Insurance crisis takes hold, pressure now on Building Ministers for an urgent solution
17 July 2019
A PDF of this Member Statement can be downloaded here.
Building Ministers from all Australian jurisdictions will meet with Federal Minister for Industry Karen Andrews at the all-important Building Ministers’ Forum in Sydney tomorrow, Thursday 18 July.
There is only one thing that should be on their agenda – the current crisis with PI insurance and what steps they intend to take to fix it.
As with the past two forums held in Adelaide and Hobart, industry representatives have been invited to take part in a roundtable discussion with the Ministers in the morning as part of the forum. This time, the two items listed for discussion are Professional Indemnity Insurance and the implementation plan around the recommendations of the Shergold and Weir Building Confidence Report.
I will be representing AIBS at the roundtable and, as we have advised Minister Andrews via letter and a conversation with her advisers last week, AIBS will be demanding the following;
- National Leadership by the Federal Government for the development of a combustible cladding rectification model to address the current crisis. On this point, the Victorian Government came out fast from the starting blocks yesterday, Tuesday 16 July, with an announcement of a $600 million fund for rectification of buildings with combustible cladding. This was one of the key measures sought by AIBS to address the current crisis and we congratulate the Victorian Government on this important step, but it will only be truly effective if other jurisdictions follow Victoria’s lead to achieve a nationally united approach.
What we urgently need to see is the other Ministers to recognise this as an example of what should be done and immediately follow suit. The statement by the Victorian Premier and Planning Minister can be found here.
But of course, this will not help building surveyors struggling with unworkable insurance policies right now. Therefore, the second point below is also vital and must be immediately taken seriously. We urgently require -
- National leadership by the Federal Government for the proper implementation of the recommendations in the Building Confidence Report by Professor Peter Shergold and Bronwyn Weir as they were intended, not the current piecemeal approach as each jurisdiction continues to act independently and in isolation. Is it any wonder that the insurance companies and the public have lost confidence in Australia’s building regulations? They are in a mess.
In addition to the suite of reforms recommended by Shergold and Weir, AIBS has been advocating to Federal and State Government for a Professional Standards Scheme for Building Surveyors. We do not need governments to put forward any financial commitment around the implementation of a professional standards scheme, all we want is for them to support it and make membership of a PSS a prerequisite for registration to work in the industry. This will raise industry standards and also add confidence to the insurance market.
There is no option now but for the Ministers to stop ignoring the severity of the problem, stop playing party political games and act now to save the building industry.
Unfortunately, AIBS is aware of building surveying firms already closing because of unreasonable insurance policies. Premiums have in some cases have skyrocketed by 500% but, even worse, they contain broad exclusions and massive excesses per claim.
Some firms currently holding policies without exclusions, fear they will have to close when their policies come up for renewal and they cannot obtain a new policy without exclusions. One leading Perth-based firm has written to the Prime Minister to voice their concerns and this was reported extensively in the news media.
I urge you to also contact your State and Federal Member of Parliament to voice your concerns. By acting together, we will make sure that our predicament is impossible to ignore. Further, AIBS have also been very active across all media platforms and we will continue to strongly represent the profession and highlight the plight that many of you are currently facing as building surveyors.
In the meantime, AIBS advises you to seek legal and business advice as to whether you have adequate insurance and are adequately covered under corporate law to continue with the work you undertake.
We also understand this crisis is causing considerable stress to some of you and if this is the case, we once again urge you to speak with your family and friends or contact one of the mental health services in your area or nationally. Some contacts are below.
We will keep you informed of developments at the Building Ministers Forum as soon as we know the outcome and for those attending the NSW/ACT conference next Monday and Tuesday at the Sydney International Convention Centre, I and all the AIBS team members welcome the opportunity to discuss these issues further with you there.
Chief Executive Officer