Keeping Australian Farmers Farming. Replacing business & production costs when disaster strikes

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1 Keeping Australian Farmers Farming Replacing business & production costs when disaster strikes

2 Thank you for your interest in the updated 2014 Latevo program. Like you, we are all acutely aware that managing and preparing for risk in dryland farming is becoming significantly more difficult for growers, with many facing tremendous economic hardship, particularly after successive seasons of natural disaster. In response to these current issues we have developed a viable new solution to relieve this financial burden for growers. Latevo is launching an affordable customised policy that is viable without government subsidy. Our crop income based insurance program works by replacing business and production costs when disaster strikes and helps to reduces a farmer s risk profile so that additional working capital can be accessed when a grower needs it the most. Working in conjunction with each farmer s nominated advisers and accountants, Latevo uses a 5-year history of revenue and expenses to accurately calculate the amount of costs that Latevo insurance can replace - generally the full cost of production, including chemical, fertiliser, interest and overheads. Latevo offices are now open in Western Australia and NSW, ensuring our capacity to deliver much needed support to farming families across Australia. With a background of over 45 years in the agricultural industry I m delighted to be leading this innovative new company. We can now offer grain growers real security to protect and maximise their income to change their future. We are passionate about giving growers more confidence, while encouraging young people to remain on family farms so that together we can revitalize our farming communities. I look forward to discussing our program in more detail with you. Yours sincerely, Deane Allen, Latevo International National Manager Latevo International Section 1: Introduction 1

3 The objective of any business is to generate a profit. Dryland farming in Australia presents some very unique business challenges. Regardless of management strategies the environment regularly does not allow farmers to even recover their costs. The cash flow impacts of crop failure is catastrophic to farming enterprises and rural communities. The only solution to this is to use a financial tool such as Crop Income Protection Insurance to avoid wildly fluctuating farm revenues. Not only does this support the farmer when it is most needed but also those who rely on farmers for their livelihood. Crop Income Protection Insurance is a must for Australian farmers because it both protects them from financial losses and gives financiers confidence to once again lend to farmers with less risk and therefore lower margins to enable access to desperately needed working capital. JOHN THOMPSON DIRECTOR RSM BIRD CAMERON 2 Section 1: Introduction Latevo International

4 Keeping Australian Famers Farming. Thank you for your expression of interest in Latevo International and our new Crop Income Protection Insurance. The idea of an insurance product to protect grain growers in Australia has been on the agenda for decades. The main issue has been that without government support, none of the concepts developed were commercially viable. This project has been four years in the making and has had no government support to date. However, following significant negotiations with global insurers and many of Australia s leading banks, we have widespread support for our innovative approach - insuring farmers in a way that offers more affordable premiums and ongoing cash flow protection. A tried and true model Developed by Australian farmers and underwritten by Allianz, this crop revenue-based insurance product includes a customised program that actually supports improved farm management and profitability. The predecessor to this model has been functioning in Canada for three years. All previous models based on a Yield x District Averages calculation have failed. The Latevo International model is Revenue (Yield x Price) x Individual Assessment. This model is not only commercial feasible, it has the backing of Allianz for years to come. Let s get started The first step in this process is to work in partnership with us to undertake a Production Audit analysing the past five years of financial data for your farm. It is important to understand that ideally, every farmer involved in this model joins with a similar risk profile. Our goal is to make the model fair and equitable, to avoid certain geographic regions drawing more heavily on the program than others. To achieve success, the Latevo team needs to fully understand the background of each grower before offering an invitation to join the program. We are well aware of the challenge involved in looking back five years into your records. However, without this analysis, it is not possible to underwrite each farmer s individual risk. Latevo International will be there to support you through the process. Simply by taking this first step, you are well on the way to securing a better future in farming. Customised to your location and situation Our Crop Income Protection Insurance offers each grower the ability to choose bands of revenue they would like to insure. This approach is what makes the whole concept fairer and more equitable. Higher rainfall farmers have the option of tailoring the model specifically to their farm. Every farmer has the comfort of knowing that they are not subsidising any other farmer; instead they are truly protecting their own land. How this can work for you Through Crop Income Protection Insurance, Latevo International can now help you manage your entire financial portfolio. It is widely known that cropping has the highest financial rewards - but also comes with the highest risk. This Insurance gives you the ability to insure your cropping enterprise and effectively put a stop loss in place. Too often a bad year of farming leads to the need to draw down revenue from other places, such as shares, real estate, livestock enterprise or farm borrowings. Under this new model, your cropping enterprise will pay for its own risk profile. Even if the worst-case scenario is that Australian farmers start each year in exactly the same financial position as the year before, Crop Income Protection Insurance will surely lead to a better night s sleep. We look forward to helping secure the future of your family and farm. Latevo International Section 1: Introduction 3

