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Australia: Insurers call on government to take nationwide action on building regulation

Source: Asia Insurance Review | Aug 2019

Australia’s fragmented approach to regulatory enforcement and compliance with building regulations requires a renewed commitment to national action to maintain public confidence in the built environment, say several industry groups which includes the Insurance Council of Australia (ICA).
Apart from the ICA, the groups are: Property Council of Australia, Ai Group, Australian Construction Industry Forum and Master Builders Australia.
A joint statement by the group outlines their concerns as follows:
  • Australian and international insurers are introducing strict cladding-related exclusions in mandatory professional indemnity insurance products for building practitioners in the building supply chain.
  • The discovery of major defects in buildings has significantly reduced the ability of those building owners to find an insurer willing to accept the risk.
  • State and territory governments have not taken a consistent and comprehensive approach to undertaking and completing audits of existing high-rise buildings with combustible cladding, nor developed a remediation strategy.
  • Governments are taking an inconsistent and fragmented approach to implementing reforms described in the Shergold-Weir report, released in February 2018, which recommended reforms which will strengthen the effective implementation of the National Construction Code.
The building, construction, property and insurance industries say that the continued inconsistency in the approach across governments is manifesting in the crisis confronting building practitioners in the building supply chain. This has led to significant increases in professional indemnity premiums and a reduction in cover via exclusions on combustible cladding and non-conforming building products.
Building surveyors, engineers and architects are now struggling to obtain the insurance they need to do their job, which in turn could seriously affect future building or construction activity.
They urge the federal government to play a leadership role and bring together all state and territory governments to:
  1. Develop and implement a consistent and best practice Australia-wide response for risk assessment and a rectification strategy for existing buildings with combustible cladding with an agreed timetable that reflects the urgency of the issue. 
  2. Establish a joint government-industry taskforce to oversee urgent and consistent implementation of all Shergold-Weir report recommendations across all jurisdictions. A 
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