State Governments Move To Protect Certifiers Despite Risks

State Governments Move To Protect Certifiers Despite Risks

State Governments Move To Protect Certifiers Despite Risks


State Governments allow certifiers to continue practising but expose long-term risks

State Governments are moving to protect certifiers and building practitioners who would be otherwise ineligible to practice under insurance exclusions.

The Queensland state government was the first to speak publicly on allowing practitioners unable to obtain insurance without cladding related exclusions to continue practising for the time being.

At the time of writing, the New South Wales Government has enacted a 12-month exemption for Certifiers concerning cladding ‘ensuring most could access insurance’. This exemption comes in line with Victorian and Queensland Governments proposals and, following their move to enact a cladding ban recently, also delivered by the Queensland Government.

The Victorian Minister for Planning, The Hon. Richard Wynne has issued a Ministerial Order which will ‘revoke’ the Building Practitioners’ Insurance Ministerial Order dated 27 May 2014. This Order immediately replaces the previous Order to enter into effect on 12 August, establishing a new structure that requires Building Practitioners to hold the necessary insurance whilst providing an exemption for cladding related exclusions enacted by the insurer, as reported by the Australian Institute of Building Surveyors (AIBS).

A temporary measure

This may not be a complete solution. However, this proposed act has been labelled as a temporary measure. Industry figures remain concerned over the expiry of professional indemnity insurance, which will occur for building practitioners across the next twelve months.

At present, a specified level of professional indemnity insurance, without exclusions or special conditions, is mandatory to be granted necessary accreditation. Where policies lapse and cannot be renewed, building certifiers without a provider will be at a standstill and unable to issue permits, which current government action seeks to delay temporarily.

The response to rising concerns by insurance providers has, for the most part, been a refusal to provide or renew professional indemnity insurance policies without significant exclusions or special conditions relating to cladding related claims, as well as significant price increases that will flow onto the construction industry. As a result, numerous insurance providers have already withdrawn from the market.

The Australian Institute of Building Surveyors (ABIS) claims that the few insurance providers, newer to the market, who were ‘sourced to offer exclusion-free policies’ have since ‘exited the market’, claiming the issue has been known to authorities in all jurisdictions since June 2018.

This has caused conflict over the availability of coverage that satisfies the necessary criteria for the registration of Building Certifiers, particularly in Queensland, New South Wales and Victoria where ‘the last remaining provider of exclusion-free insurance policies will no longer guarantee coverage from 2 July 2019.’

What is likely to happen in the sector?

In a recent feature, we noted, ‘It is understandable that this information, the surrounding events and discussion have caused significant concern as to the future of the issue, rectification of buildings and structures found to contain unsafe cladding and the legislative landscape.’

This has left industry clients wondering what will happen to the industry when the providers protected by this temporary act no longer have insurance.

While Government intervention is likely to ease pressure in the short term, we believe this may create further issues in the following years. AIBS Chief Executive Brett Mace warns that the shift in potential liability for uninsured practitioners can catalyse a market exodus.

‘But as building surveyors can’t get the insurance, you’ll find them going out of business and there’ll be a slowdown in the construction industry… If you don’t have anyone left being able to be registered in 12 months, then [the industry will] stop,’ he said in a recent interview with the ABC.

Don’t find yourself in the dark: Find a trusted certifier for the long term

This issue leaves occupants and owners of buildings isolated as certifiers’ insurance and accreditations expire.

It is in the best interest of all stakeholders to verify their current certifier’s position, to identify and align with a certifier who can clearly demonstrate a consistent record of and adherence to quality, accompanied by a professional indemnity insurance policy without exclusions or special conditions.

Hendry is proud to confirm that, as a result of our long-standing record of quality and professionalism, we are one of a limited number of organisations in Australia who have successfully renewed our professional indemnity insurance, significantly above the minimum required levels.

With no exclusions or special conditions, we can maintain the ability of our Building Certifiers and Surveyors to continue to practice without restriction across our national offices.

Our experts can address your concerns across building compliance and certification or any questions you may have surrounding external cladding, with decades of experience in managing issues across the built-form.

Want to talk cladding?

Get in touch with our Building Surveying Team to discuss your cladding requirements and needs.

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