Why the AGM matters – especially when it comes to insurance

Every year, trustees and managing agents gear up for what is often called AGM Season, and we all know that this can be a stressful time for some!  But it need not be if one has prepared ahead of time and planned accordingly. 

However, for many, the AGM is feared for many reasons.  Perhaps issues face the body corporate that are difficult to explain, or the outstanding arrear levies create unnecessary financial burdens, preventing certain projects from being initiated, and often, the ability to explain rising fixed costs to the members can be a cause for angst.  There are so many facets that make up the AGM preparation. What one often doesn’t realise is the impact that Insurance has and how best to report back on the insurance matters to the members. Let’s unpack this a bit more.

What is the AGM?

The AGM (Annual General Meeting) is arguably the most important date on a scheme’s calendar. It’s the opportunity for all stakeholders: Trustees, owners and managing agents to:

• Reflect on the past year
• Approve budgets and insurance values
• Make vital decisions for the future
• Share and shift responsibility to members

While managing agents often find this time of year to be a whirlwind, it’s crucial to remember just how significant these meetings are. For trustees, the AGM also presents a chance to transfer decision-making accountability to members, especially on matters such as insurance.

Insurance on the AGM agenda

Many schemes face increases in insurance premiums, which can be due to several factors, and one aspect is the rate at which claims are occurring, often directly linked to maintenance shortcomings.  However, the AGM deals with three very specific agenda items that are laid out in the Prescribed Management Rules.

The following three areas are particularly important:

1. Schedule of replacement values (SRV)

At the AGM, members must approve the scheme’s schedule of replacement values, commonly referred to as the SRV. This forms the basis of the insurance policy structure and should be read back to the most recent valuation.  Care: note to the members when the last valuation was conducted and when the next is due to be completed in line with statutory requirements.

This is the ideal opportunity to explain:

• The difference between body corporate insurance and owner responsibility
• Why owners must insure their personal contents or section improvements
• How upgrades should be separately insured (additional sum insured)

We recommend circulating your schedule of replacement values ahead of time in the invitation pack for members to review beforehand.

2. Liability cover

Your AGM should also address liability cover. This protects the scheme and its members (remember: every owner is the body corporate) from third-party claims.

Be sure to:

• Clarify what the liability policy includes
• Confirm member understanding and approval thereof
• Note that once approved, responsibility is collectively shared

This ensures that trustees have discharged their duty and are protected via member ratification.

3. Fidelity guarantee insurance

This area often gets overlooked, but is essential for compliance with the Sectional Titles Schemes Management Act. Fidelity insurance covers the scheme against:

• Fraud
• Dishonesty
• Misappropriation of funds

A formula exists for calculating this minimum requirement, but additional cover may be advisable. 

For this section, you want to discuss with the members:

• The amount currently insured
• Whether adjustments are needed (based on the calculations conducted before the meeting)
• Any extra cover linked to new scheme measures (e.g. security upgrades, digital systems)

Don’t forget the chairperson’s script!

Although insurance is daunting, Addsure has you covered!  We have a set script that you can read from and assist you in confidently dealing with this section of your AGM.

One of the most helpful tools at your disposal is the chairperson’s AGM script. Addsure has created an insurance-focused script designed to guide trustees and chairpersons through the insurance portions of the meeting.

The script helps you:

• Stay compliant with legislation
• Ensure all insurance points are properly tabled
• Record member decisions accurately
• Navigate common questions with confidence

This resource is based on the Sectional Titles Schemes Management Act and can be adapted for any scheme or managing agent team.

A word on advice and documentation

Trustees must also ensure they receive:

• A written letter of advice from their broker before renewal
• Documentation confirming consultation with a licensed financial advisor
• Clear communication of renewal terms and decisions

If this isn’t happening… act quickly. You should always receive a full advisory letter before the AGM so you can responsibly report to members.

Final thoughts

Your AGM is far more than a statutory obligation.  It is an opportunity for transparency, accountability, and risk mitigation.

Use this opportunity to educate your members, share responsibility and secure collective decisions around insurance and all the other matters that the scheme faces.

Most importantly, don’t go in unprepared. Use the resources that you have: the valuation reports, insurance certificates, your broker’s letter of advice, and Addsure’s chairperson’s script, which ensures everything is handled correctly and confidently.