An update on SIS, our integrated insurance business, and our improved approach to conflicts of interest

1. Why we are publishing this page

For the past 24 months, Netstratahas been on a deliberate journey to uplift our corporate governance models and polices. As part of this, we’ve recently amended the way insurance is placed.

When a scheme is managed by Netstrata, and places insurance with Strata Insurance Services Pty LTD (SIS) Netstrata must now obtain informed consent on SIS behalf.

This page has been created to outline the reason behind the change and our commitment to greater transparency for owners. We encourage all our owners to read through this page and understand the changes. If, at the end of your reading you still have questions, we strongly encourage you to reach out where we will endeavour to provide further clarification.

2. About Netstrata and our integrated business model

Netstrata is the largest organically grown strata management company in New South Wales. Our position has been built over decades, on a commitment to leadership, excellence, innovation, and continual improvement.

The Netstrata Group is more than the strata management business. We operate an integrated group of related businesses, each focused on a specific service that touches a scheme. Strata Insurance Services (SIS) for insurance broking. Winfire for fire safety compliance. Resolute Maintenance Group for general maintenance. P G Martin Plumbing for plumbing services. Evolve Reporting for insurance valuations and capital works planning. Moirs Law for strata-specialist legal advice. And Strata Space, our technology platform.

Each of these businesses is aseparate company within Network Strata Services Pty Ltd, which trades as Netstrata. They exist because, when integrated thoughtfully, this model can produce better outcomes for the schemes we manage rather than splitting the work across a rotating set of external providers we cannot directly hold to a consistent standard. The integrated approach delivers more coordinated service across thebuilding, consistent quality across every service that touches the scheme, people who understand strata, and a single line of accountability when something needs to be resolved.

There is, of course, a natural tension built into this model. When we recommend one of our own related businesses, we can indirectly benefit through the group’s overall profitability.

To prevent that financial interestfrom influencing what we recommend, we hold every related business in the Groupto three specific standards:

1. each must operate to a higher quality standard than the open market,
2. each must benchmark its pricing against the open market, and
3. each can only be recommended to a scheme where it is the best option for that scheme. Where another provider is the better fit, that is what we recommend.

That set of design choices is the foundation of how Netstrata operates. The rest of this page is about how those choices apply specifically to SIS, our insurance broker, and how the conflict of interest in that relationship is disclosed and managed.
‍

3. The conflict of interest with SIS, explained

Firstly, it is important to be clear on what a conflict of interest is. A conflict of interest, on it’s own, is not inherently a bad thing. It exists when someone working for you has another impacting reason, such as financial or structural, that could influence the choices they make on your behalf. Conflicts of interest exist in many businesses; these conflicts must be managed and juggled every day. What matters is that the conflict is disclosed openly, so you understand that it exists and is managed actively so that it doesn’t affect the outcomes you are paying for.

A conflict of interest exists between Strata Insurance Services (SIS) and Netstrata on schemes where Netstrata is the appointed Strata Manager and SIS is the appointed insurance broker.

Netstrata, as your strata manager, has a duty to act in your scheme’s best interest when arranging insurance. Netstrata also stands to benefit financially when your scheme uses SIS, since SIS is part of the group, SIS’s profits accrue to Netstrata in the normal way of a parent-subsidiary subsidiary relationship.

It is this financial interest that creates a conflict.

This relationship is considered a ‘structural conflict of interest’. The word ‘structural’ is the important one. It means the conflict is built into the ownership structure itself, rather than any specific decision. A structural conflict is not impacted by any one schemes charges or service, rather it exists due to the company’s overall profitability.

It is also important to clarify, that Netstrata employees are not incentivised to recommend SIS, nor do they receive any direct payment or indirect payment.

Due to this conflict SIS must handle it in the following ways:

1. Disclosure: SIS has to tell every scheme that uses it about the conflict, in plain terms.
2. Consent: SIS has to engage with each scheme on how the conflict will be managed, and obtain the scheme's recorded consent to continue acting as broker.
3. Oversight: the scheme's interests must come first, with controls in place to ensure this.