5 Why is a Production Audit so important? Most farmers spend their entire lives working IN the business, attempting to produce the highest yield in any given season. Finding the time to work ON the business is a major challenge as is having accurate data to make meaningful business decisions. Latevo International s Production Audit will accurately analyse both your revenue and expenses over the past five years into the correct production year. Reviewing data in detail may uncover hidden facts about your financial position, including any threats or opportunities. Business decisions made on strong factual evidence have a much greater chance of becoming a reality. The Production Audit process offers enormous benefits for your business. A more strategic approach to business planning, such as: Acknowledging that downside fear limits upside potential Helping to provide children with a sustained future in farming Understanding that by reducing risk, you can better plan for your family s future. Profit creation exploration, that will identify: True enterprise profitability Profit creation over the past five production years How to repeat good performances, through knowledge of previous per hectare profit margins. Through a focus on revenue creation, we will discover: True understanding of your historic revenue creation Where revenue creation drives upside profitability The direction of your future farm budgeting, through knowledge of per hectare revenue per year. Understand the real facts behind your business, such as: Actual business costs What your annualised financials really mean The true downside in your business. 4 Section 1: Introduction Latevo International

6 The Production Audit process. A Production Audit has three components: 1. Five Year Financial Analysis 2. Current Year Production Plan 3. Current Year Grain Marketing Plan Five year Financials Production Plan Grain Marketing Plan The Financial Analysis provides an historic view of your business, while the Production Plan and Grain Marketing Plan give us a glimpse into the future. By submitting these plans prior to binding the policy, Latevo is able to gain enough knowledge to be comfortable with your management plans for the coming season. Components of Production Audit It is absolutely essential that we fully understand not only your most recent history, but how you plan to manage your farm into the future. By insuring your crop income, we are insuring each grower s ability to grow and sell their crop. Latevo Crop income Protection Insurance Policy 1. Financial Analysis The conversion of last five June 30 Tax Returns to Production Year 2. Production Plan a. Rotation History b. Cropping Plan c. Fertilizer and Herbicide Strategy 3. Grain Marketing Plan a. Forward Marketing Plan b. Price targets and time by percentage sold Latevo will act as an independent third party, checking your plans to make sure they do not involve obvious profit limiting or high risk practices. These could include: Sowing canola on canola Forward selling an unrealistic amount of expected production. This insurance product and program has been developed by farmers, for farmers. We need to avoid acceptance of farming practices that we would not be happy taking on ourselves, to reduce risks for all. Our aim is to see farmers undertaking district best practice. Latevo International Section 1: Introduction 5

7 September 16, 2013 Chief Executive Officer Latevo International Shop 8, 6/16 Sanders Street, Griffith NSW 2680 Regional & Agribusiness WA Level 7, 109 St Georges Tce Perth WA 6000 Tel: Fax: Dear Sir, I would like to thank you for the time you have spent by your company with me over the past few months to explain and demonstrate your strong commitment to provide farming businesses an Income Protection Insurance product to market. From a banker s perspective, this type of risk mitigation tool has been a long time lacking, with its absence distorting the natural growth and innovation of the WA Grains industry. The introduction of this style of product will enable the following; Continuity of capital within the industry (Financed or Investor). Provide financial certainty to invest in longer term farm innovation. Access to longer term finance on more favorable terms as cash flow risks are addressed. Assist in reducing the barriers to entry for younger farmers to enter the market. Provide the capacity for strong existing business s to grow and expand land holdings with certainty. Assist in delivering financial stability to agricultural communities who service the industry (local retail and the like). Westpac is a strong supporter of business innovation that assists in delivering a more long term financially sustainable agricultural industry, and we commend your company for the leadership it is showing within the industry and we look forward to you assisting in providing more certainty to our clients. 6 Section 1: Introduction Latevo International

