Victorian builders are fed up with the builders’ warranty insurance system, a scheme they say is failing consumers and builders alike. Things reached boiling point last week when builders across the state lobbied the Victorian Government to restructure the system.

And the Government seems to be taking notice – kind of. Last week the Building Commission held a forum involving the building industry, insurers and government representatives.

The Victorian Government says a code of practice for insurers of the domestic building industry would help, and apparently the insurers agreed. The code will be introduced in a bid to improve communications, reporting and transparency for builders. But just who will implement the code remains to be seen.

Victorian Department of Treasury and Finance spokesman Martin Curtis says the code will be separate from the General Insurance Code of Practice.  “At this stage it will be developed within the insurance industry in conjunction with the Building Commission. It will deal specifically with builders’ warranty insurers.”

The Insurance Council of Australia says it found out through a press release about the proposal for the insurers to develop a code. Group Manager Southern Division Peter Jamvold said: “We weren’t invited to attend the forum, and at this stage we can’t really comment.”

Lobby group the Builders Collective of Australia (BCA) says the present system provides “last resort” insurance and offers no protection – a claim supported by the latest issue of the Australian Consumers’ Association magazine Choice.

The BCA says the insurance limitations placed on builders are causing many to leave the industry and preventing apprentices from entering the industry. It wants Victoria to implement a system similar to that in Queensland, where warranty insurance is provided by the state but builders are subject to a code of conduct that determines their insurance coverage.

Two insurers – Exporters Insurance Company and Lumley General Insurance – have recently entered the sector, taking the total number of providers to six. Finance and Consumer Affairs Minister John Lenders says this should have an effect on premiums.

And Victorian Planning Minister Mary Delahunty says the Government’s strategic approach is working. “Given increased competition in the market and greater choice available, insurers are more likely to respond to these issues and builders will be given more choice.”

Mr Lenders has defended the insurance arrangements, saying the first step for a consumer now is for the Building Commission to require the builder to fix the problem.

Other outcomes included agreement to assess the need for domestic building insurance for large residential projects; a review of the requirements for bonds and guarantees; and a review of the transferability of securities.