NSW to lead the nation with new apartment defect insurance
The NSW Government is taking another significant step to better protect apartment buyers with the announcement of a specialist Ministerial Advisory Panel to advise on the introduction of decennial liability insurance (DLI) into the Australian market.
Minister for Better Regulation and Innovation Kevin Anderson said the Ministerial Advisory Panel will be chaired by past Insurance Council of Australia President Gary Dransfield and is made up of experienced industry leaders from the construction, finance and insurance sectors.
“DLI is a special type of insurance taken out by the developer to guarantee against major defects for up to 10 years, which is not currently available in Australia,” Mr Anderson said.
“The NSW Government has embarked on revolutionary reforms in the building and construction sector aimed at promoting a safer and stronger industry. The introduction of DLI into NSW is only possible because of the work we have done to date.
“We have laid the foundations for DLI over the last 18 months through reforms such as the Building Assurance Solution and the Risk Rating tool, and now the game is changing. Our nation-leading reforms will explore the potential for insurers and developers to provide an insurance safety net for consumers that is currently lacking in the multi-unit high rise sector.
“A DLI policy would cover potential serious defects which arise up to 10 years after a project’s completion giving confidence to consumers to buy into multi-unit residential construction in NSW.”
The introduction of DLI would also tackle the illegal practice of phoenixing as only developers who demonstrate a commitment to a long-term market presence will be able to acquire an insurance policy.
“Insurers will be assessing developers’ ratings score, their corporate governance and balance sheets. While good quality work will be underwritten, poor quality developers will find themselves out of the market,” Mr Anderson said.
“Establishing a market for DLI would will mean untrustworthy developers are weeded out, creating a stronger, more competitive market where consumers can purchase with confidence.”
The Ministerial Advisory Panel will draw on expertise from key construction industry stakeholders, insurers, strata bodies and representatives from the NSW Government. It is expected the Panel will report back to Government with options stemming from its investigations next year.
Chair of the Ministerial Advisory Panel Gary Dransfield said DLI in Australia would lead to greater protection for consumers against major defects.
“I am really pleased to be able to assist the NSW Government and industry participants to develop an insurance proposition that will build on the reforms already delivered and further enhance protection for apartment buyers,” Mr Dransfield said.
Andrew Hall, CEO of the Insurance Council of Australia (ICA) also welcomed the announcement of the panel.
“The ICA supports the establishment of the Decennial Liability Ministerial Advisory Panel and congratulates the NSW Government on bringing about further leading building reforms, targeted at improving the quality of building product produced in NSW. We welcome the opportunity to work with Government on this important area of consumer protection,” Mr Hall said.
Members of the DLI Ministerial Panel include:
- Gary Dransfield – Past President, Insurance Council of Australia
- Michael Bennett - General Manager, Property & Construction Finance, Commonwealth Bank of Australia
- Albert Chan - Executive Director, Meriton Group
- Michael Corcoran - Co-founder and Executive Director, Solido Development Finance
- Chris Duggan – President, Strata Communities Association (NSW)
- Stefan Hicks – Founding Director, SHC Insurance Brokers,
- Chris Kelly - Construction Manager, Billbergia
- Darren Maher - Chief Underwriting Officer, IAG
- Steve Mann – Chief Executive Officer, Urban Development Institute of Australia NSW
- Corey Nugent - Senior Operations Manager, Insurance Council of Australia
- Fabrizio Pirelli - Chief Executive Officer, TOGA Development
- Jessica Rippon - Principal Solicitor, Construction Legal, representing the Owners Corporation Network
- Nicholle Sparks - General Manager, Frasers Property Australia
- David Tanevski - Managing Director, KWC Capital Partners, and Founding Director, Urban Taskforce