The unique benefits of insuring together in the Anglican Insurance Trust
Why AIB:
- Most Trustees already understand the benefits of aggregating their property into a single insurance policy in order to achieve greater benefits and cost savings. Insuring with the other Anglican Church constituent bodies is therefore an extension of what Trustees already know.
- It’s also likely that Trustees, who are under the authority of General Synod, have noted Title F of Trusts, Canon III (The Duties of Trustees) and clause 14A.2 where it says “Where the Anglican Insurance Board has promulgated an applicable offer of insurance services for any class of insurance, Trustees intending to take out that class of insurance must in each year that the promulgation is in force negotiate in good faith with the Anglican Insurance Board for the provision of that insurance”.
- Only the Anglican Church (via the Anglican Insurance Trust) has sufficient insurable interest in the entities that constitute the Anglican Church to take full advantage of all of the benefits of insuring together.
- The Church created the Anglican Insurance Trust in order to facilitate aggregation and achieve the advantages of bulk buying.
- It’s simply a good idea.
Additionally:
To begin to isolate ourselves away from NZ community risk costs imposed on the NZ public, AIB has established the Churches own insurance company, AIB Risk Management Limited (AIBRML). Over time, this will enable us to take on more risk (self-insurance) ourselves and reduce our exposure to the public insurance ratings.
One example is that our modelling has identified that the Anglican Church community does not have a large exposure to NZ flood zones. The fundamental insurance principle is that insurers share the costs of events amongst insureds. By increasing our self-insurance collectively we will begin to remove costs not relative to our own collective risk profile.
There are many other benefits to self-insuring and insuring together, other examples are:
- No share-holder dividends to be paid on our self-insurance. The Church does not want a profit, the Churches purpose is to work towards lower cost insurance.
- Higher combined policy limits
- Direct access to reinsurers
- A combined aggregate fire service levy (FSL). A collective savings that can be achieved is that a shared fire service levy based on AIBRML’s maximum probable loss (MPL) to fire can be set to the largest MPL at any one church entity. For example, the cost of an MPL of $100,000,000 ($111,900) can then be shared across the entire Anglican community instead of that one entity paying the levy themselves. The savings across the Anglican community can be measured in the hundreds of thousands of dollars.
Our understanding is that the FSL savings is one aspect that is not achievable through other association groups or collectives as only the Church itself has sufficient insurable interest in an Anglican collective.
Scale matters – insuring together with AIBRML is a tangible way of achieving savings that can be better used for the joint development of our various missions.