NIBA Welcomes NSW Strata Commissions Review, But Warns Against Overreach

The National Insurance Brokers Association (NIBA) welcomes the release of the NSW Productivity and Equality Commissionʼs Strata Commissions Review report and its focus on improving transparency, trust and consumer outcomes across the strata sector.

With around two million people in New South Wales now living in strata dwellings, and strata projected to account for almost half of all homes in metropolitan Sydney by 2041, getting the policy settings right is critical to the future of housing, consumer protection and access to trusted professional advice.

NIBA supports measures that improve professionalism, disclosure and accountability in the strata sector, particularly where reform is directed at the source of the conflicts identified in the review.

In particular, NIBA welcomes Recommendation 7, which proposes removing the requirement for strata managers to seek three insurance quotes at the end of the transition period. NIBA raised concerns about the proportionality of this requirement in its submission, noting the compliance burden it creates, especially for hard-to-place risks, where obtaining three genuine quotes may be difficult or impossible. The Commission's willingness to revisit this requirement reflects the kind of evidence-based, targeted reform NIBA supports.

However, NIBA has serious concerns about Recommendation 2, which proposes restricting commission-based remuneration for insurance brokers providing strata-related services. Insurance brokers are not supply chain intermediaries. They are Commonwealth-regulated financial services professionals, operating under Australian Financial Services Licences (AFSL), ASIC oversight, and the Insurance Brokers Code of Practice, with legal duties to act in their clients' best interests.

This framework already includes robust disclosure obligations, conflict management requirements and independent compliance oversight. Extending restrictions to the broking
profession conflates two fundamentally different regulatory environments, and risks reducing consumer access to professional risk advice for strata insurance, where that advice is mandatory, complex, and consequential.

The recent Quality of Advice Review Final Report (2022) by Michelle Levy retained the exception to the ban on conflicted remuneration for general insurance products, noting that clients seek out brokers for independent advice. Levy was concerned that consumers who rely on brokers may not be willing or able to pay a fee for their advice.

Effective reform should be proportionate and targeted — addressing conflicts where they are clearly demonstrated, without inadvertently reducing the access strata communities have to independent professional advice.

NIBA CEO Richard Klipin welcomed the reportʼs broader intent but cautioned against reforms that could create unintended harm for strata communities.

“NIBA welcomes the Commissionʼs focus on building trust, transparency and better consumer outcomes in the strata sector. These are important objectives, and we support reforms that improve disclosure and accountability where conflicts genuinely arise. But it is critical that policy responses remain targeted and proportionate,” Richard said.

Insurance brokers play a vital role in helping owners corporations navigate a highly complex insurance market, secure appropriate cover and access expert claims advocacy when something goes wrong. Proposing a model that classifies insurance brokers as supply chain intermediaries, which they arenʼt, and restricting them risks limiting choice and flexibility of access to trusted advice for consumers.

NIBA supports stronger transparency for strata managers and welcomes the opportunity to continue working constructively with government and stakeholders on reforms that build consumer confidence without undermining access to professional risk advice.

NIBA looks forward to engaging with its members and key stakeholders around the proposed recommendations outlined in this review.