Insurance Commissions & Disbursements: The Fees Your Strata Manager Hopes You Won't Question

The owner briefing

• Insurance commissions can dwarf the visible management fee.
• Disbursements look small until they are multiplied by lots, months and every routine task.
• Ask for the dollar value, recipient and authority for every benefit.

Insurance commissions shape incentives, and owners deserve to know who is being paid when a policy is placed.

Most Australian apartment owners focus on two numbers when evaluating their strata management: the quarterly levy and the annual management fee.

Two other layers in the management contract can add tens of thousands of dollars to what the building pays.

They sit in Schedule C, covering commissions and financial benefits, and Schedule D, covering disbursements.

These costs do not appear in the headline management fee but form part of the building's wider strata finances.

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Schedule C and the commission question

Schedule C of the standard SCA strata management agreement requires the strata manager to disclose any commissions, rebates, kickbacks, or financial benefits they receive from third-party service providers.

In practice, the most significant item disclosed here is the insurance commission.

How insurance commissions work

The mechanics of strata insurance commissions in Australia follow a chain:

1. Your owners corporation pays the full insurance premium
2. The insurer pays a commission to the insurance broker, typically around 20% of the base premium
3. The broker shares a portion of that commission with the strata manager as a referral fee
4. In some cases, the strata manager deals directly with the underwriter and receives the full commission

1. 01
   Owners corporation pays full premium
2. 02
   Insurer receives premium
3. 03
   Insurer pays broker ~20% commission
4. 04
   Broker shares portion with strata manager
5. 05
   Disclosure recorded under Schedule C

The owners corporation bears this cost through the premium. A direct insurer or independent broker without a commission-sharing arrangement may quote a lower premium.

What the commission costs

Building Insurance Premium	Commission at 20%	What That Means
$20,000	$4,000	More than many small buildings pay in base management fees
$50,000	$10,000	Equivalent to hiring a part-time building coordinator
$100,000	$20,000	Could fund a year of preventive maintenance
$200,000	$40,000	More than most buildings pay their strata manager directly

For larger buildings with high insurance premiums, the commission alone can exceed the base management fee. A building paying $150,000 in annual insurance might be funnelling $30,000 to its strata manager through the insurance commission chain, on top of a management fee that might only be $25,000.

In that example, the insurance commission is larger than the negotiated management fee.

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Three commission options

The standard SCA agreement provides three ways to handle commissions:

Option 1: manager keeps everything. The manager retains 100% of all commissions from suppliers. This is the default in most contracts and the most expensive option for owners.

Option 2: split arrangement. The manager retains some commissions and passes the remainder to the owners corporation. The split ratio is negotiable but rarely favourable to owners unless specifically contested.

Option 3: full pass-through. All commissions are passed through to the owners corporation within 30 days. The manager receives zero commission income and is compensated solely through the agreed management fee.

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Why commissions create conflicts of interest

Insurance commissions create a conflict as well as a cost.

When your strata manager earns a percentage of your insurance premium, they have a financial incentive to:

• Recommend higher-premium policies (bigger commission)
• Use brokers who offer larger commission splits
• Discourage the committee from shopping around independently
• Resist switching to cheaper insurers who don't pay commissions

This does not prove a manager is acting in bad faith, but the committee cannot assess the recommendation without knowing the commission.

As the Owners Corporation Network puts it: "Commissions are about one thing: concealing income to mislead you, the clients, who are paying these commissions."

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Commission reforms

Insurance commissions in strata have come under intense national scrutiny:

• The ABC's "Strata Trap" investigation brought widespread attention to how conflicted remuneration distorts the insurance market for apartment owners
• SCA NSW resolved to phase out insurance commissions for its member agents: a significant industry shift, though voluntary and still evolving
• The Strata Managing Agents Legislation Amendment Act 2024 (NSW) strengthened disclosure obligations around commissions and financial remuneration
• The NSW Productivity and Competition Commissions are currently investigating conflicted strata remuneration more broadly, with public submissions expected

Commissions remain legal. Disclosure is required, but the practice is not banned. Owners can ask how much the manager earns from the policy and negotiate another arrangement.

What owners can do about commissions

1. Request Option 3, full pass-through, in the next contract negotiation.
2. Ask for the commission amount on the front page of each management proposal.
3. Get independent insurance quotes through a broker who does not share commissions with the manager.
4. Compare the total cost of management, including commissions, rather than only the base fee.
5. Check clause 3.3(d) so the scheme does not pay a commission when arranging its own insurance.
6. Ask tendering managers whether they offer a commission-free arrangement.

