Capricorn mutual insurance australia

The New Zealand Fire Service is pursuing “mutual organisations” which provide a form of risk cover to customers in place of insurance, thereby avoiding the fire services levy (FSL) attached to property policies.

The discretionary mutuals, most notably the Perth-based Capricorn Society, provide cover and pay claims for members, but insist they are not providing insurance. While Capricorn provides protection for its members and pays claims, it says it is not subject to Australia’s Insurance Act 1973 and is not regulated by the Australian Prudential Regulation Authority.

Insurance Brokers Association of NZ CEO Gary Young says a number of his members have lost business to the mutuals, which don’t charge the FSL “on the basis there is no fire insurance policy”.

“We understand the service is now contacting clients of these [mutuals] and making them aware of their obligations and the penalties for failing to pay levies,” he told insurance NEWS .com.au.

Mr Young says one broker reported that a client who switched to Capricorn Mutual eventually arranged normal insurance cover when his bank intervened.

“The bank was contacted by the broker, as is required, to advise that the policy was being cancelled,” he said. “The bank told the client the new cover was unacceptable.

“We’ve got lots of examples of the mutuals moving business away from proper insurance.”

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