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Cladding removal alternatives 'not satisfying insurers'

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Building owners seeking to reduce the cost of fixing cladding problems are finding enhanced fire prevention systems and other “performance solutions” are not satisfying insurers, a Sedgwick executive says.

Lower-cost alternatives to removing the cladding include partial removal, spray-on fireproofing and mitigation measures such as sprinklers.

“The problem…is that insurers generally are not responsive to performance solutions,” Bruce McKenzie, the National Manager Commercial Services and Major Projects at Sedgwick, said today.

“Whenever the word polyethylene is mentioned they want it gone from these buildings to adjust premiums back to a level where they were [before] the issue came to light.”

Mr McKenzie told insuranceNEWS.com.au owners need to be aware that they might, at best, receive only a small premium reduction from alternatives to removal, even if measures have been ticked off through building rectification approval processes.

“Ultimately the insurers are the ones you do have to satisfy as they are the ones accepting the risk on your property.”

He says progress has been made in the past couple of months on understanding which replacement products are acceptable.

“The industry is a little bit more comfortable now and can start recommending products and can get on with repairs,” he said.

Progress on recommendations accepted by the Building Ministers’ Forum remains slow, although the Mascot Towers evacuation in Sydney mid-year has added urgency to the issue of construction defects.

On cladding, Mr McKenzie says pressure is growing for states to fund some of the rectification, despite a reluctance to follow the lead of Victoria, which announced a $600 million plan to assist in some circumstances.

“We are in a situation at the moment where we have buildings that are high-risk and should have work undertaken, but from a financial perspective owners simply can’t afford to do it,” he said.

There is also more discussion in NSW on improving the independence of the certification system to reduce potential conflicts of interest.

“This is getting back to a system where the certification becomes independent to the builder and there is more accountability shown,” Mr McKenzie said. “That is where we need to get to.”