8 November 7, 2013 Chief Executive Officer Latevo International Shop 8, 6/16 Sanders Street Griffith NSW 2680 Dear Andrew, For well over a decade, WAFarmers has been lobbying for the introduction of a Multi-Peril Crop Insurance into the Western Australian market. We are delighted that Latevo International has introduced such a product. We have encouraged our members to consider Multi-Peril Crop Insurance in their business planning and to make their own enquiries on the suitability of the Latevo product. We are strong advocates for a Multi-Peril Crop Insurance product, which we believe offers security to growers. Many of our members have challenging financial circumstances which can limit access to additional capital, however, we are confident that this product will alleviate some of these challenges. We are proud to welcome you as a diamond sponsor and look forward to a mutually beneficial relationship long into the future. Yours faithfully, Dale Park President The Western Australian Farmers Federation Inc. Latevo International Section 1: Introduction 7

9 Crop Income Protection Insurance The flexible and selective crop income banding system within our Crop Income Protection Insurance means it is suitable for growers in all regional areas of Australia. Most importantly, your cover can be customised, making the Latevo s Flexible and Selective Band Insurance product competitively priced for all. How it works Once your Production Audit is complete, Latevo International will analyse the financial data to calculate your maximum level of insurable revenue. There are eight bands of coverage and your premium will be offered in individual, $100/ ha bands. Once you have assessed your needs, you can choose to purchase only the necessary band coverage and drop off other bands to make sure your premiums are more affordable. The customised band system makes insurance affordable for all and means that the program is fair and equitable. Revenue protection available in $100/ha bands $800 $700 $600 $500 $400 $300 $200 $100 $0 Band 1 Band 2 Band 3 Band 4 Band 5 Band 6 Band 7 Band 8 Once you have reviewed your pricing letter, the next step is to make an Application for Insurance, which Band levels Farmers select or drop bands as required includes a comprehensive process of field mapping and reviewing your marketing and agronomic plans. 8 Section 1: Introduction Latevo International

10 Example of how Crop Income Protection Works Without Crop Income Protection Insurance The aim in any business is to make a profit, but to do so the first thing you must do is cover costs. If you do not cover cost you must then draw on external funds to meeting the shortfall and then find extra funds to run the business moving forward. $1,400,000 $1,200,000 Good Year Bad Year The concept of Crop Income Protection is simple in that your aim is to provide $1,000,000 your business with a safety net such that in a worst case scenario you break even. $800,000 Attached is a simple example of how it works. If it costs 1 million dollars to cover your cropping business enterprise, then you would aim to purchase approximately 1 million dollars of crop income $600,000 $400,000 protection to replace costs in a disastrous season. $200,000 For example in the advent of a bad year, when you have experienced drought and your income drops to $400,000, your claim would be to the value $0 Crop Income Expenses Crop Income Expenses of $600,000. There are many advantages of having such a significant payout in years where income is low. $1,400,000 With Crop Income Protection Insurance Good Year Bad Year Some of these benefits are listed below: No need to borrow additional money from the bank to fund next years crop Never breach your bank covernance Be able to hold grain and wait for a higher price No financial stress Take advantage of land purchase opportunities Know that you will not go broke in the next drought $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 Latevo policy payout Expenses Grain Revenue $0 Crop Income Expenses Crop Income Expenses Latevo premium Latevo International Section 1: Introduction 9

11 1. Farming in a low rainfall zone Latevo Band levels Low Rainfall farmer $100/ha bands $500 $400 $300 $200 $100 $0 Band 1 Band 2 Band 3 Band 1 Latevo Band levels Band 2 Band 3 This low rainfall farmer with 2000 hectares is eligible for maximum insurance protection of $250 per hectare, as calculated by the Production Audit. $250 /ha x 2000 hectares = $500,000 minimum crop income protection. Premium choices by Crop income Band $200 - $250/ha = Band 3 $200 - $220 = Band 3 Purchased $100 - $199/ha = Band 2 Offered Purchased $0 - $100/ha = Band 1 Offered Purchased Purchased Band options To reduce the premium cost, the farmer decides to drop part of Band 3 by $30/ha as calculations show that $220,000 is the cost of production for the farm. The farmer chooses to purchase a customised version of Band 3, along with Bands 2 and 1, i.e. $0/ha - $220/ha or $0 to $440,000 of crop income. Claim Event: The Insurance Policy is triggered by a lack of rain in September, with high temperatures reducing yield. (Refer to Policy wording for Exclusions) Scenario 1 If the low rainfall farmer makes only $200,000 income then a claim of $240,000 will be paid. Scenario 2 The farmer has a good season and makes $800,000. No claim is made. 10 Section 1: Introduction Latevo International

