The Purpose of this Guide
This Financial Services Guide (FSG) is designed to assist you in deciding whether to use any of our services and contains important information about:
– The services we offer you
– How we and our associates are remunerated
– Any potential conflicts of interest we may have
– What to do in the event of a complaint
Responsibility for Services Provided
We hold an Australian Financial Services Licence and are authorised to advise and deal in the full spectrum of general insurance products. We are responsible for the financial services provided to you, including the distribution of this FSG. We are required to meet high standards for staff training, organisational competence, management expertise, financial control and compliance disciplines.
Who Do We Act For
We usually act on your behalf and in your interests in all matters. Sometimes, it may be more appropriate for us to access insurance or manage claims where we act as an agent of the Insurer. If and when this situation arises we will explain and highlight this to you.
We offer a range of specialist insurance broking services to assist you to protect your assets and guard against unexpected liabilities including:
– Reviewing and advising on your insurance needs
– Identifying risk factors to avoid claims
– Seeking competitive premium quotations
We can advise on and arrange a broad range of aviation insurance products on your behalf.
Please note that Return Premiums issued under this contract of insurance may be calculated on a “Nett” basis ie. Nett of Broker’s Earnings.
What We Expect From You
To enable us to provide the right advice we need you to provide us with complete information about the risk(s) that you face and those that you want to be insured for. You should also tell us about any relevant changes as they occur so that we can review your insurance needs accordingly.
Customer Relations / Complaints
Clients not satisfied with our services should contact our Complaints Officer. We are members of the Financial Ombudsman Service (FOS), a free consumer service. Further information is available from our office or contact FOS directly on 1300 780 808 or visit www.fos.org.au. We also follow The Insurance Brokers Code of Practice.
We hold a Professional Indemnity Policy. This policy is designed to pay claims by Third Parties (including our clients) arising out of our Professional Negligence and satisfies the requirements for compensation arrangements under Section 912B of The Act.
Our Sources of Income
When placing your insurance we usually receive a commission from the Insurer. The amount varies between 0% and 15% of the base premium you pay. Where a policy is cancelled before the period of insurance has ended we will usually retain the commission on any return premium involved.
We have a set of standard non-refundable Broker Fees that we charge you for services such as:
– Market research on products available.
– Assessing the claims paying ability of Insurers.
– Sourcing alternative quotations and coverage.
– Risk analysis and portfolio co-ordination.
All fees payable for our services will be advised to you at the time of providing the advice or service. We retain the interest on premiums paid by you that are held in our trust account before paying the Insurer. If you pay by credit card we may charge you a credit card fee, which is disclosed and shown separately on our invoices, they are non-refundable. This fee covers the cost of bank charges associated with such facilities.
We are a Steadfast Group Limited (Steadfast) Network Broker. Steadfast has exclusive arrangements with some insurers and premium funders (Partners) under which Steadfast will receive between 0.5 – 1.5% commissions for each product arranged by us with those Partners. Steadfast is also a shareholder of some Partners.
We may receive a proportion of that commission from Steadfast at the end of each financial year (or other agreed period).
As a Steadfast Network Broker we have access to member services including model operating and compliance tools, procedures, manuals and training, legal, technical, banking and recruitment advice and assistance, group insurance arrangements, product comparison and placement support, claims support and group purchasing arrangements. These member services are either funded by Steadfast, subsidised by Steadfast or available exclusively to Steadfast Network Brokers for a fee.
You can obtain a copy of Steadfast’s FSG at www.steadfast.com.au
Premium funding allows you to spread out the cash flow associated with paying your insurance premiums over the next twelve months. We receive a commission from the funder for arranging the funding contract; full details are available on request. Please note that should the insurance policy be cancelled before the expiry date for whatever reason, the Premium Funder will charge you the full interest applicable to the contract, as detailed in the Loan Application Form. Typically there will be no refund of our commission on the refund premium and no refund of any fee we may have charged you for arranging the cover. We also reserve the right to charge you a policy cancellation handling fee. In some cases insurers also apply minimum premiums to policies, which may further reduce the refund that you might otherwise receive. The impact of the above on you is that any refund you receive for the mid term cancellation of your policy will usually be significantly less than a pro rata calculation would produce and in extreme cases may involve you having to make an additional final payment even though the policy has been cancelled. Therefore prior to cancelling a policy and replacing it with another cover we strongly recommend that you discuss your situation with us so that we can advise the exact extent and impact of the early cancellation provisions mentioned above.