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Schedule D and disbursements

Disbursements are the out-of-pocket administrative expenses the manager charges back to the building. Individual items look minor, but together they can add $3,000 to $10,000+ per year depending on building size.

Common disbursement charges

Disbursements typically include:

• Postage and courier costs
• Photocopying and printing
• Phone calls
• Stationery and envelopes
• Bank fees and transaction charges
• Document storage and archiving
• Preparing reconciliation statements
• Software platform fees
• Strata Hub government charges (NSW: $3 per lot)

Some contracts also include a "fixed disbursement allowance": a flat monthly charge per lot that covers all administrative overheads in one lump sum.

Per-lot charges

The fixed disbursement allowance is where many buildings get caught. The charge looks negligible on paper, but it scales dramatically with building size:

Per-Lot Monthly Charge	20 Lots	50 Lots	100 Lots	200 Lots
$3/lot/month	$720/yr	$1,800/yr	$3,600/yr	$7,200/yr
$5/lot/month	$1,200/yr	$3,000/yr	$6,000/yr	$12,000/yr
$8/lot/month	$1,920/yr	$4,800/yr	$9,600/yr	$19,200/yr
$10/lot/month	$2,400/yr	$6,000/yr	$12,000/yr	$24,000/yr

A $10 per lot per month disbursement charge in a 200-lot building is $24,000 per year in disbursements alone. That's often more than the base management fee for a building half that size.

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Fixed or variable disbursements

The choice between fixed and variable disbursements depends on how your building communicates:

Choose variable if:

• Your building uses email for levy notices and correspondence
• Meeting documents are distributed electronically
• You have an online owner portal
• Minimal physical mail is sent

Choose fixed if:

• Your building still posts levy notices
• Meeting agendas are printed and mailed
• Many owners don't use email
• You want budget predictability regardless of volume

Australian strata communication is moving toward digital delivery. If the manager still charges heavily for printing and postage, ask what is still sent on paper and why.

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Newer disbursement charges

Several new disbursement categories have emerged in recent years:

Strata Hub (NSW) Beyond the government's $3 per lot charge, many managers charge their own fee for the data entry and compliance work. Some bill this at senior manager hourly rates: $200–$500 per year for what amounts to a data entry task.

Cybersecurity compliance As strata data moves online, some managers are passing on platform security costs as disbursements.

Electronic archiving fees Cloud storage and document management platform fees are increasingly appearing as disbursement line items.

Contractor compliance verification Checking ABNs, licences, and insurance for contractors working on common property; sometimes charged per contractor, per engagement.

Updated fire safety compliance Administrative costs associated with the evolving fire safety regulatory framework, particularly for buildings with combustible cladding.

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Calculate the total management cost

Add every layer to calculate what the building pays for management:

Fee Component	Example: 80-Lot Building
Base management fee (Schedule A/F)	$22,000
Schedule B additional services (12 months)	$4,500
Insurance commission @ 20% on $60K premium (Schedule C)	$12,000
Disbursements incl. per-lot charges (Schedule D)	$3,800
Annual escalation @ 4% (Schedule E)	+$1,696
TOTAL TRUE ANNUAL COST	$43,996

In this example, the headline management fee is $22,000, but the total is double that. The insurance commission alone represents more than half of the base fee.

This is why comparing strata managers on headline price alone is so misleading. A cheaper base fee can be wiped out by commissions, disbursements and extra-service charges before the committee notices.

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Questions for renewal

Before your next AGM or contract renewal, make sure you can answer these questions:

• What is our total Schedule B spend for the past 12 months?
• What insurance commission does our manager receive, and under which option?
• What is our total annual disbursement cost, including any per-lot charges?
• What is the annual fee escalation rate, and is it pegged to CPI?
• Have we compared the total cost of management, including charges beyond the base fee, against at least two other providers?
• Does our contract require committee approval before Schedule B work is performed?
• Have we requested an all-inclusive quote for comparison?

If the committee cannot answer these questions, it does not know the building's total management cost.

Make the total cost visible

UnitBuddy can put the base fee, Schedule B charges, commissions and disbursements into the same view. That gives owners a more honest picture of what management actually costs, and gives the committee a cleaner basis for renewal or retendering discussions.

Further reading

• Strata insurance disclosure best-practice guide, via LookUpStrata
• NSW: Strata insurance commissions and related entities: what must be disclosed?, via LookUpStrata

Related reading

• What Does Strata Insurance Cover? The Complete Guide
• The hidden fees in your strata contract
• How to audit your strata manager for hidden commissions

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