1 authorised representative training v3 · 2020-06-23 · crm brokers’ financial services guide...

1 Authorised Representative Training v3.18

Federal Government legislation that regulates

providers of financial services and products

(including insurance products) It is designed to:• bring various financial services and products under one

licensing regime;

• introduce a new disclosure regime for most financial products;

and

• establish a standard of conduct for financial service providers.

** This will improve the way we do business!**

Financial Services Reform Act (FSRA)

2 Strata Insurance Training v3.19

FSRA deems a person will be considered to provide a

"financial service" if they:

• deal in a financial product;

• provide financial product advice;

• make a market for a financial product;

• operate a registered managed investment scheme;

• provide custodial or depository services etc.

As an Authorised Representative / Distributor of CRM

Brokers, you are providing financial product advice when

it comes to insurance products.



FSRA has various disclosure requirements for financial

products and services. For strata, this includes:

• Product Disclosure Statement (PDS);

• Financial Services Guide (FSG).

These documents include material information that might

reasonably be expected to influence a client's decision to

purchase the service or product.

They must be sent to the Owners Corporation (OC) or

Strata Committee (SC) at the time of taking out the

insurances (for the first year only).



CRM Brokers’ Financial Services Guide will list:

• details of CRM Brokers as the holder of an Australian

Financial Services Licence

• details of the strata company as an Authorised

Representative of CRM Brokers

• the type of advice the strata company can give i.e.

general financial advice only (includes factual information)

• who to contact if the client has a complaint

Financial Services Guide (FSG)


The PDS is usually in the first few pages of an Insurer’s

policy wording booklet. It will list:

• details of the underwriting agency and the insurer who

provides authority for the agency to bind cover on its behalf

• a basic summary of the insurance product

• details of the cooling-off period

• duty of disclosure requirements (Insurance Contracts Act)

• claim lodgement details

• dispute resolution

• privacy of information details

Product Disclosure Statement (PDS)


www.crmbrokers.com.au/strata-policy-wordings

Where can I find the PDS?


http://www.crmbrokers.com.au/strata-policy-wordings

Section 21 of the Insurance Contract Act 1984 requires

the insured to disclose all material information that is

relevant for the insurer’s decision making process.

You must reveal everything you know or that a

reasonable person in the circumstances could be

expected to know, information about the strata plan.

This would include (but not be limited to):

• Claims information

• Known defects/hazards including cladding material,

EPS and any non-compliant material such as asbestos.

• General information about the building

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Duty of Disclosure

Strata Insurance Training v3.19

Section 28 of the Insurance Contract Act 1984 – where

there is fraudulent disclosure, the Insurer can avoid

the contract or reduce their liability on a claim.

Section 54 – the insurers may reduce or exclude the

liability due to some act by the Insured causing or

contributing to the loss and therefore the insurers liability

has been prejudiced.

Non action can also be regarded as an action

Section 60 – policy cancellation due to non

compliance

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Non Disclosure


What are the 3 (three) compulsory

covers under Strata Scheme

Management Act (SSMA)?


Claims-Made

• Office Bearers Liability

• Legal Defence Expenses

• Audit Costs

• Work & Health Safety –

Appeal Expenses

Claims-Made VS Claims Occurrence

Claims-Occurrence

• Building

• Public Liability

• Voluntary Workers

• Machinery Breakdown

• Lot Owner’s Fixtures &

Improvements

What is the difference?


Provides cover to the Owners Corporation for their

legal liability in the event of an occurrence causing

property damage or personal injury. The law

requires that strata and community title properties

carry at least $10 million in legal liability cover.

($20 Million in NSW).

Q: What triggers the cover?

Public Liability cover


The policy is structured to provide monetary

benefits if a voluntary worker dies or is injured

while carrying out their voluntary work on behalf of

the Owners’ Corporation (as a result of an

accident). In some cases, this cover can also

include travel expenses, loss of wages and

domestic assistance.

The list of benefits under this cover is provided in

Insurer’s PDS.

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Voluntary Workers cover


This section provides cover for any loss that the

insured incurs resulting from fraudulent

misappropriation of their funds, including securities

and tangible property by a person with the

responsibility to protect and care for the funds. To

claim under this section, the loss has to have

occurred during the insurance period and

discovered no more than 12 months after the

expiry/renewal date.

