Some owners instruct Owners Corporation managers to place their insurance with local brokers with whom they are familiar. This places OC Managers in a difficult position, because it can potentially lead to a range of problems, including working outside the legislation.
There are several considerations which both OC Managers as well as owners must be aware of when placing insurance through brokers with whom the OC Manager has no formal arrangement either as Authorised Representative or Distributor.
MBCM franchisees are licensed Representatives of CHU Insurance which means we are able to deal direct with CHU; MBCM franchisees are also a licensed Distributors for Honan Insurance Brokers and Whitbread Insurance Brokers, through whom we have access to every specialist insurance company operating in the strata sector.
MBCM franchisees undertake regular industry training and examinations in order to maintain these business arrangements on behalf of our clients. Part of our job under our relationship with the insurance industry is also to centralise and manage insurance claims on behalf of owners.
It must be noted that owners are free to obtain their own insurance, however in this case there are a number of issues which must be considered:
- Providing advice: It is only natural that owners will always come to us for information about their insurance policy. Where a policy has been placed through another broker (ie one which we do not have a formal relationship with) we may continue to safely offer factual advice however we may not provide general advice, as we can with CHU, Honan and Whitbread products. In this case we must advise owners to take their questions direct to the broker or the insurance company that they have chosen as we are unable to assist in any way.
- Is it an effective policy: Strata insurance is a highly specialised industry. Insurance obtained through external brokers may not be appropriate for our owners.
- Paying for Insurance: In these cases, we recommend that owners must provide s specific direction that enables us to safely use owners corporation funds to pay for their preferred insurance policy.
- Errors and Omissions: When we are not directly involved with closely managing the insurance policy, our concern is always the potential for late payment or failure to pay, which puts us at great professional risk.
- Confirming Coverage and Additional Protection: Being a licensed representative or distributor offers a strong layer of protection from the principle insurers. We do not receive this benefit when placing insurance through other brokers, which also adds professional risk.
In the event that owners choose to select their own insurance, it is recommended that MBCM franchisees do not involve ourselves in certain aspects of that insurance policy, particularly including administering claims. Under these circumstances we must advise these owners that they will have to make their own claims.
Where owners resolve at an AGM that we are to obtain competitive quotes, we will always do this through our existing formal relationships, either direct through CHU Insurance, Honan Insurance Brokers Whitbread Insurance Brokers.