12 2. Farming in a medium rainfall zone Latevo Band levels Medium Rainfall farmer $500 $400 $300 $200 $100 $0 Band 1 Band 2 Band 3 Band 4 Band 2 Latevo Band levels Band 3 Band 4 This medium rainfall farmer with 2000 hectares is eligible for maximum insurance protection of $350 per hectare, as calculated by their Production Audit. $350 /ha x 2000 hectares = $700,000 minimum crop income protection. Premium choices by Crop income Band $300 - $350/ha = Band 4 Offered Purchased $200 - $299/ha = Band 3 Offered Purchased $100 - $199/ha = Band 2 Offered Purchased $0 - $100/ha = Band 1 Offered Not purchased Purchased Band options To reduce the premium cost, the farmer decides to drop Band 1 as the chances of not making $100/ha or $200,000 is very low. The farmer chooses to purchase Bands 2, 3 and 4, i.e. $100/ha - $350/ha or $200,000 to $700,000 of crop income. Claim Event: The Insurance Policy is triggered by a late, severe frost event. (Refer to Policy wording for Exclusions) Scenario 1 If the medium rainfall farmer makes only $500,000 income then a claim of $200,000 will be paid. Scenario 2 In the case the farmer only makes $100,000, the farm business will wear the first $100,000 to $200,000 and then will be paid a $500,000 claim to take it up to the $700,000 level of minimum crop income on which the premium was paid. Scenario 3 The farmer has a good season and makes $1,000,000. The farm is $300,000 above the minimum crop income of $700,000. No claim is made. Latevo International Section 1: Introduction 11

13 3. Farming in a high rainfall zone Latevo Band levels High Rainfall farmer $100/ha bands $600 $500 $400 $300 $200 $100 $0 Band 6 Band 5 Band 5 Band 4 Band 4 Band 3 Band 3 Band 2 Band 1 Latevo Band levels This high rainfall farmer with 2000 hectares is eligible for maximum insurance protection of $550 per hectare, as calculated by the Production Audit. $550 /ha x 2000 hectares = $1,100,000 minimum crop income protection. Premium choices by Crop income Band $500 - $550/ha = Band 6 Offered Not purchased $400 - $499/ha = Band 5 Offered Purchased $300 - $399/ha = Band 4 Offered Purchased $200 - $299/ha = Band 3 Offered Purchased $100 - $199/ha = Band 2 Offered Not purchased $0 - $100/ha = Band 1 Offered Not purchased Purchased Band options To reduce the premium cost, the farmer decides to drop Bands 1, 2 and 6 as the chances of not making $200/ha or $400,000 is very low and there is no need to insure above the cost of production of $500/ha. The farmer chooses to purchase Bands 3, 4 and 5, i.e. $200/ha - $500/ha or $400,000 to $1,000,000 of crop income. Claim Event The Insurance Policy is triggered by a late, severe frost event. (Refer to Policy wording for Exclusions) Scenario 1 If the high rainfall farmer makes only $600,000 income then a claim of $400,000 will be paid. Scenario 2 In the case the farmer only makes $200,000, the farm business will wear the first $200,000 to $400,000 and then be paid a $600,000 claim to take it up to the $1,000,000 minimum crop income on which the premium was paid. Scenario 3 The farmer has a good season and makes $1,500,000. No claim is made. 12 Section 1: Introduction Latevo International

14 Dear Mr and Mrs Example, Crop Income Protection Insurance: Estimated pricing letter example We are very appreciative of your involvement in the 2014 limited release program for Crop Income Protection Insurance to Australia. It gives me pleasure to provide you with the estimated pricing for the 2014 season. Max Insured Net Crop Revenue Per Hectare $ Name Insured Net Price per hundred Crop Revenue of insured value Band price Per Hectare Per Hectare Per Hectare Band $6.56 $6.56/Ha Band $7.61 $7.61/Ha Band $8.66 $8.66/Ha Band $11.03 $1.10/Ha Total Cost $23.93/Ha Total Hectares 5,924 Policy Value Estimate of the whole farm policy if full coverage is taken $141, GST $ 14, Stamp Duty $ 14, Total payable $170, Coverage options You have the option to purchase the full coverage limit, or part-there-of starting from the bottom up. You qualify to drop Band 1 because you are above the $300/ha minimum qualifying coverage for this option. To do this you must purchase a minimum $200/ha of total coverage. Estimate Only Please note this is not an offer of insurance. The above pricing is an estimate only based on the previous information provided to us about your farm. A formal quotation will be provided once a fully completed application for insurance is submitted to and accepted by us, including mapping of fields and processes for reviewing your marketing and agronomic plans. The estimated prices shown above are subject to change based upon the information reported in the application for insurance. If you have any queries please feel free to contact us or your Broker to discuss, otherwise once you have reviewed the pricing, please complete and submit your application for to us so we can assess it and provide you with our formal quotation terms accordingly. Yours sincerely, Andrew Trotter Chief Executive Latevo International Section 1: Introduction 13

