The National Insurance Brokers Association has thanked NSW Fair Trading for organising a strata forum where the future of commission-sharing was discussed.

“NIBA welcomes the opportunity to unpack key perspectives around the strata sector and to ensure that insurance brokers remain well positioned as trusted partners for strata communities,” CEO Richard Klipin said.  

Some of those who attended the forum have told insuranceNEWS.com.au the impression given by Fair Trading was that further reform is inevitable.

The NSW government has already introduced legislation to enhance remuneration disclosure.

One focus at the forum was commission-sharing arrangements. Brokers often pass to strata managers some or all of the commissions paid to them by insurers. Brokers sometimes then charge a separate fee.

As previously reported, consultant John Trowbridge, who was asked by Steadfast to review strata remuneration in 2021, continues to recommend this model be phased out. But Steadfast believes this is not necessary and enhanced disclosure is sufficient.

“The forum provided the opportunity for NSW Fair Trading to hear directly from sector representatives on options to transition away from commissions, as well as the potential risks and opportunities,” a communique released by Fair Trading after the meeting said.

“Participants acknowledged that the practice in the strata industry for strata managing agents to receive commissions has evolved over time and become the standard practice for many managing agents. 

“Many agents charge lower management fees on the basis that commissions will considerably supplement their income stream.

“Overall, participants generally agreed that the status quo needs to change, noting that a sustainable, viable and trusted strata industry is good for both consumers and managing agents.”