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Insurance Business | 17 Jul 2014, 07:50 AM Agree 0
Large insurance broking houses could leave their clients better off if they consider the advantages of discretionary mutual arrangements, though they could reduce overall channel insurance sales.
  • Bill de Vos | 17 Jul 2014, 01:00 PM Agree 0
    Aside from purchased catastrophe cover, what if working losses exceed the adequacy of the accumulated funds of a discretionary mutual, there can be a call on the "insured members". You also need to be sure of the integrity of any available claims data, and who manages the working losses, compliance, etc, would suggest that this article over-simplifies the suitability of a discretionary mutual, otherwise we'd all be using them!
  • Stephen W | 17 Jul 2014, 01:55 PM Agree 0
    Bill, the "caution" you raised is valid, but I've heard it used as a warning against Mutuals, when really it should be used as an opportunity to improve the risk avoidance measures employed. Our own Mutual has insurance measures in place to protect against both catastrophes and working losses exceeding the accumulated funds. Our Members have never been asked to make additional contributions, whilst enjoying a comparable level of protection at stabilised prices. It's good to know that the insurance industry can think outside the box too.
  • John | 17 Jul 2014, 05:57 PM Agree 0
    Discretionary means exactly that.
    And I remember the CEASA Mutual that did make calls. Most members were not aware of this exposure
  • Paul | 18 Jul 2014, 09:16 AM Agree 0
    As a means of avoiding charges Discretionary Mutuals might work fine but they are not insurance contracts and do not have the inherent protections of the Insurance Contracts Act yet are frequently still described as "insurance". Ask one of the members what he has and he will tell you its insurance. One day there will be a legal action against either the parent client and/or the broker when the end user wakes up that this is not what they thought they had.
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