JDT Concept Report

CONCEPTUAL REPORTTHE JLT DISCRETIONARY TRUST CONCEPT

399,100

135

Territories

Employees

Countries

CONCEPTUAL REPORT THE JLT DISCRETIONARY TRUST CONCEPT

JLT OVERVIEWJardine Lloyd Thompson is one of the world’s largest providers of insurance,

reinsurance and employee benefits related advice, brokerage and associated

services. JLT’s client proposition is built upon our deep specialist knowledge,

client advocacy, tailored advice and service excellence. We place our clients

first, champion innovative thinking and expect to be judged on the results

we deliver.

JLT is quoted on the London Stock Exchange and owns offices in 39

territories with more than 9,100 employees. Supported by the JLT

International Network, it offers risk management and employee benefit

solutions in 135 countries.

JLT AUSTRALIAThe JLT Discretionary Trust (JDT) is available exclusively through JLT

Australia and is supported by our specialist claims management arm Echelon.

In Australia we employ more than 800 highly motivated industry professionals

across all states and territories. Our strength is in providing tailored,

innovative solutions for insurance and reinsurance needs of companies and

individuals in Australia.

JLT GROUP SERVICES PTY LTD (JGS)JGS are a wholly owned subsidiary of JLT Australia and act as Trustees and

Scheme Managers for JDT products.

AGILITYRIGOURCOLLABORATION

INTRODUCTION TO JLT

Introduction to JLT


WHY CHOOSE A JDT?JLT have been successfully operating the JDT

throughout Australia since 1986, providing clients,

their customers and members with a viable

alternative to buying conventional insurance

protection.

The JDT offers organisations an opportunity to

access an innovative, cost effective protection

vehicle, safeguarding them from risk even in the

most uncertain market and economic conditions:

• Broad ranging cover designed solely for your

industry

• Discretionary Claims Decisions

• Competitive Terms

• Members may share in surplus profits

• Dedicated Claims and Customer Service

Support

• Financially Capped - guaranteed no calls

on members

SECURITY OF FUNDSThe JDT is constructed to meet its members’

requirements, as opposed to them purchasing a

traditional ‘off the shelf’ insurance policy. Instead,

it provides its members with a sophisticated

financial instrument for addressing identified

risk exposures, which has been actuarially

constructed and is professionally managed.

EXECUTIVE SUMMARY

Executive Summary

HOW A JDT WORKSWithout exception, a JDT is always structured to

match the needs of its members. It is designed to

build an initial layer of funds to pay for the majority

of everyday losses. Insurance is then purchased

to protect members for losses in excess of this

layer.

Members of the Trust make contributions held

in a designated bank account for the benefit of

members and managed by the Trustee. The funds

are then utilised to:

• Meet claims

• Purchase insurance protection above the initial

layer

• Cover the costs of establishing, managing and

administering the JDT facility

• Return surplus benefits to members

Surplus profits can be distributed to members in

the form of discounts, or to fund risk management

activities.

The Member is entitled to lodge a claim for any

incident and the Trustee is obliged to consider

that claim, but only up to the scheme cover limits.

Should the scheme limits be exceeded, the

Trustee will refer that component of the claim to

the excess layer Insurer for them to consider in

accordance with the insurance policy wording.

We only utilise Insurers regulated by the Australian

Prudential Regulation Authority (APRA).

PRODUCT OVERVIEW

TYPES OF RISKS In addition to more familiar covers usually seen in

conventional insurance products, a Discretionary

Trust is designed to potentially address exposures

beyond the scope of what is normally available

from the traditional insurance market.

Although the JDT is not insurance, it performs

functions similar to insurance. It manages

predictable working losses and then insurance

cover is arranged for more volatile, unexpected

risks.


JDT STRUCTURE

INSURANCE COVERAGE

JDT PAYMENTS

MEMBEREXCESS

Product Overview

JDT – THE KEY FACTSWe work closely with clients and invest the time to

ensure that we fully understand their requirements

and deliver a solution specific to their particular

needs:

• Our financial risk model is subject to an annual

independent actuarial report;

• A JDT is a cash facility and contribution and

premium funding can be organised separately

by JLT;

• The JDT’s liability is limited to the monies held in

the JDT’s bank account;

• The bank account details are declared in our

regularly provided reports and monies held in

that account are at call;

• All JDT’s are fully funded to their claims and

expense projections;

• There are no calls on Members to contribute

additional moneys to the JDT other than for

potential increases in cover;

• Each claim within the scheme limits is accepted

or otherwise at the discretion of the Trustee;

• The Trustee is obliged to consider any matter

referred to it regardless of whether the event

would be covered under the excess layer

insurance;

• The financial operations of the JDT are

independently audited each year;

• The financial audit establishes the level of

surplus monies in the JDT available for

re-distribution;

• JGS is the Trustee and Scheme Manager and is

responsible for controlling the management of

the JDT. This function cannot be performed by

any other party.

