The Insurance Council of Australia (ICA) has called for immediate government action on the troubled building industry, warning insurers will find it increasingly tough to cover the sector.

State and territory governments must unite to end the “partial and piecemeal fixes” that have failed to address systemic issues besetting the industry.

ICA made the call as UK-based Landmark Underwriting, the last provider of exclusion-free professional indemnity (PI) cover in Australia, announced it will stop writing new business this month.

Victoria, NSW and Queensland require building surveyors to have PI cover free of exclusions.

“This is a national issue and requires national consistency… insurers play a crucial role in the building industry, but they are at the end of the risk management chain,” ICA GM Risk Karl Sullivan said.

“The situation is unsustainable. Many insurers are reluctant to continue to provide unrestricted PI products to these professionals unless the key issues – flammable cladding and significant defects in building, including the compliance regime failures that have contributed – are addressed by governments and the building and construction sector.”

ICA has prepared an action list, calling for, among other steps, the establishment of a building industry-funded program to pay for rectification work and compensate property owners caught out by limitations built into defects liability regimes.

It also wants states and territories to accept and prioritise 24 recommendations made in a report by Peter Shergold and Bronwyn Weir to improve building compliance and enforcement.

Confidence in the building industry suffered a fresh blow when cracks in Sydney’s Mascot Towers led to the evacuation of residents last month. The incident comes about six months after cracks in the city’s Opal Tower forced out residents.

Builders Collective of Australia President Phil Dwyer, who has pushed for a royal commission on the building industry, says the Federal Government should stop dragging its feet.

“We’re in a bad shape, aren’t we?” he told insuranceNEWS.com.au in reference to the Mascot Towers evacuation. “We want a short, sharp royal commission.

“I think governments have been of the belief, ‘Hey, we don’t need to upset the building industry because look at the amount of income we get out of it… stamp duties and all the other associated costs with transacting properties, so we don’t want to slow anything down, let’s not rock the boat.’ I think it’s time for them to start rocking it now.”