The Victorian Managed Insurance Authority (VMIA) has paid out $3 million in claims lodged by clients of Porter Davis, following the sudden collapse of the Melbourne-based residential home builder in March.

“It comes as we continue to manage nearly 1800 domestic building insurance claims which have continued to come in from Porter Davis customers, marking the single biggest event of its kind in the almost three decades since VMIA’s formation as the Victorian Government’s insurer,” VMIA says in a LinkedIn post today.

VMIA says the $3 million represents more than 1100 claims outcomes that “equates to six months’ worth of claims decisions on behalf of affected customers in the nine-week period since the building company closed its doors”.

“So far, we’ve conducted approximately 1350 site inspections and paid out some $3 million in claims, and we expect to close out hundreds more claims assessments over coming weeks.”

VMIA did not say if the claims payout includes the hundreds of families who were left uninsured after it was discovered Porter Davis failed to acquire the mandatory builders’ warranty insurance (BWI) on their behalf.

The State Government subsequently announced a one-off relief scheme to compensate the 560 families who lost their deposits after Porter Davis collapsed. They would be treated like they are covered by the state’s BWI scheme.

Victorian laws require a builder to obtain domestic building insurance – as BWI is referred to in the state – before taking a deposit or any other money for residential works of $16,000 or more.

Porter Davis’s potential breach of those laws was uncovered after liquidators combed through its accounts and found it did not acquire the insurance but had taken deposits from the families.

The Government has also announced measures to shore up oversight of the BWI scheme, acknowledging the “liquidation of Porter Davis exposed a concerning practice of builders not taking out the required insurance when accepting deposits”.

A news article in The Age this month said home building insurance was identified as a key issue five months before Porter Davis collapsed.

The issue was flagged by a working group that was created by the State Government last year to find short-term ways to resolve spiralling costs facing home builders and buyers.

The Age article says the working group – chaired by the Department of Treasury and Finance and made up of government, union, industry and consumer representatives – delivered a 14-point plan to Minister for Regulatory Reform Danny Pearson in October.

The working group also called for more transparency around domestic building insurance, including training for regulators on how to check the insurance status of a home-build project and the option to make that function available to customers.