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Fidelity Guarantee cover


Office Bearers are:

• Chairman

• Treasurer

• Secretary

Plus other elected members up to 9 people (except for 2-lot schemes)

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Office Bearers


Intended to indemnify the committee members for

any losses caused by a wrongful act resulting in a

claim.

Wrongful act can include mistreatment, neglect or

breach of duty, errors and act or omission.

Claim could arise from any decisions they make or

failed to make but should have made.

Does not cover fraudulent, dishonest, criminal

acts, libel or slander.

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Office Bearers Liability cover


Cover is on a ‘claims made’ basisi.e. you must notify the insurer of any possible

Office Bearers claim before the policy expires.

Coverage applies only to claims first made against

the Strata Committee (SC) during the period of

insurance and notified to the insurer during such

period of insurance.

Cover limit is in aggregate for all SC members.

If you had $100,000 cover and 9 SC members,

that’s $11,111 each member.

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Office Bearers Liability cover


They are governing the Strata Plan and most of

the time, on a voluntary basis. But they can be

sued for any decision they make and the dollar

amount is unlimited.

Their personal assets could be at risk (if done in

good faith for the purpose of executing functions

under the Act, the liability attaches to the Owners

Corporation instead) – Section 260 Strata Scheme

Management Act 2015

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Office Bearers – What is the risk?


An individual on the SC approached a lot owner

who was pruning a tree which the council had

ordered was not to be pruned. The SC member

placed her hand on the lot owner’s shoulder when

talking to her.

Q: Is this example covered under OBL?

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Office Bearers – Example One


A SC member (Treasurer) was heading overseas

and paid just over $100,000 to a painter before he

left. This was payment in advance for painting the

building.

The painter disappeared.


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Office Bearers – Example Two


A lot owner in a townhouse complex asked the SC

member if they could replace the fences in their

lot. The SC member gave permission.

The SC told the lot owner to replace the new fence

with something similar to the rest of the fences in

the complex. The lot owner sues the SC member.


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Office Bearers – Example Three


Cover for any legal expenses you incur in defence

of a legal proceedings brought against the Owners

Corporation.

Q: Are there other legal defence expenses covers

under strata policy?

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Legal Defence Expenses cover


Provides cover against any escalation in

rebuilding/replacement costs due to a

catastrophe (emergency) event declared by a

government authority.

Q: What triggers the cover?

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Catastrophe cover


Provides protection against unexpected sudden physical

damage or destruction to machinery, requiring replacement or

repair in order for the continuation of normal operations.

Generally includes damage to mechanical and electrical

machinery, pressure vessels and boilers and any other plant

equipment that forms part of the building.

Cover for Escalators, elevators and lifts may be subject to a

maintenance agreement in place.

Some insurers cover Loss of Rent arising from Machinery

Breakdown event.

Q: What’s the difference with Fusion cover?

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Machinery Breakdown cover


Paint cover: covers the costs incurred in the re-wallpapering or

repainting of internal walls or ceilings of a lot/unit as a result of a

claimable event under Section 1 - Building.

Floating Floorboards: this cover provides protection against

laminated, engineered, veneered or similar type flooring not fixed to the

sub-floor, but held in position by their own weight and/or skirting

boards.

Flood: cover against unforeseen flooding, including repair and

replacement costs necessary to restore the affected area. Flood

protection applies when water from a lake, river, creek, reservoir,

watercourse, dam or canal (whether they are in their original state or

have been modified) overflows onto usually dry land.

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Other Optional covers


Under CRM Broker’s Authorised Representative

(AR) Agreement, you can give:

• Factual Information

• General Advice

But not Personal Advice!

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Advice


Factual information is accurate and objective

information about:

• The services that you offer (e.g. arranging the strata

insurance policies); and

• The features of the strata insurance (e.g. the benefits, the

various limits on cover, etc.).

As long as you can factually support the statements you

make, you are giving factual information.

Don’t give your personal opinion!

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What is Factual Information?


Fact 1: The Product Disclosure Statement

summarises the policy benefits, limits of liability,

and what it does not cover.

