Australian Business Shield
AMIR has recently been granted a licence variation with a new authorisation to issue, and provide general advice on, miscellaneous financial facility - miscellaneous risk products limited to business risk products to retail and wholesale clients.
This will allow AMIR to offer discretionary products in respect of business risks, including (but not limited to) risks relating to physical damage, business interruption, public liability and professional indemnity.
There is no limit on the size of the risk for which AMIR may offer discretionary risk products.
AMIR proposes to offer discretionary cover under the registered business name 'Australian Business Shield'.
What is a discretionary risk product?
A discretionary risk product is a product which allows the product holder (the client) to make a claim for assistance in the event that certain events happen and they suffer certain loss. The client has the right to have their claim for assistance heard, and the issuer (in this case, AMIR) will (if the claim for assistance is within the terms and conditions of the product) make a decision whether to excercise its discretion for the benefit of the client or not. If the discretion is exercised, AMIR will pay the client an amount equal to all or part of the financial loss suffered by the client up to the maximum limit of indemnity. The product issuer generally undertakes to exercise its discretion in good faith.
AMIR trading as Australian Business Shield will become the risk carrier
A discretionary risk product is broadly comparable to an insurance policy, and the product issuer of a discretionary product (i.e. AMIR) is the risk carrier under a discretionary contract the way the insurer is the risk carrier under an insurance contract.
Difference between Discretionary Risk Product and Insurance
The key difference between a discretionary risk product and an insurance contract is the discretionary nature of the payments it makes. At no time is the risk carrier under a discretionary risk product compelled to make a payment on the happening of certain circumstances, as an insurer. A risk carrier under a discretionary product at all times has the right to refuse financial assistance to a purchaser who makes a claim for assistance. Therefore, AMIR does not need to be authorised under the Insurance Act 1973 and will not be in breach of that Act by offering the discretionary risk product.
AMIR will be able to buy Reinsurance
As the risk carrier under a discretionary risk product, AMIR is lawfully able to reinsure the risks and liabilities it assumes under the discretionary risk product (although there is no obligation on AMIR to do so). AMIR's liabilities under the discretionary risk product can be reinsured with any insurer or reinsurer authorised under the Insurance Act 1973 or who are otherwise exempt from the requirements of that Act.
The Competitive Edge
The miscellaneous financial risk products AMIR proposes to issue is a discretionary product. No Fire Service Levies or Stamp Duties are payable on the fees and charges of this product, making it competitive compared with general insurance products. A discretionary risk product is a risk product where the issuer has no absolute obligation to pay claims and has the discretion to deny claims, placing it outside the regulatory scheme of the Insurance Act 1973 and able to be offered by entities that are not APRA-regulated insurers. However, AMIR will at all times exercise its discretion fairly in assessing and accepting claims for assistance.
Comparison of costs between normal insurance and discretionary product:
costcomparison.JPG - large 

Scope of Cover under the Discretionary Risk Product

The product will allow its holder to make a claim for assistance in respect of the following classes of business risks (subject to the terms and conditions of the product):
  • Physical Damage
  • Business Interruption
  • Public Liability
  • Professional Indemnity


Types of Risks which will be Targeted
  • Pharmacies
  • Medical Centres
  • Day Surgeries
  • Hospitals
  • Professional and Business Offices
  • Small shops in suburban and CBD area in major cities and towns
  • Franchise Groups
  • Art Galleries
  • Property Owners
  • Wedding Reception Venues
  • Dry Cleaners
  • Florists
  • Funeral Directors
  • Hardware Stores
  • Jewellers
  • Milk Bars / Delis / Convenience Stores
  • Newsagents
  • Office Risks
  • Real Estate Agents
  • Recruitment Industry
  • Retirement Villages
  • Self-storage Facilities
Key Contact:
Adel Dawood