Additional Information on Property Portfolios
The property portfolio arrangements overcome many of the limitations of an ’ad hoc’ approach that include: -
- Under utilising purchasing power
- Lack of control over where the risk is placed
- Potential for inadequate cover
- Inconsistencies in claims handling and support
- Risk of uninvited renewals or unpaid premiums and consequently cancellation of cover
In conjunction with certain leading Insurers, we have structured a Property Insurance Portfolio, which provides significant benefits including: -
- Premium savings
- Improved insurance cover
- Protection from Insurance market fluctuations
- High standards of claims support
- Simplified administration
- ‘Sleep Easy’ protection
- All insurances placed with Insurers of stature
- Compliance with Insurance Tax and Regulatory issues
- Survey & Valuation Service
Premium Savings
Insurers will reduce premiums under a Portfolio arrangement due to economies achieved through volume and spread of risk. Although Insurers would be reluctant to guarantee premium discounts, we have achieved reductions well in excess of 30%.
In our experience, the quality of risks managed by trust companies, banks, property managers and developers are generally above standard. Not only therefore does the ‘pooling’ arrangement bring together a collection of individual risks, but it also brings together a collection of good quality risks. This is ultimately reflected in premium savings.
Improved Insurance Cover
When insurance is purchased on an ‘ad hoc’ basis, Insurers offer, in the majority of cases, an ‘off the shelf’ policy, with standard terms and conditions. However, under the property portfolio arrangements, where there are many homogenous risks arising from one source, Insurers provide enhanced cover.
Outlined below are examples of additional policy benefits that are achieved for commercial, industrial & residential property: -
- ’all risks’ cover including subsidence ensuring the widest possible cover
- full theft cover (not just following violent/forcible entry or exit) including the fabric of the building
- no deduction for wear & tear
- removal of debris including boarding up
- architects, surveyors, legal and consulting engineers fees
- ’Day One’ inflation provision on both buildings and loss of rent
- a wide definition of buildings including costs of repairing and clearing drains, yards, car parks, etc., street furniture, pipes and cables
- landlords contents up to £25,000
- reinstatement of the sum insured following a loss
- contract works cover on extensions to existing premises up to £500,000
- trace and access costs resulting from escape of water or fuel oil
- repairs to landscape gardens damaged as a result of an insured peril
- cost of alternative accommodation and loss of rent for residential properties up to 25% of the building sum insured
- replacement of locks following theft of keys up to £500
- unauthorised use of utilities
- full cover for vacant (unoccupied) properties subject to security requirements
- subsidence damage to yards, car parks and roads whether the buildings are also damaged or not
- capital additions to allow for improvements to buildings up to £1,000,000 or 10% of the total sum insured whichever is the less
- contracting purchaser’s interest - where a contract of sale has been entered into but the building is damaged prior to completion, the purchaser can claim under the policy
- loss of rent cover includes prevention of access plus automatic 100% uplift to allow for rent reviews and additional costs re-letting the property including legal fees & any other expenditure to minimise loss of rent
- waiver of subrogation rights against any tenant
- non-invalidation clause protecting the owners’ and any mortgagees or lessors interest stating that cover will not be prejudiced if, unknown to the insured, the risk of damage is increased due to acts or neglect by any occupier of the buildings or is outside the control of the insured
- EC and public authorities requirements
- additional costs including undamaged portions of the property or in respect of water supply equipment supplying the sprinkler installation
- costs of refilling or recharging fire extinguishing appliances halon gas and CO2 flooding systems and sprinkler tanks
- costs of replacing sprinkler heads
- costs of resetting fire and intruder alarms
- loss of market value - payment of a cash settlement if the property is not, or cannot be reinstated in the same form e. g. due to a decision of the public authority
Protection from Insurance Market Fluctuations
The Insurance business is traditionally cyclical; that is, premium rates increase and reduce dependent on competition and other market factors. Insurance risks placed on an ‘ad hoc’ basis are particularly vulnerable to the cyclical changes, as the Insurer feels no loyalty to one small (yet profitable) risk.
The portfolio facility can exert leverage on the Insurer to offer and maintain competitive terms. The larger and more profitable the portfolio the greater the purchasing and bargaining power.
A High Standard of Claims Support
The quality of claims handling (internal link to ‘Claims’ area) is the ‘acid test’ to any insurance. Once again, individual risks placed on an ‘ad hoc’ basis have little influence over an Insurer who decides to take a pedantic or difficult approach in relation to a claim.
The Portfolio offers leverage in the event of a difficult claim. Furthermore, an ongoing relationship between the portfolio administrators and the insurers fosters goodwill, trust and familiarity. With this in mind, any insurer is less likely to adopt a difficult stance and will facilitate enhanced claims management.
Simplified Administration
When placing insurance, trust companies, banks, property managers and developers need to satisfy themselves that any insurance terms offered are the most favourable available. In practice, this generally means continuing with the existing insurance arrangements at renewal, providing premiums remain at similar levels to the previous year.
Testing the market is often a time consuming process. Should better terms be found with alternative Insurers lengthy proposal forms then need to be completed and it is questionable whether savings achieved outweigh the administrative costs to achieve them.
As only fundamental risk information is required for each property added to the established portfolio, you do not need to complete proposal forms.
Sleep Easy Protection
The primary concern for many trust companies, banks, property managers and developers is whether cover is in place at all times. It is the responsibility of the trust companies, banks, property managers and developers to keep track of all client insurances to ensure that this is done.
Under a portfolio, aware of the risk to administrators inadvertently omitting to insure a client asset, insurers are willing to offer retroactive cover giving full peace of mind. This facility is offered on the understanding that the portfolio is being supported.
All Insurances Placed with Insurers of Stature
All Insurers selected to underwrite the portfolio are be DTI approved with a high ‘Standard and Poors’ rating.
Compliance with Insurance Tax and Regulatory Issues
Insurance business placed on an ‘ad hoc’ basis may leave you exposed to Insurance Tax and other regulatory problems. For example, an Insurer may levy insurance premium tax where it is not appropriate or a client risk may be insured with an Insurer not properly ’registered’. In Jersey, the Insurance Business (Jersey) Law 1996 requires all Insurers trading in or on the Island to register with the Financial Services Department.
By consolidating your clients’ insurances through one or a few sources, it is much easier to ensure that these types of issues are addressed.
Valuation and Survey Services
One of the principal problems encountered in arranging cover is perhaps an administrators geographical remoteness from an insured property who often rely on information held on file (that may be out of date) or provided by clients or agents, such as property managers.
As an integral part of the Property Portfolio arrangements and at no additional cost, independent basic surveys are undertaken by a firm of national loss adjuster/surveyors at each insured location with a report issued (copied to the Portfolio Administrators, Hepburns Insurance and Insurers) that includes: -
- a photograph of the property
- confirmation of the risk address
- confirmation of construction
- confirmation of occupancy
- comment on the adequacy of the sum insured
- comment on the general condition of the property and whether there are any obvious defects
In addition, at reasonable fee rates, these same surveyors can also complete Triennial Market Valuations and/or detailed Values at Risk Surveys. The fee costs are believed to be competitive with the charges by surveyors local to any property location.