I have been writing about insurance commissions in strata management for years. The same arguments have come back at me that entire time: commissions are disclosed, owners are not harmed, the model has stood the test of time. Then, recently, Bobby Lehane, Managing Director and CEO of PICA Group, said it plainly in The CEO Magazine. He supports commission, he explained, because it is transparent.
Transparent. That’s an interesting word to use about a payment that flows from an insurer to a manager, inside a transaction where the manager is supposed to be acting in the building's interest, and where most lot owners have no idea the payment exists, let alone how much it is worth because it doesn’t appear in the strata accounts. Lehane also noted that commission subsidises the management fee, which at least confirms that the building's insurance premium is partly funding a discount on the manager's stated charges.
Read: At the Crossroads: The End of Hidden Commissions in Strata Management
The Macquarie Bank 2026 Strata Industry Benchmarking Report doesn’t deal in reassuring words. It deals in numbers, and the numbers give transparency a precise dollar value. Across firms that still collect insurance commission, average insurance revenue is $82 per lot per year. On total revenue of $528 per lot, that means insurance income represents approximately 15.5% of everything a strata management firm earns from your building. It is not a rounding error. It is the second-largest revenue line in the business after the base management fee, and for most lot owners it is completely invisible.
The commission versus fee comparison sharpens the picture further. Firms that collect insurance commission charge $333 per lot in management fees. Firms that have moved to a transparent fee model charge $366 per lot. The $33 per lot difference tells you what the word transparent means in practice: firms that disclose everything charge more upfront, because the number you see is the number you pay. Commission firms charge less upfront and recover the difference, and then some, from insurer payments that never appear on your levy notice.
Why does the commission model create a conflict of interest?
The commission model creates a conflict of interest because the manager's income from insurance is tied to the size of your premium. The higher the premium, the larger the commission. A manager operating under this model has no financial incentive to shop the market aggressively, negotiate a lower premium, or challenge the renewal terms. They may do all those things anyway, out of professionalism. But the structure of their payment works against it.
At $82 per lot per year, a firm managing 1,000 lots earns $82,000 annually from insurance income alone, with none of it visible in your management fee. A firm managing 5,000 lots earns over $400,000. This is meaningful revenue, and it flows from an arrangement where the insurer, not the building, is effectively paying the manager.
Read: Banking Fixed Its Conflict-of-Interest Problem. Why Is Strata Still Defending It?
What does the shift to a transparent fee model mean?
The transparent fee model means a disclosed, fixed fee for arranging insurance, approved by the committee, and separated entirely from the premium. Under this model, the manager has no financial stake in the insurance outcome. Their job is to find the best policy at the best price for the building.
The 24% figure in the Macquarie report is significant for a different reason than it might first appear. It is not just evidence that some firms are more ethical than others. It is evidence that transparent firms have found a commercially viable alternative. They charge $33 more per lot in visible fees and absorb no commission income. The model works. The 76% who have not made the switch are making a choice.
Read: No Free Lunch: What the Strata Commissions Review Really Means for Agents and Owners
How do you find out which model your manager uses?
Finding out which model your manager uses is straightforward. Ask them directly, in writing, whether they receive any commission, referral fee, or other payment from insurers or brokers in connection with your building's insurance. Ask for the dollar amount or percentage, and ask for it to be disclosed in the strata roll or financial statements going forward.
Your management agreement should already contain this disclosure if your firm operates in NSW or the ACT under current regulations. If it does not, that is itself informative. Committees are entitled to request full disclosure of all third-party income earned in connection with their scheme.
Read: Insurance Commissions at Risk: Yet Again
A manager unwilling to provide disclosure is telling you something important about their business model. The 24% of firms who have already made the switch have done so because they see transparency as a competitive advantage, not a threat. The question for every owners corporation in 2026 is whether the other 76% will follow voluntarily, or whether they will wait to be pushed.
Read: A New Law to Make a Messy Situation About Insurance Commissions Even Messier
Michael Teys advises strata management businesses on improving profitability through professionalisation and streamlined operating systems.
He has more than 30 years’ experience as a strata lawyer and academic and has owned 11 strata management agencies throughout Australia. He has a Master of Philosophy (Built Environment) and Bachelor of Laws. He lectures and writes widely about strata management issues in Australia and internationally.
