Facebook Pixel
Skip to content

What you need to consider when appointing a community scheme’s insurance broker

When a body corporate or homeowners’ association (HOA) in South Africa decides to appoint a new insurance broker, it’s crucial to be well-informed about the process and implications. As an insurance broker, Addsure outlines the key points in the appointment letter that prospective clients must be aware of below.

Choosing the right broker

    Doing thorough research and choosing a broker who specialises in community scheme legislation is key. Choosing the right broker or intermediary can be highly influential and positive for your scheme. As a scheme, receiving proper advice based on legislative needs, client needs, mitigation factors, and overall risks will be critical.

    More about choosing the right broker can be read in a previous Addsure article.

    Proper counseling and introduction

    The appointing entity (scheme executives) should understand the content and ramifications of the appointment letter. There should be a statutory letter of introduction on file, signifying the proper introduction and engagement between the scheme and the new insurance broker.

    Liability claims awareness

    The appointing scheme should not be aware of any events or occurrences that could potentially lead to a liability claim and if there are, these should be fully disclosed upfront before making any changes or appointments.

    Compliance with Property Practitioners Act

    The appointment of Addsure or any broker should not have been compelled or encouraged by the property practitioner, managing agent, or their agent.  This is clearly spelled out in Section 58.(1)(b) of the Property Practitioners Act.

    Transition and notice periods

    In case the existing insurance policy is being cancelled as a result of the change in th broker, the appointing entity is advised to provide notice of 30 days (a calendar month) but if the policy remains in force and only the broker is changing, the appointment of the new broker can be immediate.

    Transition Guidelines: Clear notice periods help ensure a smooth transition from the outgoing broker to Addsure.


    Appointing a new insurance broker is a big decision for any scheme. Being informed about the key considerations, as outlined in the appointment letter, helps to ensure a transparent and well-organised transition. The provided guidelines promote compliance with legal regulations, protect against potential liabilities, and facilitate a seamless change in broker services.

    *See Addsure’s letter of appointment which is central to this article.

    Author: Mike Addison

    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.