CONCEPTUAL REPORT THE JLT DISCRETIONARY TRUST CONCEPT Product Overview


LEGAL STATUSAll JDT documentation (the Trust Deed, Scheme

Rules and Product Disclosure Statement) has

been prepared in consultation with the Australian

Prudential Regulation Authority (APRA), the

Australian Securities and Investment Commission

(ASIC) and The Commonwealth Treasury.

• APRA have confirmed that JDT’s do not

constitute Insurance or contravene the

Insurance Act. The Trustee also complies with

the reporting requirements detailed within

the Financial Sector Legislation Amendment

(Discretionary Mutual Funds and Direct

Offshore Foreign Insurers) Act 2007.

• ASIC has issued a relief instrument – Managed

Investment Schemes (Rule 5C). ASIC have

confirmed that JDT’s are not in contravention

of the Corporations Law (Prescribed Interest).

The JDT’s Product Disclosure Statement

documentation has met all ASIC requirements.

• Australian Tax Office reviews have reinforced

that JDT’s are both ABN and Tax compliant

and contributions are not income to the JDT

- the only income is the interest earned, plus

any recoveries made by the JDT.

REGULATORY OVERVIEW

MEMBERS

Member 1

Member 2

Member 4

Member 5

CumulativeSum of Contributions

SCHEME COVER“THE FUND”

INSURANCE COVER

INSURANCE BROKERS

EXTERNAL SERVICE PROVIDERS TO JDT

• Auditors• Actuaries• Legal Advisers• Tax Agent

Member 3 JDTContributions

Paymentfrom Fund to Trustee

PaymentFrom Insurer

to TrusteePremium for XOL

Insurance

Premium for XOL

Fully Funded Scheme Cover

Limited

SPECIALISTS SUPPORTING THE JDTINSURANCE BROKERS Jardine Lloyd Thompson Pty Ltd

CLAIMS MANAGERS Echelon

ACTUARIES Cumpston Sargeant Pty Ltd

AUDITORS BDO Australia

BANKERS National Australia Bank

LEGAL ADVISER Thomson Geer

TAX AGENT BDO Australia

• JLT will liaise with all parties and reach

agreement on the core requirements of the

client and what the Trust is designed to

achieve;

• JGS undertakes risk profiling to gain a detailed

assessment of the risk factors that need to

be considered and the safeguards that are

required;

• JGS builds the Financial Model;

• JLT obtains terms for Excess Layer Insurance

Protection;

• JLT obtains client agreement to proceed;

• JGS supplies Legal Agreements to the client;

• JGS develops, implements and documents

Operational Procedures specific to the

requirements of the particular Trust;

• Management Reporting Requirements are

agreed with all parties.

THE NEXT STEPS

Regulatory Overview

JLT Group Services Pty Ltd ABN 26 004 485 214 AFS License 417 964 Level 3, 148 Frome Street ADELAIDE SA 5000

GPO Box 1693 ADELAIDE SA 5001

All cover is subject to the Trustee’s discretion and/or the relevant policy terms, conditions and exclusions. Any advice in this document is general advice and does not take into account your objectives, financial situation or needs. You should consider the relevant Product Disclosure Statement and your objectives, financial situation or needs before acting on this advice. Please visit www.jlta.com.au or contact JLT Group Services Pty Ltd for the relevant Product Disclosure Statement, or for further information.

JLT Group Services Pty Ltd, ABN 26 004 485 214. AFS License 417 964 www.jlta.com.au A member of the Jardine Lloyd Thompson Group

© August 2014 0874/033

CONTACTS

CRAIG HARMSGeneral Manager

Tel +61 8 8100 3008

Mob +61 409 797 122

[email protected]

GAVIN BROWN Board of Advice

Tel +61 8 9426 0981

Mob +61 419 919 394

[email protected]

JDT Concept Report

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