Temporary fix for professional indemnity insurance crisis

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QUEENSLAND will join New South Wales and South Australia in allowing building practitioners to operate with professional indemnity insurance featuring cladding related exclusions, which the industry warns is not a long-term solution.

Minister for Housing and Public Works Mick de Brenni yesterday proposed new regulations as part of a two-pronged approach to provide a lifeline to the state’s certifiers caught up in a shrinking insurance market.

The Minister said in allowing certifiers to operate with exclusions on their PI insurance, it will sustain the 230,000 construction jobs in QLD that were at risk, if sites were shut down.

de Brenni said the new regulations are in response to a PricewaterhouseCoopers report released by the Palaszczuk government that shines a light on the effects caused by the deregulation of the Australian construction industry.

The government will allow certifiers to remain licensed while they are holding professional indemnity (PI) insurance featuring cladding related exclusions.

The proposal also includes requiring certifiers to declare that combustible cladding has not been used, and that there hasn’t been any product substitution during the construction process.

The Australian Institute of Building Surveyors has previously warned against this move.

“If there are no insurance policies without cladding exclusions, who is going to undertake the rectification of buildings identified by the respective cladding taskforces across the country or any other building with external cladding?”

AIBS president Troy Olds and CEO Brett Mace said this is not a long-term workable solution because it leaves practitioners and consumers without appropriate protection.

Minister de Brenni agreed, adding that this is only a temporary solution to the PI insurance crisis.

“Allowing insurance with exclusions is a time-limited solution that provides the industry with immediate confidence to continue operating.

“These proposals are designed to ensure that jobs growth in Queensland doesn’t slow and construction industry practitioners continue to remain in the industry.

“We’ve already seen insurers attempting to cut and run from the market by withdrawing their insurance products and that means they escape their obligations, and that’s not on.

“This has put at risk hundreds of thousands of jobs in the sector and it’s got the potential to impact homeowners who would be left holding the can if they have to pursue litigation with dodgy buildings.

“Certifiers provide a level of protection for homeowners and we need to keep them in the industry.

“It means that as of today, the 400 licensed certifiers in Queensland will continue to be able to work tomorrow… however subject to stringent conditions.

“The restrictions are part of the immediate term resolution of the issues to be followed by a suite of longer term system reform approaches including continuing to pursue a national ban on the importation of dodgy cladding,” de Brenni said.

Meanwhile QLD will join Victoria and NSW in banning the use of combustible cladding on all new buildings in the state. The ban would extend to all aluminium composite panels with a PE core of greater than 30%, and it would restrict usage across all buildings.

“By banning combustible cladding on new construction in Queensland, it means there doesn’t need to be an expense for certifiers in the form of exclusion free insurance,” de Brenni said.

Meanwhile de Brenni said PwC’s analysis on the effects caused by the deregulation of the Australian construction industry showed the problem was not limited to Queensland, but a national issue affecting the building industry in all states and territories.

The Minister has called on the federal government to introduce an importation ban on all aluminium composite panels with a PE core.

“I’ve made numerous calls on the Commonwealth to ban this combustible cladding at the border, they can’t keep dodging this responsibility to the people of Australia.

“And again, I call on Minister Karen Andrews to urgently address the issue at a national level, as the retraction of the insurance market has to be rectified by the Federal Treasury,” he added.

“Prime Minister Morrison has a chance here to help rebuild confidence in the industry and back in local manufacturing jobs by banning dodgy cladding that fails community standards, but in the meantime we will have to impose extra requirements on the sector.”

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