As most readers are aware, the new community scheme Acts and relative regulations came into effect on 7 October 2016. The new regulations usher in a new era of management and supervision of community schemes in South Africa. It is disappointing that these regulations were made public over a year ago but the public and stakeholders in the community schemes arena were only given 30 days to make submissions. Addsure submitted over 20 suggestions including corrections to tweak some of the financial regulations but unfortunately, these have been largely ignored. There are a few insurance rules and regulations that can still be improvement and hopefully the new board will attend to these in due course.
One of the rules that need improvement are around CSOS (Community Scheme Ombud Services) Act regulation 15. We believe that the option to have a managing agent’s own fidelity policy ceded or interests of community schemes noted therein is significantly flawed and complex. In these cases, managing agent policies have to insure large sums, be variable, have very low excess structures as well as cover the directors and principal’s dishonesty which will be challenging to do.
What should bodies corporate or managing agents be doing right away?
One of the things that change immediately is the format of the AGM where some significant aspects of insurance need to be attended to.
Addsure has provided clients with a solution for the fidelity question for many years which was previously optional. Now compulsory, underwriting managers or insurers have scrambled to launch products to meet the fidelity need since the new regulations were gazetted. This has been an interesting time as underwriting managers, insurance advisors and portfolio managers try to understand the new regulations. The dust is slowly settling in this regard and leading community scheme businesses have provided insurance advisors with group scheme options and/or individual options for schemes.
Fidcure, the Camargue underwritten fidelity and trustee indemnity option, remains the best broad-based cover and is exclusively available to Addsure clients. We provide clients with comparative and highly competitive options from others such as CIA, FPA, CSure and others. The CSure option can only be considered where a managing agent has fidelity cover already which is covered by Addsure’s PIMA option.
Addsure is a reliable and established community scheme insurance specialist with many different options available:
- We offer a wide range of options including umbrella schemes
- We consider managing agents’ overall fidelity and commercial crime needs in conjunction with body corporate needs
- We really understand the legislation and provides training for portfolio managers in this regard
- We can assist any managing agent and their clients, no matter whether building policies are on our book or not
- We specialise exclusively in community schemes and provide superior advice in this regard
- We can provide cost effective and competitive premiums
Bodies corporate and managing agents need to take care as there are pitfalls. For example, there are various options and premiums which can often differ significantly from a competitor product. Some underwriters require a written managing agent contract and others do not. Some products require onerous application process while others may simply require a one-pager or no forms at all.
How do we go about obtaining quotes for an umbrella scheme? Download the spreadsheet and send the completed form back to us.
Call us to assist in dealing with fidelity insurance and other new changes. We are capable and highly qualified to advise on the best and most cost-effective cover for your scheme.
Author: Mike Addison
Addsure are the leaders in sectional title insurance. Get 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