Are you a trustee or member of a scheme, and are you wondering about the importance of the annual general meeting (AGM) with insurance in mind? Look no further: Addsure has you covered.
At Addsure, we believe that the AGM is likely the most important time of the year for a scheme. It’s the chance for all stakeholders to come together and really discuss the latest goings-on in the scheme and what the plans are going forward. It is a chance for the trustees to report back to the members, and for important decisions that affect the scheme to be discussed and ratified.
As trustees, it is your chance to offload in a sense and move many onerous decisions onto the members’ responsibility. The insurance aspect for the scheme is just one of the many important decisions that are made then collectively by the members. Your risk of not reporting back to the members is then eradicated.
Here are some insurance aspects that you need to keep in mind at the AGM:
In terms of Prescribed Management Rule 17(6)(j)(ii), when discussing your Schedule of Replacement Values (SRV) which should be included to your invitation pack for adequate time for the members to review the same, it’s useful to note to the members when your last property valuation was completed, and when it’s next due. Your SRV is directly based on those figures and any inflation that has been allowed for in the valuation report.
Use this opportunity to explain what the body corporate insurance covers versus what an owner must seek cover for, such as their personal belongings. Allow your members the opportunity to understand their section’s sum insured – encourage that if they have done any enhancements to their property to seek guidance on whether they should insure those upgrades. Let them know that it’s worthwhile itemising and insuring these upgrades for a minimal cost. This item on the agenda allows you to have your members approve the values that are being insured. Transfer of accountability has occurred once that decision has been taken.
Discussing liability is vitally important as it helps to cover owners collectively against the risk of liability in line with PMR 17(6)(j)(iii). Remember, each member is part of the body corporate and liability claims can be made against the body corporate, which includes each member. Check what your policy caters for in respect of liability and ask the meeting members if they agree with the amount. The minimum amount required for public liability is noted in PMR23(6)(b) is no less than R10 million and you can reference the exact amount noted in your insurance policy to the meeting attendees.
The discussion of fidelity (PMR23(7) ) is another vital aspect and one of compliance. You need to protect the scheme against possible fraud, dishonesty, and misappropriation of scheme funds. There is a set formula that should be used when calculating this amount. If you are unsure with anything like this prior to the meeting invitation being issued, feel free to chat to us to assist you in this regard. Again, you report back to the meeting about the fidelity guarantee cover the scheme has in place, and you gain their approval on the amount.
Discussing any additional cover is also an important element, especially where many schemes are implementing additional measures to navigate the latest environment facing schemes nowadays. This is an important item to not neglect.
You also want to make the mention that the trustees have consulted with an authorised and independent financial advisor about the insurance cover for the scheme, and that written record has been received.
Remember that you should be receiving a comprehensive letter of advice prior to your renewal that outlines all items that were dealt with on the renewal. If you are not receiving this advice, please make sure that you receive this each annual renewal to safeguard all role players.
The AGM is an opportunity to report back and engage with your members and agree the way forward for the scheme with the ensuing financial year.
Now that we’ve covered some key points to keep in mind regarding insurance during the AGM, let’s highlight some tips for a successful meeting:
- Firstly, it’s important to plan. The chairperson should have a clear idea of what needs to be discussed during the meeting and ensure that all relevant documents, including the agenda and any reports, are circulated well in advance. This will give all stakeholders the chance to review the materials and come to the meeting prepared with any questions or concerns they may have.
- During the meeting, it’s important to keep things on track. The chairperson should make sure that the discussion stays focused on the agenda items and that everyone has a chance to speak. It’s important to create an open and inclusive environment where all voices are heard, but it’s equally important to keep the meeting from getting side-tracked by tangential issues.
- Another important aspect of a successful AGM is transparency. Members should have access to all request all relevant information about the scheme, including financial statements, budgets and valuation reports. This will allow them to make informed decisions and participate fully in the decision-making process. At Addsure, we don’t support the idea to simply include the insurance policy with the invitation pack as you have to keep in mind all the regulations and legislation surrounding privacy rights; we advocate including the SRV in your invitation pack at all times.
- Finally, it’s important to follow up after the meeting. The chairperson should ensure that all decisions made during the meeting are recorded as minutes and that any action items are assigned and followed up on. This will help ensure that the decisions made during the meeting are implemented and that the scheme moves forward in a productive and positive way.
In conclusion, the AGM is a critical event for any scheme, and insurance is a key aspect of this meeting. Trustees must ensure that they have adequately prepared for the meeting, including reviewing their insurance policies and communicating any necessary information to members.
By planning ahead, staying focused, and fostering transparency and inclusivity, the AGM can be a successful event that sets the stage for the scheme’s future success.
*Watch our video on the same subject
Author: Candice Persson, Addsure
Addsure is South Africa’s leading sectional title insurance brokerage. Obtain fit and proper advice from advisors who understand sectional title. Contact our head office, Cape Town (021) 551 5069 who will put you directly in touch with one of our nationwide advisors.