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Discretionary Mutual Fund: is it feasible?

Business Management


Future Business sessions coming to a region near you.

Following positive feedback from the Discretionary Mutual Fund: is it feasible? session held in Shepparton last month, the Future Business team are hitting the road to deliver insurance-related information and experts straight to you.

Save the date of your workshop:

Huon Valley, Tas -25 February (Combined with FGT event)
Stanthorpe, Qld – 2 March
Shepparton, Vic – 6 March
Orange, NSW – 9 March
Batlow, NSW- 10 March
Southern Vic – 13 March
Manjimup, WA – 23 March
Adelaide Hills, SA – 24 March

The session is the next step in helping industry address the rising cost of insurance premiums relating to the use of insulated sandwich panelling. Phase one saw an industry-wide feasibility study conducted to understand if the Australian apple and pear industry could benefit from pooling resources via the establishment of a Discretionary Mutual Fund (DMF).


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Feasibility study  |  RW Squibb & Sons Pty Ltd testimonial  |  More information


Discretionary Mutual Fund: is it feasible?

Initial findings show that the 12 per cent of apple and pear growing businesses nationally, who participated in the feasibility study, are currently paying more than $6.5 million a year in insurance premiums. Last financial year just $1 million was paid out in claims to the same group.

Justin Niven from KJ Risk Group is the expert engaged by APAL to analyse data collected during the study. He said he was really encouraged by the figures shared so far.

“This data is very positive and it shows the power of aggregation. The underwriters are making a large profit from these policies and we have a great opportunity to capture that underwriting profit for the apple and pear industry,” Justin said.

“It is a long process as we want to ensure the industry is correctly set up for financial success. The feasibility study was Phase 1 to determine whether there is a need, opportunity and if it’s viable to move down that path as an industry.

“The next steps require more detailed analysis of assets, turnover and insurance-related information.”

The session in Shepparton provided a platform to share the initial findings with industry following positive feedback and interest in opportunities. And as a result, the Future Business team will be bringing the session to each of the key apple and pear growing regions around Australia.

The sessions are an opportunity for Justin to share findings from the study and explore opportunities to work together as an industry to share insurance-related risk through a DMF. There will also be discussion around group-purchasing opportunities, in particular for workers compensation which cannot currently be mutualised.

“There may be some industry members with doubts about participating in a mutual, the session will cover key risk areas where businesses are spending money to ensure continuity – we understand you may not see value in all areas of coverage but there will be opportunities for everyone,” Justin said.

To ensure members of the DMF are protected from catastrophic loss, such as severe weather events including bushfire, excess of loss (XOL) cover will be purchased. Justin is currently in discussion with a handful of insurance underwriters to provide XOL coverage and will share what this would look like during the session.

Anyone interested in diving deeper into the results from the feasibility study and learning about managing risk via a DMF, by repurposing premiums already being spent on insurance, is encouraged to come to the session. There will be ample time for discussion and opportunities to speak with Justin and others with expertise in the creation and operation of a DMF.

“This is a really good opportunity for you, as an industry, to take ownership of your risk and the fund – it will be owned by members, not by APAL or any other business. We have an opportunity to create a company from scratch, that over time has the potential to benefit the Australian apple and pear industry in a variety of ways,” Justin said.

Incidence of little to no cover becoming more apparent

KJ Risk Group has partnered with AB Phillips, a company that specialises in finding insurance solutions for businesses, to deliver the feasibility study and collect data for the DMF. The data-collection process revealed many business owners were either unable to insure their cool storage facilities; their insurance had significantly increased; or it was going to increase within the next 12 months.

In some of these cases AB Phillips had the opportunity to work closely with a couple of businesses who were struggling to find worthwhile insurance solutions. One of these was Tasmanian-basedRW Squibb & Sons Pty Ltd, where Brett and Linda Squibb were gravely concerned about the future of their business:

“After being told that our previous insurance company could no longer cover our Industrial Special Risk (ISR) insurance on our building and coolstores built in the 1980s due to panelling and spray on foam, we set about finding new insurance.

