[Updated 29 April 2025]
Many insurance advisors are licensed to provide intermediary services and advice to community schemes, but only a handful have the experience, knowledge and resources to properly advise and service community schemes. Scheme executives should choose carefully.
What distinguishes an experienced broker?
The ideal community schemes advisor should have a comprehensive understanding of insurance requirements as set out in the Sectional Titles Scheme Management Act and the Community Schemes Ombud Services Act. The broker should have a clear understanding of terms such as units, sections, common property, exclusive use areas, body corporate rules, the various implications and distinctions of these terms as well as the rights and responsibilities of the various role-players such as the managing agent, portfolio manager, estate manager, owner, trustee, valuer, assessor and insurer.
Understanding the liability aspects in community schemes, the fidelity issues and various factors which pose risks in a scheme is of vital importance.
The broker’s office needs to be equally familiar with the specialist aspects of community schemes, for example, how to set out a correct schedule of replacement values, accounting for improvements by owners, dealing with exclusive area improvements, handling claims for owners and trustees, the various excess implications, etc.
Specialised tailored systems such as Addsure’s ATON software allows portfolio managers to access their client’s information online, track claims live, monitor renewals, valuations, etc. Most brokers only cater for basic insurance needs of clients generally and not specifically for community schemes. When a broker specialises in community schemes, information such as articles, publications, resources, and coaching will be more specific and targeted.
The insurance brokerage should not only be a resource in respect of knowledge, technologies and experience, but should have a team that can properly advise and engage with owners, trustees and managing agents. When that large storm comes and multiple sections are damaged, the brokerage needs to be equipped to deal with it efficiently – when it counts most!
The insurance advisor or broker should provide written advice in line with the Financial Advisory and Intermediary Services Act (FAIS Act) regulations, which should reflect the following:
1. A brief summary of the information and material on which the advice was based.
2. The financial products that were considered.
3. The financial product recommended along with a clear and detailed justification.
This annual record of advice should be filed with the trustee’s minutes or resolution once the trustees agree on policy renewal.
Brokers or intermediaries who are not familiar with community scheme legislation will have some difficulty meeting the basic requirements of dispensing advice to community schemes.
Author: Mike Addison
Addsure is a leading sectional title insurance broker. Get fit and proper advice from advisors who understand sectional title.