Home / Local / Insurers seek building faults transparency
19 August 2019
Calculating potential underwriting losses from poor construction remains impossible as governments prove reluctant to share information on building issues, Insurance Council of Australia (ICA) Head of Risk and Operations Karl Sullivan has told a NSW parliamentary inquiry.
“We still do not have any data from government about how many buildings have been assessed, how many have dangerous cladding [and] how many may ultimately require remediation,” he told a hearing last week.
“In the absence of information – and I stress that it is not NSW alone but all states and territories – it is impossible to calculate the losses going forward.”
Mr Sullivan says he understands the complex reasons for not publicly releasing information from registers of high-risk buildings, but details should be provided to insurers as solutions are considered so the industry can analyse potential maximum losses and how that will influence future products and prices.
Remediation work for buildings also remains difficult to cover under professional indemnity policies, as there has been no agreement on remediation standards and how they will be achieved.
“That is a fundamental step that needs to be achieved before insurers can even begin to assess whether they can insure the risks of people signing off on those plans,” he said.
The current “uncapped liability” has required the continued use of exclusions.
Mr Sullivan says he understands no Australian insurer would offer terms for Sydney’s Opal Tower apartment building, which was evacuated the day before Christmas due to cracking.
Coverage was sought from the international market. “The only terms I believe they could get were a tenfold increase at least in the premium, and a vast restriction in what they would insure the building for.
“Most of the natural perils that most buildings would be insured for were ruled out. Essentially the building is insured for fire only and at a reduced sum.”
The NSW Legislative Council Public Accountability Committee, chaired by Greens member David Shoebridge, is inquiring into the regulation of building standards, building quality and building disputes.
Hearings will be held again on August 27, with an interim report due “as soon as practical” and a final report by February 14.