The New South Wales government is set to introduce a defects insurance scheme to better protect apartment owners and stamp out concerns in the issue-plagued construction sector. Minister for Better Regulation, Keven Anderson, has earmarked it as the “end game” for reforming the industry.
The liability insurance scheme is already in place in several other countries. It will also aim to establish greater examination procedures for developers and contractors, allowing insurers to price risk across the market more accurately.
The NSW Government has committed to putting together a panel of experts to provide recommendations for the scheme, with an announcement expected early next year.
“Once you’ve lined up all the ducks, then you’re able to provide a 10-year product on that building, which basically says a building is of sound quality, high quality, will stand the test of time over a 10-year period, and if there are defects … they will be covered,” Minister for Better Regulation, Kevin Anderson, told The Australian Financial Review.
The details of the insurance are yet to be announced, including how the insurance would work with the NSW strata building bond scheme to manage defects and how it will work with policies currently in place.
Mr Anderson has expressed his desire for the insurance to be made mandatory but is yet to announce a planned start date for the scheme and remained tight-lipped about the underwriters he had been in conversation with.
The national issue of combustible cladding installed in apartment complexes is a primary example of previously unidentified risks that have affected the insurance market. The scheme will aim to provide the essential information and data points to better price and identify risks across the industry.
The announcement comes shortly after reforms under the Design and Building Practitioners (DBP) Act 2020 and the Residential Apartment Buildings (RAB) Act 2020, came into effect.
The amendments aim to provide greater transparency across the residential apartment industry and give regulators, and building commissioner David Chandler, greater powers to improve outcomes and hold various stakeholders to higher account.