The Victorian Managed Insurance Authority has announced average premium rises of 53% for its compulsory builders’ warranty insurance scheme following record claims payments in the past several months.

The increases will take effect from August 6 and brokers who arrange the cover on behalf of residential builders have been informed of the changes.

Premiums for new single and multi-unit dwellings will go up by 65%; structural renovations, non-structural renovations and swimming pools by 20%; and charges for owner-builders by 65%.

A spokesman for the state insurer says a record number of Victorians have received domestic building insurance (as BWI is known in the state) settlements over the past 12 months to finish their new homes.

The insurer has resolved more than 4000 claims since July 1 last year, the spokesman told insuranceNEWS.com.au today.

“We have made record claims payments due to the compounding factors of builder insolvencies, high inflation, and skilled worker shortages, all of which impact build costs. This means VMIA has to increase … premiums to ensure homeowners continue to be protected when builders are unable to complete or rectify homes.

“Domestic building insurance plays a critical role in bringing peace of mind to customers of builders at a time of industry uncertainty.”

The Housing Industry Association, which represents the residential building sector, has criticised the premium increases.

Keith Ryan, the association’s executive director for Victoria, says the higher premiums are “another blow for Victorian home builders and their clients and further undermine housing affordability. It means new homebuyers face more fees and charges, with the typical home in Melbourne already paying more than 40% of the cost of a new house and land package in taxes, fees and charges – which is locking thousands of Victorians out of homeownership.”

Mr Ryan says the increases will ultimately be borne by homebuyers because builders are already struggling with increased building materials and labour costs.

“Equally, it is disappointing that these increases are not accompanied by any changes to the insurance benefits for homebuyers,” he said.