managers play a vital role dealing with issues affecting buildings and are first responders for claims.

Any changes to the strata manager arrangements need to be well thought out, he told the Steadfast investor day panel.

“We’re constantly engaging with them,” he said. “If they walk away from that space, I’ll need to charge more because I’ll need to need to invest more resources into doing the things they’ve been doing.”  

Fair Trading Minister Anoulack Chanthivong told the Strata Community Association NSW convention last year that reforms already passed aimed to ensure a strong and trustworthy industry, while he had sought advice and would consult further on transitioning away from commissions.

“If industry remains committed to capturing the trust and confidence of owners and the broader community, we must acknowledge that commissions hinder these efforts,” he said.

NSW Fair Trading confirmed earlier this year that it had met with sector stakeholders, including owners, strata managing agents, insurers, brokers, lawyers and academics, to explore how a ban could be implemented. An update from the government is likely in coming months.

Laws that require detailed breakdowns of insurance quotes including commissions and broker fees, plus greater transparency around service company links, were passed last year and took effect on February 3.