Community scheme insurance and the independent insurance advisor

We have written a number of blogs about the importance of advice and in particular, how to maintain such records of advice. There are many good reasons for community scheme trustees to use an independent insurance broker’s expertise to assist them in making the most informed decisions when buying insurance. Ideally, a specialist in the field should be used.

Insurance brokers act as the scheme’s advisor on insurance and insurance-related financial matters.  They work for the scheme – not the insurance company – to make sure that the community, their assets and their overall financial well-being are suitably protected. If you experience the misfortune of a loss, your insurance broker will guide you through the claims process, helping to ensure a swift and fair settlement by your insurance company with the aim of getting you back to the position you were in financially before the event occurred.

Independent brokers should provide expert, unbiased advice on your individual scheme’s insurance needs. Some other providers such as certain tied-brokers are more focused on selling a product to your scheme, some with a longer-term view of cross-selling retail products to the database they acquire. With an independent broker, your scheme’s interests come first.  In our view, it is the focus on the client’s need – rather than the broker’s own objective –  that sets apart the independent broker.

Comparing products

Independent advisors (brokers) have access to a wide selection of some of the best insurers in South Africa, most of whom do not sell directly to the market.  Once a broker has properly assessed your particular scheme’s insurance needs, the broker should set out written advice, meeting certain criteria in terms of FAIS legislation and providing the scheme’s trustees with advice on the most appropriate product after thorough comparative analysis. This should be done on an annual basis and presented to trustees in terms easy to understand. The broker should be impartial but clear on the advised product and why.

Availability

Ideally, the broker should be present at a trustee meeting where the insurance decisions are made but this is not always possible. The next best option for the trustees is to have the broker’s advice available, in writing, so informed decisions are made with the comparisons tabled. The written record of advice should be filed with the minutes and trustee resolution.

Responsibility and trust

Your independent insurance broker should put the client’s interest first, before the interest of the insurance companies they deal with. Buying via a broker means that the advice is independent of any insurance company, so their recommendations should always be impartial and in the scheme’s best interests. The advice is professional and the advisor carries certain responsibilities with the dispensed advice.

Advocacy

If you have to make a claim, your broker is there to ensure that the claimant receives fair and prompt settlement as well as to ensure that the community scheme is treated fairly throughout the process.

In the event of a dispute, your expert broker should step in as your advisor and negotiate with the insurance company.  Experience has shown that a broker’s knowledge and relationships can often help settle a disputed claim.  Especially in the case of a rejected insurance claim in the community scheme environment, owners will need an independent expert view to satisfy themselves on the merits of a) the insurers position and b) professional input and assistance to fortify their argument.

Experience and expertise

With their knowledge, experience and expertise, specialist independent advisors or brokers can add a lot of value to the process of product choice and at claims stage. An advisor will know which product best suits certain scheme dynamics and will be able to advise on the most suited and economically viable in terms of the needs.

When there are complications at claims stage, an experienced broker will guide clients through the process. Often a poorly presented claim has prejudiced a client’s claim.

In the event of a dispute, the experienced and trusted independent broker’s advice should be recognised and respected by both insurer and insured, and will go a long way in resolving disputes.

Cost and disclosure

It shouldn’t cost you any more to use the services of an independent insurance advisor. It is our view that alternative selling methods involve far more expense in brand awareness and advertising than what brokers are paid for their services.  Independent brokers earn commission from each insurance company they place your business with, so there is no financial incentive for them to pick one over another.  All remuneration is fully disclosed. For the commission earned, independent professional advice is dispensed as well as certain intermediary services which are critical to the protection of the scheme

Trustees should choose the most professional and most knowledgeable expert independent advisor they can find. With the expert advisor, informed product choices are made by trustees with the confidence and assurances associated with fit and proper written advice.

 

Author:  Mike Addison, Addsure

Contact Addsure – The Leaders in Sectional Title Insurance – for fit and proper advice from advisors who understand Sectional Title. Contact us in Johannesburg (011) 704-3858; Durban (031) 459-1795; Cape Town (021) 551-5069.