Strata Insurance: What is a Fee-for-Service Model?
For years, many strata committees have been frustrated by the lack of clarity around insurance costs. Premiums are often bundled in hidden commissions paid to strata managers or brokers, “rebates” on commissions that don’t really exist, leaving owners uncertain about what services they were actually paying for.
In response, the progressive and more client-focused strata managing agents are now adopting a fee-for-service model, bringing greater transparency, accountability, and trust.
A New Way of Thinking about Strata Insurance
Under this approach, the cost of arranging and managing insurance is clearly itemised instead of being bundled into the premium. For owners corporations (or bodies corporate in Queensland), the benefit is straightforward: you know exactly what you are paying your strata manager for.
Instead of receiving commissions from insurers, managers are paid directly by the owners corporation for the services provided. These services are significant and extend well beyond filling in a form, they can involve complex tasks such as assessing policy coverage, liaising with brokers, and coordinating with insurers during claims, notwithstanding taking on liability for the process.
Independence to Choose Your Own Broker
Strata and community managers embracing fee-for-service often maintain a panel of brokers that committees can choose from. This gives owners the opportunity to select the broker they feel most comfortable with and best suited to their scheme’s needs.
The benefits of this independence include:
Recommendations driven by client needs, not hidden incentives.
More open conversations about policy coverage and costs.
A stronger relationship of trust between the client and the manager.
Because the manager is paid directly by the scheme and not through insurer commissions, their advice is better aligned with owners’ best interests.
A Simple & Predictable Pricing Structure
Insurance is often one of the largest expenses for a strata scheme. Under the commission-based system, costs could rise without a clear explanation. With a fee-for-service model, at least the management component of the cost is transparent and fixed in the management contract.
It is important to note, however, that insurance premiums themselves will still fluctuate due to market conditions, claims history, and risk profile. The improvement is that committees can separate out the management fee from the premium, making levy-setting and financial planning more predictable and easier to justify to owners.
Removing the Reliance on Insurance Commissions
The move toward fee-for-service reflects broader consumer expectations across industries. Just as financial advice and mortgage broking have moved away from commission-based remuneration, strata management is beginning to follow. The approach strengthens governance, reduces potential conflicts of interest, and enhances consumer protection. Each state and territory has its own regimen for how commissions are reported, which can be complex. In simple terms, fee-for-service goes a step further by removing reliance on commissions altogether, aligning with the spirit of these disclosure requirements in the most visible and simple way possible.
The True Value of Transparent Insurance Solutions
Some schemes may initially see a separate service fee as an additional cost. In reality, it often represents better value, as commissions are removed from premiums and owners know exactly what they are paying for. Negotiating the fee upfront also gives committees more control and ensures transparency in both management remuneration and insurance processes.
Over time, this creates a more sustainable and professional framework that benefits managers, brokers, and owners alike.
Demanding a Higher Standard for Insurance
The shift to fee-for-service is more than an administrative change; it is a cultural shift that prioritises owners. By removing hidden costs, strengthening trust, and giving committees clearer budgeting tools, it marks an important step toward a more accountable and owner-focused strata sector.
In strata and community living, trust matters. With fee-for-service, transparency and independence are built into the way insurance is managed, ensuring communities can move forward with confidence.
The Bottom Line
The fee-for-service model is not just a new method of charging. It is an approach that delivers clarity, fairness, and trust, giving owners confidence that their strata manager is acting in their best interests.
Here’s a clear comparison table you can include alongside the article to help committees quickly understand the difference between the two models:
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