Fact 2: Your current policy doesn’t have Office

Bearers Liability cover in place.

Fact 3: The minimum cover for Public Liability is

$20 Million as per the Strata Schemes

Management Act (NSW).

Fact 4: Floating Floorboards cover is available

with this insurer.

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Factual Information Examples


General advice is a general statement,

recommendation or opinion that influences or

could influence the Owners’ Corporation to make a

decision about the strata insurance.

It is not based on their personal circumstances (as

this will then be personal advice).

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What is General Advice?


General Advice 1: A valuation report carried out by a

prescribed professional for insurance purposes would

assist the Owners Corporation in reviewing the

Building Sum Insured (BSI) to avoid underinsurance.

General Advice 2: In our experience, your current

Insurer has excellent claims services.

General Advice 3: Some Insurers may not provide

terms if not all information about Aluminium

Composite Panels (ACP) is provided.

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General Advice Examples


Financial Services Reform Act (FSRA) says: If

you give general advice you must give the

following general advice warning:

“This is general advice and it may not be right for

you.”

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General Advice Warning


A written general advice warning also appears in

the insurance documentation:

“This is general advice. It doesn’t take account of

your personal circumstances and whether the

product is right for you. Before you make a

decision, read the Product Disclosure Statement.”

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General Advice Warning


Personal advice is a statement, recommendation

or opinion you make that influences or could

influence the owners’ corporation to make a

decision about strata insurance where:

• You have considered their needs, financial

situation or objectives; or

• They reasonably assume you have considered

their needs, financial situation and objectives.

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What is Personal Advice?


Even though you may know about the Owners’

Corporation’s circumstances because you manage

the strata scheme, you cannot advise them if

insurance is appropriate for them. They must

decide for themselves.

You can tell them about the different policies, and

the types of situations a policy may be suitable for,

but you cannot tell them which policy suits them.

You must leave the decision to the Owner’s

Corporation.

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What is Personal Advice?


Personal Advice 1: “I think you should insure your building

for $5 million. That will cover you in the event of a total

loss.”

Personal Advice 2: “Because your building includes an

underground car park, you should consider a policy that

includes cover for removal of water from a car park or

basement.” - This is personal advice because you have

made a recommendation based on the client’s personal

circumstances.

Personal Advice 3: “You should only get $500,000 Office

Bearers cover. That will be enough.”

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Personal Advice Examples


In accordance with Terrorism Insurance Act 2003

Starting from 1st July 2017, buildings that fall within

the below categories are subject to Terrorism

premium (Levy);

1. 20% commercial floor space and higher or;

2. Building Sum Insured (BSI) equals to or greater

than $50 Million

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Terrorism Premium (Levy)


A strata by-law is a set of rules for strata’s internal

governance purposes whereas the PDS is the

insurer’s document detailing their product

(inclusions/exclusions).

In the event of a claim, the Insurer will refer to their

PDS.

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Strata By-Law vs PDS


Each claim needs to be assessed on its own

merits

Supporting documentation is essential, including

completion claim notification form, images,

All insurers are different and offer different

coverage.


Claims – Is something covered?


What is required when lodging a claim

• Causation i.e. how did the damage occur

• Date of the Incident (Date of Loss)

• Settlement Preference e.g. EFT (bank details)

• GST Registration Status, ABN Details & GST %

• Copies of Work Orders

• Copies of Quotes & Invoices for repairs

• Where possible, detailed images

Claims can be lodged through our online portal –

www.crmbrokers.com.au/strata-claims-notification

http://www.crmbrokers.com.au/strata-claims-notification

Lodge a claim as soon as possible.

CRM Brokers will lodge the claim with the Insurer

within 24-48 hour of written notice.

Claims marked “Urgent” will be lodged within the

same day – Call Us on 1300 880 494

If an assessor is required a claim will be lodged

with the insurer same day.

If a claim is lodged late – the Insurer will ask to

provide advice as to why the late notification.


Claims – Time Frames

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Question Time & Test

Please complete the short test available on our website,

the link will be emailed to you.

1 authorised representative training v3 · 2020-06-23 · crm brokers’ financial services guide...

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