15 Cropping Income and Expenses per Hectare without Policy (Example Farm) $ $600 $500 $/ha $400 $300 $200 Grain Revenue Finance and Labour Costs Overhead Costs Machine Costs (including depreciation) Input Costs $100 $0 Income Expenses Income Expenses Income Expenses Income Expenses Income Expenses 14 Section 1: Introduction Latevo International

16 Cropping Income and Expenses per Hectare with Policy (Example Farm) $ $600 $/ha $500 $400 $300 $200 Latevo policy payout Cost of Latevo policy Grain Revenue Finance and Labour Costs Overhead Costs Machine Costs (including depreciation) Input Costs $100 $0 Income Expenses Income Expenses Income Expenses Income Expenses Income Expenses Latevo International Section 1: Introduction 15

17 Total Cropping Income and Expenses without Policy (Example Farm) $1,600, $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 Grain Revenue Finance and Labour Costs Overhead Costs Machine Costs (including depreciation) Input Costs $200,000 $0 Income Expenses Income Expenses Income Expenses Income Expenses Income Expenses 16 Section 1: Introduction Latevo International

18 Total Cropping Income and Expenses with Policy (Example Farm) $1,600, $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 Latevo policy payout Cost of Latevo policy Grain Revenue Finance and Labour Costs Overhead Costs Machine Costs (including depreciation) Input Costs $200,000 $0 Income Expenses Income Expenses Income Expenses Income Expenses Income Expenses Latevo International Section 1: Introduction 17

19 Total Hectares Seeded Hectares - Cropping Too Wet Hectares - Cropping Seeded Hectares - Grazing Fallow Hectares Seeded Irrigated Hectares Average Grain Revenue/ha 4,142 4,142 4,142 4,142 4,142 2,070 2,140 2,389 2,307 2, Section 1: Introduction Latevo International

20 Certainty Insurance Policy wording

21 Contents Introduction About Allianz About Latevo About this Insurance Understanding this insurance and its important terms and conditions Applying for cover Our contract with You Premium General Definitions applicable to the Policy Certainty Insurance What We cover Basis of Settlement When We may reduce or deny a claim General Exclusions applicable to the Policy War Nuclear General Conditions applicable to all Sections of the Policy Misstatement of Inventory or production Cross Liability Examination Governing law and jurisdiction Interests of other parties GST Notice Other Insurance Your obligation to comply with the Policy terms and conditions How to make a claim Cancellation rights under the Policy How You may cancel the Policy Your Duty of Disclosure Privacy Act 1988 Information General Insurance Code of Practice Dispute resolution process helping You solve any problems Contact for assistance or confirmation of cover If this insurance has been issued through an insurance intermediary Lawful seizure Wilful acts Territorial limits Terrorism Pollution Other Excluded Losses Claims Procedure Claims procedures Transfer & Assignment Salvage Waiver of subrogation rights

