Insurance responsibilities ahead of the AGM

(Updated: 12 December 2024)

Annual general meeting (AGM) preparations often happen at the last minute—it seems to be human nature! However, when it comes to insurance-related responsibilities, better planning is essential to ensure a smooth process.

Key insurance items that will be dealt with at the AGM and which may require attention ahead of the AGM include:

• An updated schedule of replacement values (SRV) per Prescribed Management Rule (PMR) 23.(4),
• Liability cover in terms of PMR 23.(6),
• Fidelity cover per PMR 23.(7), and
• Additional cover per PMR 23.(8).

In simpler terms, this means the replacement values of the buildings, along with individual unit values, need to be approved by all of the owners at the AGM, after considering the SRV. Similarly, decisions must be made regarding liability cover (protection for the body corporate against legal liability for third-party injury or property damage), fidelity cover (protection against fraud and dishonesty involving scheme funds), and any additional insurance deemed necessary.

Preparation ideas

1. Plan the valuation

Start by considering the most recent valuation at least three months ahead of the AGM. If the last valuation was conducted two or more years ago, it may be time to revisit it. While valuations are required at least every three years, scheduling one a few months early can be prudent, particularly for larger schemes where accuracy is paramount.

2. Schedule of replacement values (SRV)

Prepare the SRV based on the latest valuation. If a new valuation isn’t feasible, consult an experienced insurance advisor or property expert who can escalate figures appropriately using current building inflation rates. The SRV must comply with PMR 23.(4) and should be completed well before sending AGM notices. Addsure’s prepared SRVs include helpful links to explainers, making the process straightforward and transparent.

3. Fidelity cover

CSOS Regulation 15, sub-regulation 3 provides a formula to calculate the minimum required fidelity cover. Once the budget and draft financial statements are available, consider adjusting figures if necessary, before the AGM. While the AGM ultimately decides the adequacy of the cover, early preparation ensures compliance and clarity.

4. Keep AGM information to a minimum

Providing a copy of the insurance policy schedule in AGM packs may seem helpful but can lead to complications. Outdated terms, changed excesses, and sensitive information like policy numbers could create confusion or fall into the wrong hands. Instead, rather only include the SRV and relevant explainers, so that the statutory requirements as set out in the agenda are met. This also avoids deviation from the set agenda. Policy information should, however, always remain accessible to owners separately, outside of the AGM pack. Transparency is key, but confidentiality is important.

Conclusion

Proper planning and preparation are essential for a successful AGM, particularly when addressing critical insurance responsibilities. Addsure offers specialist assistance to ensure these tasks are handled efficiently. We provide tailored SRVs, fidelity cover calculations, and downloadable resources like explainer booklets and AGM handouts. By planning ahead, managing agents and trustees can approach the AGM with confidence, ensuring compliance and peace of mind for all involved.

Let Addsure help you make your AGM preparations seamless and stress-free. Download our resources or reach out for support today!