How Our Representatives Are Paid
Our representatives do not receive any benefit directly from the sale of a product to you. Our representatives may receive bonuses payable based on the overall performance of our business. If a person has referred you to us, we may pay them a part of any fees or commission received.
Conflicts Of Interest
As a business we have relationships with and receive income from various third parties. All material conflicts that impact our advice, that are not mentioned in this FSG, will be advised to you on the invoices related to that advice.
AFS Licence No.: 241408 / ABN: 52 647 799 869
Building 221 Qantas Avenue
Archerfield Qld 4108
PHONE: (07) 3274 4732
FAX: (07) 3274 4758
This FSG applies from 16.03.2015
Direct Off Shore Foreign Insurers(DOFIs)
The Federal Government introduced Legislation into Parliament concerning DOFIs that came into force on the 1st July 2008. The enacted legislation was introduced to protect consumers as well as to try and lessen the chances of another HIH debacle.
The legislation required that unless a DOFI was authorized under the Insurance Act they had to cease operating in Australia prior to the 1st July 2008. There was a transitional period for the natural run off of existing policies but those policies could not be renewed with the DOFI unless they were authorized. Lloyd’s of London is not regarded as a DOFI.
Before the legislation came into force an offshore foreign insurer could sell insurance products to Australians without obtaining authorisation under the Insurance Act, by offering insurance in the Australian Market through agents in Australia or solely from overseas via a direct approach from the client or its broker and sometimes through the internet. The new legislation effectively bans these dealings. The Australian Prudential Registry Authority (APRA) has been given additional enforcement powers in relation to these charges to the Insurance Act.
There are some exemptions under the Act but these relate to other categories of insurance and not Aviation.
The Australian Prudential Registry Authority takes the legislative changes most seriously given that they are responsible for insurers in this country and their duty to protect the consumer.
About Your Policy Renewal
Renewal is not automatic
Unlike some motor vehicle, homeowners, and other insurance policies, aviation insurance policies do not renew automatically. You are responsible for authorising specific renewal instructions. You should mark your expiration date on your calendar and allow sufficient time to get the renewal processed before the expiration date.
Aviation insurance policies, with few exceptions, are written for a one-year period. They expire at 4pm on the expiration date shown in the policy. It’s best to think of the day before as the absolute least you will have coverage. If the expiration date (or the day before) falls on a weekend or holiday, then the absolute latest to get the renewal bound would be the last working day before the expiration date.
Of course we don’t recommend waiting until the last day to arrange your renewal. When we receive your renewal authorisation we must prepare and send renewal documentation to the company, to you, to any lien holders, and, in may cases, to other certificate of insurance holders.
We need your instructions
We endeavour to obtain updated underwriting information early enough to present your risk to the appropriate insurance markets for coverage proposals. Then we try to provide you with our recommendations in time to get your approval and to get the appropriate insurance documentation processed.
We normally send out a Renewal Letter around 21 days before the expiration date.
We recommend you keep copies of previous underwriting forms to make updating the current information a little easier. The sooner we receive the updated underwriting information the sooner we can commence the renewal process.
Accurate underwriting information is very important.
Whether your renewal is in respect of an aircraft or an aviation liability (Premises, Hangarkeepers & Products Liability) policy it is essential that the underwriting information you provide to us with is up to date, fully complete and accurate.
As an example, for an aircraft renewal, you should review your hull insured value (Hull Agreed Value). Any additional equipment added, or improvements made such as new paint or interior should be considered.
KEEPING YOU AS A CUSTOMER BY RENEWING YOUR POLICY IS VERY IMPORTANT TO US!
Why should I use an Aviation Insurance specialist?
Pick your aviation insurance broker carefully and steer clear of amateurs. There are very few aviation insurance specialists compared to the total number of general insurance brokers. A general broker usually will know only one or perhaps two aviation underwriting companies at best and will have such a small volume of aviation business that he will not be able to match the client with the most appropriate company.