22 Introduction Welcome and thank You for choosing the Allianz, Certainty Insurance distributed by Latevo. About Allianz The insurer of this insurance is Allianz Australia Insurance Limited ABN (Allianz) AFS Licence No Allianz is one of Australia s largest general insurers. We utilise years of local expertise, combined with global experience to offer a wide range of products and services to Our customers. As a member of the worldwide Allianz Group, We are committed to continuous improvement of Our products and services and strive to achieve this through knowledge transfer within the Group, dedicated technical research units, sharing globally new product developments and a wide range of risk management services. About Latevo This insurance is arranged by Latevo International (Aus) Pty Ltd ABN (Latevo) AR No In arranging this insurance Latevo has been appointed as an authorised representative of Allianz and acts under binding authority on behalf of Allianz, and not on your behalf. Latevo is part of the Latevo International group which supports farmers worldwide in obtaining affordable crop insurance that helps them manage the risk of weatherrelated crop disasters. For any enquiries about this insurance please contact Latevo on: Latevo International, Shop 8, 6/16 Sanders Street Griffith, NSW Australia LATEVO ( ) About this Insurance This is an important document. You should read it carefully before making a decision to purchase this insurance. It will help You to: decide whether this insurance will meet Your needs; and compare it with other products You may be considering. Please note that any recommendation or opinion in this document is of a general nature only and does not take into account Your objectives, financial situation or needs. You need to decide if this insurance is right for You and You should read all of the documents that make up the Policy to ensure You have the cover You need. Preparation date: 27/01/2014 Summary of the cover The Policy insures you against loss directly resulting from reduction of Net Crop Revenue Per Hectare caused by destruction of or damage to the Insured Crop Area as a direct result of the covered Insured Perils occurring during the Indemnity Period. The covered Insured Perils are: Water Stress, flood, hail, wind, frost, lightning, excessive rain, temperature stress, snow, hurricane, cyclone, tornado, wildlife, accidental fire, bushfire, insect or pest manifestation or plant disease. All other perils causing physical loss of or damage to crops are not insured. Understanding this insurance and its important terms and conditions To properly understand the significant features, benefits and risks of this insurance You need to carefully read: about the available types of cover and benefits (the standard cover provided can be affected by the following); the rest of this Introduction section this sets out how You apply for cover, the basis on which We insure You, the duty of disclosure You need to meet before We insure You, Our privacy information, Our dispute resolution procedures and other important information; Latevo International Section 2: Latevo Certainty Insurance Policy Wording 1

23 the General Definitions applicable to all Sections of the Policy section this sets out what We mean by certain words used in the Policy. These words begin with a capital letter throughout this document. The cover section(s) may also contain definitions relevant to the section; the General Exclusions applicable to all Sections of the Policy section this sets out the general exclusions and limits that apply to all covers and benefits; the General Conditions applicable to all Sections of the Policy and Claims sections these set out certain general rights and obligations that You and We have; all of the documents that make up the Policy, including the Schedule and any endorsements or other written changes to the cover We issue You with these contain specific details relevant to You and can affect the cover. Headings are provided for reference only and do not form part of the Policy for interpretation purposes. Applying for cover When You apply for this insurance you need to complete Our application process summarised below. You need to provide the information We require to determine whether to issue a policy and if so, on what terms. By way of summary, under the application process: 2 Section 2: Latevo Certainty Insurance Policy Wording Latevo International 1. You must submit a minimum of five years Accrual Financial Statements for all persons or entities seeking cover under the policy. All related entities and operations must also be separated using Enterprise Accounting. 2. This application will declare: a) Names, addresses and contact information for main contact person and any power of attorney appointed; b) Land location of the applicant with all contact information; c) The total hectares which are planned to be seeded to each Insured Crop along with land descriptions, in which You have an interest at the time of seeding; d) Total hectares of summerfallow, sloughs or idle land; e) Total hectares seeded to crops that are not Insured Crops; f) Listing of any other insurance coverage on the Insured Crop Area; g) Declaration that there has been no damage to the crops prior to this application for insurance coverage; h) Any other relevant information We may require respecting the matters mentioned in clauses (a) to (g) 3. The application submitted to Us is binding on You and is not subject to change by You without Our written consent. 4. This application pursuant to this section of the Policy forms the basis on which any crop is insured and the basis on which any loss will be paid. We will tell you anything else we require at the time of application. By entering into the Policy, You agree that the person representing You when completing the proposal is authorised to give and receive information on Your behalf in relation to all matters arising under the Policy and in accordance with the Insurance Contracts Act Where We agree to issue a policy, cover is provided on the basis: that You have paid or agreed to pay Us the premium for the cover provided; of the verbal and/or written information provided by You which must be given in accordance with Your Duty of Disclosure either verbally or in writing. If You fail to comply with Your Duty of Disclosure or have made a misrepresentation to Us, We may be entitled to reduce Our liability under the Policy in respect of a claim and/or We may cancel the Policy. If You have told Us something which is fraudulent, We also have the option of avoiding the Policy (i.e. treating it as if it never existed). Your Duty of Disclosure and the consequences of nondisclosure, are provided under the heading Your Duty of Disclosure.