Support for

Creating a better future for Australian apple and pear growers,
through industry leadership and commercial advancement.

Discretionary Mutual Fund (DMF)

Investigating alternate risk financing strategies for the benefit of growers, pack houses and cool stores.

Conventional insurance premiums are increasing significantly each year with one large Victorian packing shed reporting their annual premium doubled from $200,000 to $400,000.

Much of this increase is reportedly due to the flammable nature of EPS panelling which is often used to insulate cool storage facilities. This is classified as a hard-to-place risk in terms of insurance and an area where a DMF, for example, could act as a financial vehicle for the management of these risks.

Based on initial interest, APAL is working with external risk experts to conduct a feasibility study, assessing the cost saving opportunity, and other benefits, and risks, that a DMF may present for apple and pear growers.

At the conclusion of the study, recommendations for pursuing this model, including member framework and a risk assessment for each viable option, will be presented to all APAL members.


What is a DMF?

Under a traditional insurance structure, the insurance company acquire a business’ risk, which is transferred when a policy agreement is signed and paid. The policy owner makes annual payments in the form of a premium which increases when a claim is made. Insurance companies then make a profit by investing the money received through their premiums, which is not shared with, or returned to, policy owners in any way.

A DMF is not insurance, it offers ‘discretionary cover’ in the form of an insurance-like product. It is a legally owned company and is run by industry members (through a Board of Directors). As a group, the fund owners take control of the risk – so instead of the insurance company you’re currently paying owning the risk, the members of the DMF will collectively do that via annual payments.

The DMF still needs to purchase Excess of Loss insurance to ensure protection in case of catastrophic loss and to cap members’ liability at the aggregate.

Read the DMF Information kit for more information.

Download: APAL-DMF Infographic-Aug2019

More information:

Fact sheet: Alternate Risk Financing, understanding Discretionary Mutual Funds

Virgin Pilots Association (VIPA) case study

KJ Risk Group privacy policy

AB Phillips privacy policy

APAL privacy policy