4. The new SIS Conflicts of Interest Policy

SIS has recently rewritten it’s Conflicts of Interest Policy. Under the new policy, SIS commits to the following standards:

• Fee-only remuneration – SIS is paid only by the Owners Corporation, through an agreed broker fee. SIS does not accept commission, brokerage rebate, profit share, override, volume rebate, or any other monetary benefit from any insurer or underwriter in connection with the placement of a scheme's insurance.
• Client first – Where the interests of the Owners Corporation and the Netstrata Group diverge, SIS will act in the interests of the Owners Corporation, even were doing so reduces Netstrata Group revenue.
• Genuine market test – SIS will market-test each scheme's policy at every annual renewal, seeking quotations from a minimum of three insurers where the market permits. The market summary is provided to the strata committee with the renewal recommendation.
• Full fee disclosure – The SIS broker fee is provided in writing before placement, itemised separately on the invoice, and disclosed under section 60 of the Strata Schemes Management Act at each annual general meeting.
• No undisclosed soft-dollar benefits – Any non-monetary benefits received from insurers (training, hospitality, conferences) above a $200 per-supplier per-year threshold are declined or surrendered, recorded in the SIS Gifts Register, and reported quarterly to the Netstrata Group Compliance Officer.
• Right to choose – Any Owners Corporation may use a different broker without affecting the strata management relationship with Netstrata. There is no penalty, no break fee, and no pressure to stay with SIS.
• Claims handling independence – The team handling claims is structurally separate from the team negotiating premium. Claims outcomes are not linked to any element of SIS staff remuneration.

‍

5. How Netstrata manages the conflict

The policy above sets out the formal commitments that bind SIS. This section sets out how those commitments are applied in.

5.1 Ensuring competitive value

The fair-value commitment in the policy is not just a written promise; it is supported by aset of practical controls that operate at every annual renewal.

• The market test at every annual renewal – SIS must obtain quotations from a minimum of three insurers eachtime a scheme renews. The result of the market test is documented in a Market Summary Sheet that the strata committee receives with the renewal recommendation. The committee can see which insurers were approached, which provided quotes, and which declined. The recommendation explains why the chosen insurer is the best fit for the scheme – on a balance of price, scope of cover, claims service, and security.‍
• Independent review by McGrathNicol Advisory – McGrathNicol's 2025 review of Netstrata's procurement included an audit of SIS pricing on a total-cost basis against the top ten brokers in the Netstrata-managed schemes book. The review found that SIS's average invoice was lower than the comparators.

5.2 Quality assurance

Quality assurance at SIS rests on a set of regulatory and structural foundations.

• SIS is a licensed and regulated broker – SIS holds an Australian Financial Services Licence and is regulated by the Australian Securities and Investments Commission. SIS is also a member of the National Insurance Brokers Association (NIBA), and is therefore bound by the Insurance Brokers Code of Practice.
• Compliance reporting through the Group – The SIS Responsible Manager reports to the SIS board and reportsquarterly to the Netstrata Group Compliance Officer. Material breaches of the policy are reported to the Netstrata Board within ten business days. The Policy itself is reviewed annually.
• SIS are members of the National InsuranceBrokers Association (NIBA) - Being amember of NIBA, SIS are bound by the Insurance Brokers Code of Conduct providing owners with an independent dispute resolution process.
• SIS are members of Strata Community Association (SCA)(NSW) - SIS use the SCA(NSW) best practice guide and standardised insurance quotation format ensuring transparency andcomparability in the renewal process

5.3 When SIS is, and is not, the right fit

SIS is recommended to most Netstrata-managed schemes. The reasons for that, supportedby the McGrathNicol review, are that SIS's claims service is strong, its total-cost outcomes for owners have been favourable against the market, and it brings specialist strata expertise that not all brokers in the market have.

SIS's quality also stands on its own merits in the open market. Around 15% of the schemes SIS manages are external to Netstrata, and have chosen SIS on its merits through a normal market process.

If your scheme would prefer to use a different broker, that decision is yours. There is no penalty, no break fee, and no pressure to stay with SIS.

6. The updated distributor agreement

In addition to the SIS Conflicts of Interest Policy, the agreement that sits between SIS and Netstrata – the distributor agreement – has been rewritten.

Under the updated agreement, Netstrata, as the Distributor that introduces schemes to SIS, commits to three specific things:

• To comply with the Code Principles, and other provisions of the Code, relevant to the services Netstrata provides as a Distributor.
• To report any breach or potential breach of the Code to SIS within five days of discovery.
• To report to SIS immediately on receiving a complaint about a Code breach.

These commitments mean that Netstrata – not only SIS – is now expressly bound by the same Code that SIS is bound by, in the conduct of its work introducing schemes to SIS.

