New panel to guide NSW apartment defect insurance
The NSW Government will establish a Ministerial Advisory Panel to advise on the introduction of decennial liability insurance (DLI) into the Australian market, to better protect apartment buyers.
Better Regulation and Innovation Minister 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,” 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,” 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.