CLAD CRISIS INSURER FARCE
Government given two weeks to stop building industry ‘grinding to a halt’ after insurance sector standoff
THE Queensland Government has until the end of the month to sort out an “insurance crisis” that is threatening to cripple the entire building industry.
Insurance companies are so concerned about the combustible cladding debacle and potential law suits they are refusing to offer full cover to the state’s 500 building certifiers in the new financial year.
Construction industry heads say the stance will cause delays to thousands of buildings being greenlighted nationwide and hinder payments to tradies. It could also mean a spike in red-tape costs for those looking to build their own home, with a sharp rise in premiums.
The Australian Institute of Building Surveyors labelled the situation as “scandalous”, the Master Builders said “enormous delays are looming” and a certifier said the industry would “grind to a halt”.
The Federal Government last night blamed the State Government, and the State Government blamed the Federal Government.
PEAK building bodies warn the construction industry will come to a grinding halt if the government fails to urgently address an “insurance crisis”.
The State Government and industry heads will hold an emergency meeting today to work out how to tackle the decision by insurance companies to withdraw support to building certifiers because of concerns about combustible cladding.
From July 2, insurers will remove full cover for the majority of Queensland’s 500 certifiers, which could lead to an immediate cancellation of their registration under state law.
Insurers are concerned about the looming cost of removing combustible cladding from buildings and potential future lawsuits from homeowners following the Grenfell tower disaster in 2017, which killed 72 people.
Industry heads say it will cause delays in thousands of buildings being green-lit nationwide and payments for tradies. It could also mean a spike in red-tape costs for those looking to build their own home.
“There is a real possibility that without government intervention in the next two weeks, private building surveyors may be forced out of work and the construction industry across Australia will be significantly impacted,” Australian Institute of Building Surveyors CEO Brett Mace said.
The issue had been raised at all levels of government in the past year and caused considerable stress on existing certifiers who were now facing a loss of income, he said.
“It is scandalous that to date no meaningful action had been taken. Rectifi- cation is coming and the certifiers have been left holding the can.”
The AIBS also warned the Queensland Government against Band-Aid solutions and allowing policy exclusions.
Geoff Mitchell, the director of GMA Certification Group, said the Gold Coast construction industry would “come to a grinding halt” if the issue was not sorted.
“It will have a run-on effect on construction,” he said. “There will be no one to do approvals, builders won’t be able to put in payment claims. It will become difficult for more than just certifiers – tradies and developers will be impacted too.”
Mr Mitchell is one of only a few certifiers whose insurance will be renewed until October, meaning he has time for it to be addressed. However, it will come at a cost with premiums likely to rise by “200-300 per cent”.
“Operators on the Gold Coast are finding it hard to justify if they are going to keep playing in this space, the added problem is you need to carry insurance for your past work.”
Master Builders said “enormous delays are looming”.
“Construction relies on certification as a regulatory function to know their buildings comply,” Master Builders deputy CEO Paul Bidwell said.
State Housing and Public Works Minister Mick de Brenni blamed the Federal Government for a lack of national strategy.
“Due to the Morrison Government’s inaction we’ve got to the point where combustible cladding is causing insurance companies to exit the market and crank up their charges to certifiers,” he said. “We’ve had reports of some insurance premiums increasing by thousands of dollars, some by up to 226 per cent more than the previous year.”
Michael Hart, the Shadow Minister for Housing and Public Works, who raised the issue in parliament, said the last-minute rush by the State Government was disappointing. “From what I have seen so far, they (the government) have completely failed to recognise that this is a problem,” he said.
“It is going to completely blow up on them when certifiers are no longer in existence.”
The issue was also raised in August last year at a Building Minister’s Forum.
Federal Minister for Industry Karen Andrews said the responsibility rested with the State Government.
“Building regulation compliance is a matter for the states and territories and the Queensland Housing Minister knows this and continues to ignore his duty.”