How Strong Is Your Deposit Bond?
Australian deposit bond provider, Deposit Assure, says brokers, conveyancers and real estate agents need to question the strength of deposit bonds if they want to protect their clients and their reputation.
Etienne Rizzo, director of Deposit Assure, said: “Nobody questions the strength of a deposit bond until they need it. As the situation proved earlier this year, that can cause major issues for Australian home buyers and vendors.
“The best way for brokers, conveyancers and agents to protect their clients – and their reputation – is to choose a strong deposit bond from the outset.”
Rizzo recommends looking for three key indicators that a deposit bond is strong:
1. The deposit bond underwriter has a strong credit rating and is APRA regulated
“Look for A+ stable from a reputable credit rating agency, such as Standard & Poor’s and Moody’s. An increasing number of property contracts stipulate the use of a deposit bond provider with an Australian-based underwriter, who is regulated by the Australian Prudential Regulation Authority (APRA). This provides another level of comfort to vendors and purchasers alike.”
2. The provider has a strong track record of paying claims.
“Past behaviour is often an indication of future behaviour. Where an underwriter has a track record of paying valid claims, vendors and purchasers can take comfort that claims will be paid when needed.”
3. The underwriter is based in Australia.
“This is important because an Australian-based insurer is answerable to the Australian legal system,” Rizzo adds.
Deposit Assure provides deposit bonds backed by one of the strongest insurers in the world, QBE Insurance (Australia) Limited. Based in Australia and publicly listed, QBE Insurance Group has a Standard and Poor credit rating of A+ (Stable). This A+ rating supports the financial strength and stability of QBE and puts it in good standing compared to other deposit bond backers.
“When a deposit bond is required, we urge brokers, conveyancers and real estate agents to choose a Deposit Assure deposit bond backed by QBE,” Rizzo adds.
Since 1989, deposit bonds have been giving Australia home buyers a smart alternative to a cash deposit. QBE started underwriting deposit bonds in 2000. Its deposit bonds, like those provided by Deposit Assure, have since become the most widely accepted deposit bonds Australia-wide.