FAQs for Distributors

FAQs for Distributors

Distributors are now principally viewed as 'Licensed Distributors' of this statutory class of insurance.  
HBCF has introduced several new general requirements on distributors including clarifying the obligation of good faith. This includes preventing commercial relationships with BCRP (Building Contract Review Program) dervice providers and introducing minimum of 10 builder client or $200,000 annual Gross Written Premium in order to act as a Distributor.
Thresholds have been set to maximise the ability of builders to access specialised knowledge from Distributors for this complex product. If a Distributor meets the Distribution Deed criteria of 10 builders or generating $200,000 GWP nationally, they can continue to service builders in NSW.
Under the terms of the Distribution Deed, hbcf and the Insurance Agents may contact the builder, builder's accountant/representative or other related parties directly in the course of the eligibility assessment process. The Scheme Agents must give notice to the Distributor first and keep them informed of the outcomes and resolutions either by email or add it to the BEAT assessment for referral back to the Distributor.
Yes, the combination of QBE and RBUA facilities is to be applied against the threshold requirements.
Taking into account the new business threshold requirements, larger Distributors can now enter into wholesaling arrangements with smaller Distributors, however, they remain responsible for the smaller Distributor's actions. There are also Authorised Representative Networks that will offer a central facility.
HBCF will only permit the holder of an Australian Financial Services (AFS) Licence that meets the threshold requirements to enter into Distribution Deeds. Individual authorised representatives who do not have their own AFS licence will not be able to enter into a new distribution deed. 

AR groups will either support you through a centralised specialist desk or you will need to make arrangements with a larger wholesaling distributor. This ensures that distributors understand the product and can effectively complete an eligibility review which is complex and requires specialised knowledge.
Distributors continue to use their chosen Scheme Agents. 
To save time during an eligibility review the Scheme Agents, RBUA and QBE, as well as HBCF can now go direct to the builder and/or accountant to resolve queries and issues quickly. However, the Agents and HBCF must inform the Distributor first by email or add it to the BEAT assessment and refer it back to the Distributor.
Distributors should seek their own independent legal advice about the effect of the Distribution Deed.
Using CIMS the Distributors will be able to:

      • Submit policy applications
      • Amend a policy strictly following the HBCF Guidelines
      • Enter the completion date for each project on behalf of the builder
      • Cancel policies, strictly following the HBCF Guidelines).
HBCF is committed to providing regular webinars for all new staff as they are on-boarded to a distributor. New users can book into one of the regular scheduled webinars via the HBCF Portal.
There is a support model in place to assist CIMS users. You are encouraged to be as self-sufficient as possible and seek answers in the first instance by referring to the HBCF Portal which includes a Getting Started Guide, CIMS User Manual, FAQs and other useful materials.
When staff leave the Distributor must inform HBCF by completing the access form and choosing 'Remove User' so the user profile can be deleted from CIMS and access terminated. 
There are project application forms available. The forms provide HBCF with sufficient information to ensure the actual works insured are adequately described. 

There are mandatory fields to be completed before a submission is accepted by CIMS.
When a builder completes an electronic form and submits it online, it is counted as an electronic signature.
Distributor can submit both ‘multi dwelling projects’ and ‘all projects excluding multi dwelling projects’ application forms. Multi dwelling submissions are referred to the insurance agents within CIMS and the normal additional information rules still apply.
Distributors still continue their normal billing arrangements and collection of premium from the builder. 

