Home / Daily / ICA calls for disclosures on high-risk buildings
13 August 2019
Information from high-risk building registers should be shared by governments with insurers to provide clarity on potential liabilities, Insurance Council of Australia (ICA) Head of Risk and Operations Karl Sullivan has told a NSW parliamentary inquiry.
“We still do not have any data from government about how many buildings have been assessed, how many have dangerous cladding [and] how many may ultimately require remediation,” he told a hearing yesterday.
“In the absence of information – and I stress that it is not NSW alone but all states and territories – it is impossible to calculate the losses going forward.”
Mr Sullivan says he understands the complex reasons for not publicly releasing information, including preventing arson, but details collected for government registers should be provided to insurers as solutions are considered.
“We would not expect to see a register published on the internet, for example,” he said.
“But we are calling for all states, including NSW, to be more forthcoming with that information so that we can start to analyse what the probable maximum losses may be and can start to look at, down the track, how that will influence products and prices.”
Mr Sullivan says remediation work for buildings remains difficult to cover under professional indemnity policies in the current market, as there has been no agreement from any taskforce in any state on remediation standards, and what needs to be achieved by whom and in what manner.
“That is a fundamental step that needs to be achieved before insurers can even begin to assess whether they can insure the risks of people signing off on those plans,” he said.
The current “uncapped liability” has meant it is almost impossible for insurers to calculate a probable maximum loss, and has required the continued use of exclusions.
Mr Sullivan says he understands no Australian insurer would offer terms for Sydney’s Opal Tower apartment building, which was evacuated the day before Christmas due to cracking.
Coverage was sought from the international market. “The only terms I believe they could get were a tenfold increase at least in the premium, and a vast restriction in what they would insure the building for.
“Most of the natural perils that most buildings would be insured for were ruled out. Essentially the building is insured for fire only and at a reduced sum.”
The Legislative Council Public Accountability Committee, chaired by Greens member David Shoebridge, is inquiring into the regulation of building standards, building quality and building disputes.
Further hearings will be held on Friday and on August 27, with an interim report due “as soon as practical” and a final report by February 14.
ICA is continuing to push for a national response to the issue, with insurers not likely to consider offering unrestricted products in the building industry profession indemnity market until confidence in the sector is restored.