Unlike many other lines of insurance, aviation insurance policies vary greatly in content and coverage. It is very important that your broker understands the broad forms from the limited forms. Although you may qualify or want a restricted form of coverage, your broker should have the knowledge and ability to counsel you on the differences. A non aviation specialist broker will likely receive the insurer’s standard product offering rather than tailored policy coverage AIBA will provide.
This is a relationship business. It is important that your broker has a good working relationship with the insurer/underwriter and their claims personnel from which we are requesting quotations.
Should I shop around for the best price?
There are only a small number of insurers/underwriters capable of writing your insurance. If you have selected a strong broker who specialises in aviation insurance, they will approach the entire insurance market on your behalf. Pitting two or more brokers against each other is usually counter-productive because an insurer/underwriter will generally only extend terms to one broker at a time.
The first quote or declinature given by an insurer/underwriter must remain the same for any subsequent broker you appoint. This means if the first broker poorly or inadequately presents your risk to the insurer then any subsequent attempt by the second broker to improve these terms will be to no avail. Therefore your selection process should be that of choosing your broker. If only one broker is presenting your risk, the underwriter will know that this is the person with whom they must deal. You eliminate the confusion of multiple brokers contacting the same insurer/underwriter and keep your insurance marketing at a most professional level.
What if I do not like my broker?
If you do not like your existing broker or are not confident in their service or ability, you may select a new broker and give them the authority to represent you by “Letter of Appointment”. Your new broker will be glad to provide you a copy of the desired wording.
I don’t have time to deal with the proposal form; can’t my broker complete it for me?
We see many clients treat the proposal process as necessary evil. In reality, this is one of the most important documents in the insurance placement process. The better you and your broker present your risks to the insurance/underwriting market, the better response you will have. This can be reflected in broader coverages and premiums savings. Keep in mind, it is only you who can complete the correct resume. Your broker does not know your history as well as you. So, a word of advice – help the broker develop the underwriting submission and give this task priority.
How critical is correct information? Can I just estimate my pilot hours?
It is important to give accurate information to insurers/underwriters.
If, for example, you must estimate on such things as pilot hours, it is important that you underestimate. Many policies will make the hours and ratings given on the pilot’s underwriting submission a requirement of the policy. If you overestimate your experience, you may find yourself not meeting the minimum standards set for you in your policy. If you employ a pilot, it is up to you to ensure the information furnished by your pilot is accurate. Check their logbooks.
I’m not very familiar with the make and model of my aircraft – am I at risk for being rejected by the insurer/underwriter?
If the aircraft to be insured is of a make and model unfamiliar to you, work with your broker to develop a pilot training and transition plan before you or anyone approaches the insurer/ underwriter.. A comprehensive type conversion training programme is essential and if implemented will greatly assist the insurer/underwriter in being able to offer an insurance quotation.
Keep in mind, the insurer/underwriter is paid to accept or reject the risks as presented. If accepted, it is their duty to determine the premium the policy and confirm the breadth of coverage. It is not their responsibility to dictate or provide a conversion solution. That is up to the client and if required, the broker can offer their assistance.
How important is it for me to continue pilot training?
All pilots, professional or pleasure, want to be thought of as highly qualified in the cockpit. Some however, don’t want to prepare, train, practice and pay the price to be among the best. Remember, the underwriting community has heard all the bragging, the excuses and the broken promises about pilot skills and training.
Don’t overlook the importance of recurrent training. Some insurers /underwriters require annual schools for all pilots flying turbine, jet or high performance piston equipment. Underwriting statistics have long proven the school-trained pilot has fewer losses. If we know annual training is undertaken, we will make it an important part of our underwriting submission. The professional approach you have taken will be rewarded with a better underwriting proposition.
When Someone Else Flies Your Aircraft
There are a number of insurance considerations for an aircraft owner who loans their aircraft to someone else, or even has it ferried or flown for maintenance.
You must ensure that any other pilot who operates your aircraft meets the conditions of Insurance Policy’s Pilot Warranty or if a Named Pilot Warranty that the pilot is noted and agreed by insurers prior to the flight commencing.
Properly Value Your Aircraft
Most aviation policies are split into hull (protection against physical loss or damage to the aircraft), and liability (loss to the property of others or for bodily injury of others arising out of your negligence).
Agreed Hull Value: Properly value your aircraft on your policy. The value that you place on your aircraft and agree to with underwriter is the basis that will be used when settling your claim. This is referred to as an “agreed value policy”. If you under-value your aircraft, your claim settlement may be inadequate.