Each licensed distributor;
• will receive a CIMS electronic monthly statement
• payment within 30 day credit terms is to be made to HBCF by Electronic Funds Transfer.
CIMS does not allow partial payment of policies; each certificate of insurance must be paid in full by an Electronic Funds Transfer. However partial payment of statements is allowable by unticking the certificate you do not want to pay for in the calendar month of issue. The certificate will be displayed on the next statement unless the policy is cancelled.
When a certificate of insurance is cancelled, the next statement will include a credit adjustment and the Distributor must refund the commission and charges to the builder.
A policy can only be cancelled if there is evidence that construction did not commence. Follow the detailed procedures in the hbcf Underwriting Guidelines.
Yes.  The premium commission payment of 15% by icare will be removed from 3 April 2017. Distributors must disclose to builders all costs, charges and benefits received by them in respect of any project application (separately from the premium and taxes).
At the commencement date of the agreement, and from time to time during the term of the Deed, the following procedures and guidelines will be provided by the Insurance Agent to the Distributors:
• Underwriting Guidelines – updated guidelines will be available on the hbcf secure distributor portal)
• Market Practice Guidelines are available on this website. 
• CIMS user guide to be supplied after each user attends the CIMS training session
• Information about hbcf Insurance pricing structure and rates. To access Pricing Calculator on hbcf website.
hbcf has listened to builder feedback and is taking this opportunity to change the eligibility limits calculation from traditional annual turnover to the number and value of “open jobs” under construction.

It is now the responsibility of the Distributor to inform the builders if a review uncovers concerns or under performance and ensure the builder takes measures to remedy the situation. This means conveying to builders all reasons and observations from IA or hbcf related to an eligibility or project application. It is the distributor’s responsibility to clarify with the IA or hbcf anything that is unclear. The Builder report generated from BEAT must be provided to builders.
The job limit is based on a combination of both number of open jobs and the total value of these projects. The eligibility criteria set in BEAT will directly feed into CIMS. If the eligibility criteria lapses because a review has not been completed the builder won’t be able to submit an application for a certificate of insurance.
The site address details will verify against known address data to validate the address details. This ensures all property information issued on the certificate is as up to date as possible.

If the address has not been updated with then the most current address will be displayed on the certificate. At the time of entering the actual completion date the actual postal address is to be confirmed.
Calculations are based on some conservative assumptions of the estimated completion dates provided previously as the starting position of each builder’s utilisation and unused limits. For example, a builder who now builds value of $3 million houses with an average completion rate of 2 years will have a higher open job limit than a builder who does mainly $30K bathroom renovations which typically take a month. 
The builder must submit a completion Advice form once the final invoice has been issued to the client. An email is sent to the homeowner from CIMS confirming the commencement of the warranty periods.

Distributors are required to input the details of all builders’ completed jobs into CIMS. Actual completion dates will now be based on the builder’s declaration of delivering the completed job to the owners (practical completion) and managed by the distributor.  

Once a builder has finished the job, issued the last client invoice and submitted the completion date to their distributor, they can then start their next job within their limits. If a project is not completed within the industry benchmarks it could trigger a review unless supported by a suitable reason. Project non-completion could trigger a review if the job is not completed within the industry benchmarks for a job typical of the size and duration.
The thresholds for non-reviewed builders will be a balance of the types of projects and would typically be:

• 3 projects and $2 million for single dwelling builders 
• 1 project and $5 million for multi-unit builders. 
No, the builder would need to either:

     • complete one of the jobs before commencing the next, or
     • apply for a revised eligibility profile.

The insurance agents have some discretion for minor abnormal delays in completing projects which can be reviewed on application from the distributor. Any discretion is temporary and does not permanently increase the eligibility profile.
The Project Application forms captures more information on the type of dwelling being built. This ensures hbcf can identify the scope of the project being insured. 
Two do-not-reply emails are automatically generated from CIMS and sent to the homeowners:

1. When a certificate is issued containing the policy number, site address, builder’s company name. The email advises the homeowner to contact the builder direct to obtain their certificate of insurance or query the details if incorrect.
2. When a Builder Completion Advice form is received and entered into CIMS, confirming the start of the warranty periods.
All certificates are published in the hbcf online Certificate Register. The following information will be displayed;

    • Builder’s company name
    • Property address
    • Description of the works
    • Premium amount.
Such unusual circumstance will be dealt with manually by hbcf.