The way insurers operate can be complicated and confusing. This is because there are stringent rules and regulations governing the industry. However, in the interest of being open and honest, we have highlighted below exactly how EBM RentCover works in the marketplace. And, we have set it out as clearly and concisely as possible…
The first thing you need to know about taking out cover with EBM RentCover is that there are a few different business relationships involved. This includes EBM RentCover, EBM Insurance Brokers and QBE Insurance (Australia) Limited.
- EBM RentCover is an underwriting agency and offers specialist insurance for landlords. We are an Authorised Representative of our parent-company EBM Insurance Brokers.
- EBM Insurance Brokers (EBM Insurance) is a national broking house and deals with a wide range of businesses and industries offering general insurance broking and risk services. EBM Insurance has a binding agreement with QBE Insurance (Australia) Limited.
- QBE Insurance (Australia) Limited (QBE) is Australia’s second largest global insurer that has entered a binding agreement with EBM Insurance. This agreement authorises EBM Insurance to issue policies, and handle and settle claims on behalf of QBE. EBM Insurance has delegated this authority to EBM RentCover.
The second thing you need to know is that all companies that provide financial advice or deliver a financial service must have an Australian Financial Services Licence (AFSL). EBM RentCover’s parent company EBM Insurance is an AFSL holder.
Ultimately, EBM RentCover is an authorised representative of its parent company EBM Insurance which holds an AFSL, and a binding agreement with insurer QBE.
What exactly is a ‘binding agreement’?
A binding agreement is where an insurer provides authorisation to another business to perform certain functions for, and on behalf of, the insurer. QBE authorises EBM Insurance (which then authorises EBM RentCover) to arrange and deal in policies and handle and settle claims on QBE’s behalf
FUN FACT: EBM RentCover is one of few companies that has maintained a binding agreement with the same insurer for 30 years. This strong, stable, supportive working relationship enables EBM RentCover to deliver outstanding care to clients.
The role of EBM RentCover…
In addition to accepting applications for cover on behalf of QBE, we provide general advice about products and services and educate clients about the value of aligning with a specialist landlord insurance provider. We also highlight features of policies, share premium details, arrange premium funding (if needed), and supply all the relevant forms so clients can get a quote and apply for cover. However, it is important to note that when providing advice, we cannot consider the personal circumstances of clients (your financial situation and objectives of the investment).
How is EBM RentCover paid?
While we are discussing how we operate, we want to be clear about how we are paid. When you purchase insurance, you pay a premium. A premium is made up of a base rate (this is the actual amount it costs to insure the property) and additional fees, such as government charges and administration fees.
- Base rate – the base rate cost is the underlying amount required to insure a property and is the cost the insurer believes is sufficient to cover the risk of insuring the property.
- Government charges – these are costs that are required by the government, including GST, stamp duty, and Emergency Services Levy, and ranges from state to state.
- Admin fee – this is a fee charged by and paid to EBM RentCover for arranging insurance. It helps to support the overheads of running the EBM RentCover business and all the processes associated with our products and services including settling claims. The fee amount varies depending on the product and is noted on a client’s invoice.
In addition to receiving admin fees (outlined above), we receive a commission for every policy we sell on behalf of QBE. The commission EBM RentCover receives ranges from 20 to 35 per cent – depending on the policy – and is included in the base rate premium. This helps us to cover the costs of managing the portfolio on behalf of QBE, and ensures our team is equipped with the appropriate resources to successfully work with clients to protect rental properties (it is ultimately reinvested back into the business). In addition, if we have been performing well, EBM RentCover may also receive an annual profit share commission from QBE. Because of the nature of insurance and business, we are unable to determine the exact amount until/if the time comes.
And what about EBM RentCover real estate partners?
Sometimes we appoint distributors to arrange insurance for our clients. They are usually property managers and act on behalf of us when dealing with EBM RentCover products and services. If they refer you to us or help you to arrange cover through EBM RentCover, they may receive an admin fee up to $40 + GST for each policy. This cost comes out of EBM RentCover’s pocket, meaning we pass on part of our admin fee to the agent; it is not an extra cost you have to pay in addition to the total premium owing. This fee helps cover the costs the real estate professional incurs when arranging cover for clients and preparing claims to submit on the landlord’s behalf.
Need more information?
Hopefully the above information has helped untangle the web of all of those involved in the services being offered by EBM RentCover and explained how we (and the others involved) are paid. If you need more information, please refer to our Financial Services Guide, or contact the EBM RentCover team on 1800 661 662.
*While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you need us we are there, contact 1800 661 662 if you have any questions.
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