Under-valuation: If you under-value your aircraft, you can actually cause a partial loss to become a “constructive total loss”. If the salvage value plus the cost to repair exceed the insured value of the aircraft, the adjuster could pay a total loss and take title to all the salvage including the avionics.
For example: You own a $100,000 aircraft but insure it for only $50,000. You have a $25,000 claim. The adjuster receives a bid to repair the aircraft for $25,000 and a salvage estimate for $65,000. He would be foolish to spend $25,000 to repair your aircraft when he could pay you $50,000 for your total loss and sell the salvage for $65,000.
Even though this may be an exaggerated example, we frequently see aircraft owners try to save money on their hull insurance by under-insuring the aircraft. In an attempt to avoid this problem, the underwriters often monitor proper valuation. Although they are not qualified to appraise aircraft values, they are aware of market trends. Reviewing your stated insured value periodically is important, especially considering that some older models are actually increasing in value. Don’t forget you can change the value of your aircraft hull any time during the policy period. You don’t have to wait for renewal.
We are seeing used aircraft values increase steadily. In a year’s time, you might realise a significant appreciation. Upgrades to your aircraft such as new paint, new engine, new interior, or new avionics can greatly alter the value of your aircraft.
In any event, if you think the value of your aircraft has changed significantly, don’t wait, give us a call and we will ask the underwriter to endorse the policy.
We will invoice you for the premium, statutory charges (eg stamp duty, G.S.T., etc) and any fees we charge for arranging your insurances. You must pay us upon receipt of the invoice or, in the case of a renewal, before the expiry date of the contract of insurance.
If you do not pay the premium on time, we will tell the insurer. The insurer has the right to cancel the contract of insurance and you will not be insured. The insurer may also charge a short term penalty premium for the time on risk.
Premium funding products enable you to pay your premiums by instalments. Premium funding companies do charge interest.
We can arrange premium funding on your behalf if you require it.
We are committed to protecting your privacy. We use the information you provide to advise about and assist with your insurance needs. We only provide your information to the insurance companies with whom you choose to deal (and their representatives). We do not trade, rent or sell your information.
The client’s judgment of a broker’s real service arises with its expeditious handling of a query or a claim. Ian and his team know that this is what insurance is all about, so they place themselves on call 24 hours a day 7 days a week.
When you engage Ian and his team, they will get to know your business – and their advice may make the difference between being eternally nervous or sleeping well at night. Don’t procrastinate – act now and give one our experienced team a call for independent, expert and prompt service.
You can check the information we hold about you at any time.
The new amendments to the Privacy Act 1988(Cth) took effect on 12 March 2014. The Act and its Australian Privacy Principles set out standards for the collection, use, disclosure and handling of personal information.
Aviation Insurance Brokers of Australia Pty Ltd respects your privacy and is committed to protecting your personal information.
- We require personal information in order to recommend and advise on and arrange insurance, assist on claims, and generally administer your insurance, including financing thereof, transacted through our company.
- We may disclose your personal information to Insurers and their service providers such as Loss Adjusters, Risk Surveyors, etc; our Business Partners; Your Financiers when seeking evidence of insurance and/or negotiating premium funding.
- Where personal information is provided to Insurers offshore, we take reasonable steps to ensure that the overseas recipient does not breach the privacy principles, by way of them being bound to privacy laws in their country.
- We may also disclose personal information about you as required or permitted by law.
- In requesting our services in any form you are consenting to us collecting and disclosing your personal information to meet our service objectives.
- Quality of personal information is critical and you should advise any changes thereto immediately.
- If you do not provide requested information our ability to assist in placement or administration of your insurance covers may be hampered to the extent where we may decline to provide services to you. Additionally you may be in breach of your Duty of Disclosure.
- On request, in most cases, we will give you access to personal information held by us.
For any specific issues on privacy contact our “Privacy Officer”,
Building 221, Qantas Avenue
Archerfield Airport Archerfield Qld 4108
Telephone: (07) 3274 4732
Facsimile: (07) 3274 4758
Unless you notify us in writing otherwise, by proceeding to deal with us, you confirm on your behalf and/or on the behalf of those you represent, agreement to the above principles.