Australian Fire Brigade Charges Scheme Collection Monitoring

Managing agents and companies are reminded of the various Bulletins (as listed above) issued by the LMA which outline changes to the Australian Fire Brigade Charges Scheme (AFBCS) made over the past year, and remind participants of the need to comply with its terms, and to follow the Guidelines issued by the Victorian Fire Services Levy Monitor (see below).

Following these changes, PriceWaterhouseCoopers Australia will need to undertake an assessment of over or under collection of funds by individual managing agents/companies.

In view of this, PwC Australia has prepared the attached spreadsheet which should be completed by all insurers which have written business via the Scheme. Responses should include all applicable business where your organisation has set a rate under the AFBCS.

PwC will use the data collected from the completed spreadsheet, compared to the funds sitting within the Scheme, to assess any individual over or under collection by Scheme participants and will notify participants in the event that there are material variances. It has been agreed that this exercise should be completed before any FSL payment is made from the Scheme.

You are therefore requested to complete this data and return it to:

Greg Hodson
PricewaterhouseCoopers Australia
Office: +61 (3) 8603 3567
Fax: +61 (3) 8613 2020

Any enquiries regarding completion of this form should also be addressed to PwC.

This return should be completed no later than 30 days from the latest date on which all of the Fire Brigade Authorities have completed their annual assessments. Based on the due dates listed below, the return should be completed and submitted to PwC by 31 October 2013. This will ensure that PwC can undertake the necessary calculations regarding contributions prior to any payments being made from the Fund.

Members of the scheme are reminded that once PwC has completed its calculations, it may be necessary for the Scheme to approach insurers to compensate for any individual over or under collection of funds by participants.

The Fire Brigade Authorities have advised that the annual declarations for the financial year ended 30 June 2013 will be due on the following dates.

30 September 2013 - NSW Ministry for Police and Emergency Services   
16 September 2013 - Victorian Metropolitan Fire and Emergency Services Board  
16 September 2013 - Victorian Country Fire Authority     

You will need to ensure that Brokers and Coverholders submit their annual declarations to the Authorities and yourselves by these due dates to enable you to complete the attached return by 31 October 2013. 

Compliance with Victoria Fire Services Levy Monitor Guidelines

The introduction of the Fire Services Property Levy is set out under the Fire Services Property Levy Act 2012. the Victoria Fire Service Levy Monitor (the Monitor) has issued two sets of Guidelines as outlined in LMA Bulletin LMA13-015-NS relating to expected behaviours by insurers. These Guidelines cover firstly Price Exploitation and, secondly, False Representation or Misleading or Deceptive Conduct.
The Guidelines relating to Price Exploitation include the expectation that premium for fire insurance should not increase contemporaneously with the abolition of the FSL, unless the relevant insurer can demonstrate a cost basis for the increase. Where a fire premium does increase in this way, and the higher premium reflects a change which increases costs allocated to fire policies in Victoria, the Monitor may investigate the change and will expect the insurer to justify the change in cost allocation.

The Price Exploitation Guidelines also include a requirement that insurers establish internal controls designed to ensure that no FSL will be charged on new policies issued or policies renewed from 1 July 2013.  The Monitor Guidelines require a Declaration to this effect, signed by the CEO of the insurer, to be provided to the Monitor by all insurers. AFBCS participants must ensure that they have such controls in place, and a submission will be made to this effect to the Monitor by the AFBCS Committee of Management.

Under the second set of Guidelines, dealing with false representation, misleading or deceptive conduct, the Monitor requires that a process is implemented that enables an insured to raise an enquiry in respect of the calculation of their premium compared to the previous year. While the first point of contact for such enquiries is likely to be the local broker or coverholder, managing agencies/insurers are asked to provide a "point of contact" for such enquiries which can be held by the LMA/IUA in the event that an enquiry arises. Details of this point of contact should also be passed to your London brokers and coverholders. Please note that if the enquiry is not answered to their satisfaction the insured should, in the first instance, contact Lloyd's Australia.

Neil Smith
Head of Underwriting
Lloyd's Market Association

LMA Logo

LMA Bulletin

Date:  29 July 2013

From: Head, Underwriting

Ref: LMA13-019-NS

Previous Bulletins:

LMA12-013-KJ (Initial announcement of changes to the Scheme)
LMA12-014-KJ (Further details and FAQs)
LMA12-017-NS (rate setting expectations)
LMA12-022-NS (Rate Setting Expectations further details)
LMA12-031-NS (Introduction of updated Scheme)
LMA13-015-NS (Victoria Monitor Guidelines Introduction)