Potential Crisis Looms Over Strata Industry Amid Proposed Insurance Commission Reforms
PICA Group Highlights Risks of Removing Insurance Commissions in Strata Management
0
The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.
The strata management sector in Australia is at a crossroads, with proposed reforms to eliminate insurance commissions sparking concerns about the industry's future viability.
Bobby Lehane, CEO of PICA Group, has issued a stark warning that removing these commissions could lead to a decline similar to that experienced by the aged care industry.
Lehane highlighted that the aged care sector suffered from sustained profitability declines, resulting in an exodus of skilled professionals and investors, deteriorating services, and eventual government intervention. He cautioned that the strata management sector could face a similar trajectory if significant changes to remuneration from insurance are implemented without careful consideration.
The New South Wales Government's extensive reform program includes exploring the removal or replacement of insurance commissions. Lehane emphasized that strata management requires a level of profitability to survive and that recent years have seen profit margins plummet due to increasing costs, stagnant management fees, and the growing complexity of schemes and legislation.
A survey conducted by PICA Group among strata owners in New South Wales revealed that 71% of respondents did not want strata management fees to be impacted. Preferences varied, with 34% supporting the maintenance of current commissions to offset management fees, 38% favoring a fixed insurance fee paid by the insurer, and 29% advocating for the removal of insurance commissions accompanied by increased management fees.
As more Australians turn to apartment living amid the cost of living crisis, the importance of a stable and effective strata management sector becomes increasingly critical. The industry must navigate these proposed reforms carefully to avoid unintended consequences that could jeopardize its sustainability and the quality of services provided to property owners.
Please Note: We do not endorse any specific products or companies. Some content is sourced from third parties, including press releases, and may not be independently verified for accuracy or completeness.
In recent years, many Australian strata property owners have faced significant increases in insurance premiums, with some experiencing hikes of 40-80% since 2022. Understanding the underlying causes of these increases is crucial for developing effective strategies to manage and mitigate costs. - read more
Consumer advocacy groups are urging the National Insurance Brokers Association (NIBA) to explicitly prohibit conflicted remuneration arrangements in strata insurance. This call comes amid concerns that such financial practices may compromise the interests of strata property owners. - read more
The strata management sector in Australia is at a crossroads, with proposed reforms to eliminate insurance commissions sparking concerns about the industry's future viability. Bobby Lehane, CEO of PICA Group, has issued a stark warning that removing these commissions could lead to a decline similar to that experienced by the aged care industry. - read more
In the first quarter of 2026, Australia's commercial insurance market experienced a notable decline in rates, with an average decrease of 12%, as reported by Marsh's latest Global Insurance Market Index. This trend marks a continuation of the previous quarter's downward trajectory, offering potential relief to businesses grappling with insurance costs. - read more
