RWTA Discretionary Mutual Fund (DMF) Update FEB25
We all agree, the cost of insurance is crippling. The Discretionary Mutual Fund(DMF) is a cold chain initiative and proposed solution.
The document outlines the process for setting up a DMF, broken into three main stages:
Pre-Feasibility (1 week): This initial phase involves a basic review of past premium and claim data to assess the viability of a DMF.
Feasibility (6-8 weeks): This crucial step involves determining the fund's financial retention levels, obtaining potential reinsurance pricing, and deciding the most suitable legal structure for the DMF. This phase has not yet begun and will require a $50,000 feasibility study fee, half of which needs to be paid upfront.
Implementation (6-8 weeks): Post-feasibility, this phase will commence once there is approval from the client(s) to establish the DMF. This involves setting up the actual structure and beginning operations.
Key Management Questions and Answers:
Setup Costs and Payments: The Mutual Manager (MM) clarified that a 50% deposit of the feasibility study fee is required upfront due to past issues with project continuations.
Data Requirements: For the feasibility study, the DMF needs detailed past data on premiums, claims, and exposure information summarized in specified formats.
Control and Oversight: Once operational, the DMF bank account will be controlled by the Mutual Manager under the DMF board’s direction, with regular audits to ensure compliance and financial integrity.
Financial Returns and Capital Structure: The return on investment and the exact capital requirements will depend on the level of risk retained within the DMF. Initial capital is mainly used to cover potential risks, with any surplus possibly returned to members or reinvested as decided by the DMF board.
We are looking to set up, with Benjamin and Benjamin, a video link soon to answer any questions that there may be, and the next steps. Interested? Please book here.
