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PI crisis: calls for national cladding fix ignored

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Building surveyors’ calls for a co-ordinated response to fix the cladding problem have fallen on deaf ears as Federal Industry Minister Karen Andrews maintained the matter would be handled by the states and territories.

The Australian Institute of Building Surveyors (AIBS) has urged the minister and her state counterparts to back its push for a “nationally consistent program directed towards rectification of combustible cladding issues across all jurisdictions.”

Taking this approach is “a vital first step towards regaining the confidence of the insurance sector,” the AIBS says in a letter in August to the minister.

But Ms Andrews today reiterated there will be no change to the position the Building Ministers’ Forum adopted at its last meeting in July.

"The [AIBS] has raised concerns with me and I have responded to their letter,” Ms Andrews told insuranceNEWS.com.au today.

“At the July Building Ministers’ Forum, all state and territory governments agreed to take responsibility for their individual paths to cladding remediation and rectification.”

Queensland has already ruled out setting up a cladding rectification plan similar to the $600 million scheme the Victorian Government announced in July.

Housing and Public Works Minister Mick de Brenni told insuranceNEWS.com.au “the companies who built these buildings, and their insurers, should pay to fix their own mistakes”.

“Building owners are responsible for rectification of their buildings,” he said. “Queensland taxpayers should not have to pay for the decisions made by developers who have led a pursuit of profit over quality and safety for decades.”

According to the AIBS, the professional indemnity crisis has worsened since the withdrawal of exemption-free cover in July.

Reform promises promised by the Governments are a step in the right direction, but insurers won’t offer exemption-free PI policies until there is agreement on a united response to the cladding problem.

“The issue of responsibility between governments and the insurance industry for external combustible cladding rectification continues to remain unresolved,” AIBS CEO Brett Mace told insuranceNEWS.com.au.

“AIBS has raised this with ministers and their advisers. The response has varied from jurisdiction to jurisdiction. Until all jurisdictions get on the same page, there won’t be any meaningful remedy."

He says the Queensland and NSW “are stonewalling the situation” by trying to pin the problem on to the insurance industry.

“They say insurers took the premiums for many years and therefore the industry itself should be responsible for paying for the problem now,” Mr Mace said.

“We say that doesn’t make any sense, because the end result of that scenario is of course that it is consumers, not building owners, who end up paying.”

NSW Minister for Better Regulation Kevin Anderson has also rejected a state-funded repair plan. His spokesman told insuranceNEWS.com.au today there are already a number of schemes in place such as statutory warranties for owners seeking recourse.

Changes made in April last year to the Home Building Regulation Act specifies cladding likely to cause a fire safety threat to occupants is considered a major defect.

"Owners can claim on these statutory warranties for any defective building work within set periods, including up to six years for major defects,” the spokesman says, adding "it would not be appropriate for the NSW taxpayers to take over the financial responsibility of remediation at this stage."