Conveyancers need to question the strength of deposit bonds if they want to protect their clients and their reputation. Unfortunately, nobody questions the strength of a deposit bond until they need it. As the situation proved in 2018 with the exit of a deposit bond provider, a weak deposit bond can cause major issues for Australian home buyers and vendors.
The best way for conveyancers to protect their clients – and their reputation – is to choose a strong deposit bond from the outset.
So how do you know if your deposit bond is strong? Here are three tips
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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.
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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.
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The underwriter is based in Australia.
This is important because an Australian-based insurer is answerable to the Australian legal system. Deposit Assure provides deposit bonds backed by QBE Insurance (Australia) Limited, one of the strongest insurers in the world. 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.
How can conveyancers quickly request a deposit bond?
Deposit bond referrals can now be lodged directly from Infotrack to Deposit Assure’s concierge team. From the concierge request, the team will prepare the deposit bond application on behalf of the conveyancer and will send out the application for applicants to sign. Once the application is signed, the deposit bonds are released. The concierge service is the simplest way for a conveyancer to obtain a deposit bond without doing any of the chasing up or the paperwork.
