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Discretionary Trusts

Rising premiums, costs, exclusions, lower limits and bigger excesses continue to impact the bottom-line and survival of Australian businesses.

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Reduce insurance premium funding and costs through Discretionary Trusts

As business becomes more complex in an increasingly uncertain and rapidly changing world, so does insurance.

Just as priorities can change in business, so can an insurer’s appetite. And through no fault of your own, your business faces higher insurance rates, a lack of capacity and more stringent terms and conditions – resulting in less control of your economic cost of risk.

Are you facing these challenges?

  • Increasing premium spend and feeling dictated by a hardening insurance market 
  • No confidence and control over your cash-flow
  • Potential premium and deductible increases, particularly after a claim has been made
  • Insurers perceiving your risks as more than what they are
  • Rejected insurance claims due to strict policy conditions and exclusions
  • Frustrated that insurers can profit off your premiums whilst you are not rewarded for good risk management 
  • Expensive risk management initiatives

This can be the reality of traditional insurance. With alternative risk financing, it doesn’t have to be this way.

Discretionary Trusts sometimes solve these challenges

A Discretionary Trust can be an alternative and innovative risk financing structure for those seeking to take control over your own risk financing plan by either pooling together risk with others or forming your own facility. 

What is a Discretionary Trust?

The discretionary trust framework allows members to contribute funds for working losses to a trust arrangement, independently administered by an ASIC licensed Trustee.

As a member of a Trust, you can enjoy potential cost savings, consistent pricing, wide protection and the potential return of surplus funds at the end of a good claims year.

How does a Discretionary Trust work?

  1. The Trust grows an initial layer of funds to pay for the majority of everyday claims.
  2. Insurance protects members for large losses above this layer.
  3. Funds and membership grow over time.
  4. Surplus funds may be returned back to members after all claims are paid.

Benefits of a Discretionary Trust

Trusts are purpose built from the ground up with coverage and product innovation tailored to your needs. You set the level of control, type of risk covered, level of cover deductible levels and limits.

This means Trust members can enjoy potential savings, consistent pricing, wide protection, and the potential return of surplus funds at the end of a good claims year.

Backed by both local and global insurance companies for over 30 years

Pioneered and provided through JLT Risk Solutions, you can experience the power of group purchasing by either pooling together risk with others or forming your own facility. Discover benefits far beyond traditional insurance as the JLT Risk Solutions team help you define a new path for protecting your organisation or community.

Since 1986, JLT Group Services Pty Ltd has managed over 80 arrangements for organisations across 12 different insurance lines.  Through JLT Risk Solutions, Marsh currently protect over 400,000 members within 45 Trusts.

What clients are saying…

"There are significant benefits to be derived from participating in a Mutual Discretionary Fund, as opposed to dealing with a traditional market place insurer: the personal one stop shop approach, so you know who you are dealing with each and every claim, and the built in flexibility where the Trustee is able to realistically apply a level of actual discretion. In recognising that there may be circumstances where the Policy, in reality, does not cover the entire loss, it is possible that if it is in the best interests of the scheme and its members that cover may be extended to provide the best outcome in a particular situation."

How to set up a Discretionary Trust?

Speak to your broker today or contact a member of the Alternative Risk Solutions team to model if a Discretionary Trust would be of benefit to you. 

LCPA 22/076.

Download PDF to learn more

Introducing Discretionary Trusts

FAQs

Any business or organisation looking for an alternative to traditional insurance. 

  • The Trustee has exclusive discretion to consider claims which insurers may not 
  • Organisations may be rewarded with surplus funds in a good claims year to fund initiatives that further reduce costs and claims
  • Access innovative cover that others can’t
  • Reliable and stable member contributions you can depend on
  • Control and security with full disclosure of Trust status

Currently cover is only provided for Australian Businesses and organisations. 

Property, Motor, Marine, ESG, Personal Accident and Illness, Cyber and Crime.

The concept of self-insurance is similar to a Discretionary Trust, however a Trust provides a legal framework for managing member contributions and the consideration of all claims.

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