INSURANCE

Insurance Update – Australian Members

Deferred Sales Model | Information for SSAA Members

The SSAA continues to advocate on behalf of Australian members in light of the recent Deferred Sales Model for From 5 October 2021, add-on insurance regulations customer goods (DSM) that came into effect on insurance can only be 5 October 2021. issued to customers

We recently met with Treasury four calendar days officials to better understand after the customer the background to the DSM, the has signed the storage Commissioner’s approach to its agreement and application to self storage and been given theASIC to gauge Treasury’s views on Information Sheet. exemptions and/or relief. These The deferred sales model governs views have informed our planned what can and can’t be offered to engagement with the Australian Securities and Investments customers in relation to insurance during three distinct periods of the customer sales journey. Commission regarding the application of DSM across the self Add-on insurance can no longer be offered as an “opt-out” product. storage industry and we will keep members updated via email as our Add-on insurance cannot be issued in the pre-deferral or deferral period and advocacy work progresses. then automatically commence after

We are continuing our work on the deferral period ends. a range of solutions to address both the hard insurance market and the complexity of offering customer goods insurance. We’re working with existing insurers, brokers looking to develop new products, and independent consultants who have been engaged to advise the SSAA on alternative solutions. A feasibility study is underway to determine the most suitable alternatives for members and we aim to share more detailed information on completion of the study, planned for early 2022.

We thank those members who have engaged with us directly and shared their insights to help inform our approach.

If you offer customer goods insurance in Australia, ensure you are complying with the DSM.

What is the DSM?

The purpose of the DSM is to provide customers with an opportunity to consider their options when purchasing add-on insurance, by introducing a four-day pause between when a customer purchases a principal product (e.g. storage) and when they are offered or issued add-on insurance. These changes come after the Royal Commission found that customers were at times pressured into purchasing add-on insurance.

The DSM outlines how self storage operators must communicate with their customers regarding add-on insurance. In summary: l Customers must be given an ASIC

Information Sheet that informs customers that add-on insurance is optional. l Customer goods insurance can only be issued four (4) calendar days after the customer has signed the storage agreement

AND has received the ASIC information sheet l Once the customer enters into a storage agreement, all contact with the customer in relation to customer goods insurance must be in writing (e.g. by email or text message) unless the customer has initiated the conversation to find out about insurance.

Ultimately, how a facility decides to incorporate the deferred sales model into its operations is a business decision for the facility owner or operator. Your broker will have provided resources and information on how to implement the DSM in your business and the SSAA has developed a Member Guide to DSM, sample sales journeys and step-by-step email templates which you can adjust to suit your processes.

SUMMARY: THE DEFERRED SALES MODEL FOR ADD-ON INSURANCE

Issue and take payment for add-on insurance Enquiry Phase

The period of time where the customer makes enquiries about storage, until they sign the storage agreement AND receive the ASIC Information Sheet.

Day 0 –Day 4

The deferral period starts when the customer signs the storage agreement and receives the ASIC Information Sheet about add-on insurance

Pre-deferral period Deferral period

Day 5 → →

Customers can agree to purchase and facilities can issue and take payment for add-on insurance

Post-deferral period

Communicate about insurance

Communicating about insurance if a customer opts-out

Facilities can discuss add-on insurance and offer or invite customers to apply verbally and in writing

Facilities can discuss add-on insurance ONLY if the customer initiates contact

Facilities can discuss and offer add-on insurance ONLYin writing e.g. via email or SMS

Source: SSAA Member Guide to DSM

© SSAA 2021

How SSAA is working to support members

Together with insurers, SSAA is currently lobbying for an exemption for the self storage industry as we believe the DSM will negatively impact both our members and their customers. We believe add-on insurance is of value to self storage customers and that the DSM will increase the risk of uninsured losses.

While there is a possibility an exemption may be granted in future, at this stage, members should proceed on the basis they have to follow the deferred sales model. l

Visit the SSAA Member Portal for more information including the SSAA’s position statement on DSM and resources including sample sales journeys, templates and more.

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