Insurance Council explain 'crisis of confidence' in construction sector

The Insurance Council of Australia (ICA) has told an NSW inquiry into building standards why insurers have developed a “crisis of confidence” in the construction industry – and what can be done to bring them back to the table.

Submissions to the Public Accountability Committee inquiry into the regulation of building standards, building quality and building disputes have now closed.

ICA says in its submission that insurers, like the community, “assumed that buildings are indeed constructed to meet or preferably exceed…minimum standards”.

However, it says this assumption has now been proven false.

“A number of high profile compliance failures in NSW, coinciding with use of non-conforming and potentially dangerous external cladding on modern and some refurbished buildings, has led to a crisis in confidence for insurers who provide professional indemnity coverage for building professionals, and increasingly for insurers who insure the physical buildings once construction has been completed.”

This has led to exclusions in professional indemnity insurance products for certifiers. They have removed cover for works relating to cladding or non-conforming building products.