For more information about the Distributor Agreement - Contact us at transparency@netstrata.com.au

7. What we are asking you to do

As part of Netstrata’s journey to uplift its corporate governance, SIS will need to obtain informed consent before acting as the scheme’s insurance. This is a proactive measure that goes above and beyond disclosing the relationship.

In the agenda for your scheme's upcoming meeting, you will see a motion. The motion asks your Owners Corporation, to be aware of the conflict of interest the relationship and how it’s being managed, to opt in to continuing with SIS as your broker. The Code calls this 'informed consent'. It means the consent comes after the relationship has been explained in full.

The motion also grants what is called a 'standing authority'. A standing authority means that, having consented once, the scheme does not need to vote again at every annual renewal. SIS continues placing your insurance under the same authority each year. The scheme can revoke that authority at any time by passing a new resolution at a general meeting.

If your scheme would prefer to use a different broker, that decision is entirely yours, and it always has been. We will support the transition.

8. Why we recommend SIS to most of the schemes we manage

Netstrata recommends SIS as the insurance broker for most of the schemes we manage. That recommendation is not a default. It is a recommendation we make on the merits, and one we believe is in the best interests of the schemes that follow it. The reasons sit across four areas: how SIS is paid, how SIS handles claims, who SISis, and what the track record looks like.

• The fee structure works in the scheme's favour
  SIS operates on a fee-for-service model. The fee is based on the work SIS does to arrange your insurance, not on the size of your premium. SIS does not earn more if the premium is higher, and the fee is not shared with Netstrata as commission or referral payment. It is shown separately on every invoice, disclosed under section 60 of the Strata Schemes Management Act at every annual general meeting, and tested against the open market each year. The 2025 independent review by McGrathNicol Advisory confirmed that, on a total-cost basis, SIS schemes pay less than other brokers within the top ten insurance services providers on Netstrata-managed schemes.‍
• Claims are handled with discipline
  Strata insurance is most tested at the moment a claim is made. SIS lodges new claims with the insurer within 24 hours of being notified by the scheme. Throughout the life of the claim, SIS manages the communication between the scheme, the insurer, any lawyers involved, and the strata manager, so the scheme does not have to chase three or four different parties to find out what is happening. SIS will also advise on potential issues before they become formal claims, which can protect the scheme's claims history and keep future premiums lower than they would otherwise be.‍
• SIS is a strata insurance specialist
  SIS works exclusively in strata insurance. It is not a general insurance broker that also does strata. Over 12 years of operation, the team has built deep specialist knowledge of strata risk, the cover schemes need, and the underwriters that compete for strata business. The team also includes former strata managers who understand the day-to-day pressures faced by owners corporations and committees, which shows up in the way SIS communicates and the way SIS prioritises.‍

We do not put any of this forward to claim SIS is the right choice for every scheme. Netstrata recommends external brokers where they are a better fit. But for most of the schemes we manage, the combination of fee transparency, claims discipline, specialist focus, and a consistent track record is what makes SIS the recommendation.

9. The Insurance Brokers Code of Practice, and how to raise a concern

The Insurance Brokers Code of Practice is the industry standard SIS operates under. It sets the rules for how brokers should conduct themselves – including how they should disclose conflicts of interest, how they should handle complaints, and how they should treat clients. Membership of the National Insurance Brokers Association requires brokers to subscribe to the Code, and the Code itself is monitored by the Insurance Brokers Code Compliance Committee.

The Code is publicly available at insurancebrokerscode.com.au.

If you believe that SIS or Netstrata has breached the Code – or any other obligation owed to your scheme – there is a clear escalation pathway. You can use any of the channels below, at any time. You do not need to go through them in order.

• SIS Responsible Manager – admin@stratais.com.au
• Netstrata Compliance Officer – transparency@netstrata.com.au
• National Insurance Brokers Association (NIBA) – niba.com.au – the industry body responsible for the Code
• NSW Fair Trading – the state regulator for strata management agents and consumer matters – nsw.gov.au/fair-trading
• Australian Financial Complaints Authority (AFCA) – afca.org.au – for unresolved disputes about a financial service.

The Code requires us to actively promote it, and to make this escalation pathway accessible.

10. Contact us

If you have a question this page hasn't answered – or you want to talk through anything in person or on the phone – here is how to reach us.

• Phone: 1300 638 787
• Email: transparency@netstrata.com.au
• Your strata manager: contact them directly

‍