“We were not aware of the stress and dramas this was about to cause. After contacting several insurance companies and brokers over a three-month period, we were unsuccessful in gaining coverage as no one wanted to cover the risk. We actually thought we might have to close our business down as the risk was too high, especially with company bank loans, we couldn’t continue if our asset wasn’t covered, if there was to be a fire.

“As our deadline was getting closer, and without any luck, in desperation we contacted Richelle Zealley at APAL to see if they knew of any insurance companies that dealt with our industry. This is when we were put in contact with AB Phillips. The guys at AB Phillips were so helpful and easy to get along with, and after working with us for a few short weeks, they successfully managed to gain insurance for every part of our business. They were so professional with their work manner, and at a time when things were causing us much anxiety, they were always there to talk on the phone or answer emails. Nothing was too much trouble.

“We can’t speak highly enough of AB Phillips’ friendly and professional manner, as they went above and beyond to help our third-generation orchard secure insurance and continue to do what we love, growing apples.

“We highly recommend contacting AB Phillips for all your insurance needs.”

– Brett and Linda Squibb, RW Squibb & Sons Pty Ltd

More information on EPS

Insurance premiums have recently sky rocketed and apple and pear businesses are finding it difficult to renew their insurance or pay the increased premiums to protect themselves.

EPS panels are a hot topic when it comes to insurance, as certain types are deemed to be a ‘high risk’, and therefore difficult and expensive to insure.

There are several different types of EPS panels and you may not know what type your building contains, but they can have a significant impact upon your insurance premiums and insurer appetite to renew your policies.

What are EPS panels?

Expanded Polystyrene Panels (EPS) are a type of Insulated Sandwich Panel (ISP), and have been used for commercial construction in Australia for the past 50 years. Insulated Sandwich Panels (ISP) are made when three separate elements are “sandwiched together” to form one structure.

The combined properties of the high tensile and compressive strength of the outer steel skins and the high shear strength of the inner core leads to a building material which has a much longer spanning capacity and is lighter in weight than traditional building materials.

EPS is manufactured from styrene monomer, using a polymerisation process which produces translucent spherical beads of polystyrene, about the size of sugar granules.  During this process a low boiling point hydrocarbon, usually pentane gas, is added to the material to assist expansion during subsequent processing. The flame retardant predominately used for expanded polystyrene is hexabromocyclododecane (HBCD). HBCD is added during the polymerisation process and is retained within the polymer matrix.

What are the advantages of insulated sandwich panels?

  • Significantly reduces the amount of energy required to keep buildings within a comfortable temperature range.
  • Light weight, low maintenance, recyclable and reusable.
  • Uses the non-ozone depleting insulants.
  • Steel skins can be made with between 10-30 per cent recycled material.
  • Reduces landfill over standard framed construction methods.
  • Provides continuous insulation that reduces or eliminates thermal bridging.
  • Provides a consistent level of insulation that is impervious to compression, water vapour, vermin and rot.
  • Reduces air-leakage/infiltration rates.
  • Significantly shortens construction time

What are the disadvantages of insulated sandwich panels?

The perceived disadvantage of ISP has been its performance in fires. The most common criticisms of ISP in fire conditions relate to the delaminating of the outer skins exposing the core, the structural ability of the Panels to stay in place and not collapse during a fire and fire spreading within the Panel. There have been improvements over time to ISP and addition of fire retardants, metal fixings, not using plastic fixings, etc. The objective of the Code of Practice (“the CODE”) is to bring all of these improvements, and others in further research and testing, together into one system and industry CODE.

(Source: Insulated Panel Council of Australia)

The information above has been provided by AB Phillips, experts in finding insurance solutions for businesses with Insulated Panels.

For more information contact Alan Limpyer on 1300 242 136.

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