Backup from the NSW and Victorian governments has warded off a collapse of both states’ builders’ warranty schemes. The move has quelled speculation that the survival of the schemes rested offshore, with both governments announcing that they would act as reinsurer for underwriting agency Dexta.

Victorian Finance Minister John Lenders said both governments will put in place arrangements for the necessary reinsurance for Allianz, so that Dexta can re-open for business. In a bid to scale down the number of disputes reaching insurers, the Victorian Government will employ around 50 new building inspectors.

The whole point of the scheme is to ensure that consumers use insurers as a last resort instead of a first, Victorian Planning Minister Mary Delahunty said. She expects around half of the complaints normally received will now be solved through the conciliation process.  

Not surprisingly, Dexta MD Ashraf Kamha was happy with the governments’ commitment. After working for several months to set up a new reinsurance panel after Swiss Re announced its decision to pull out, he was thwarted at the last minute by the withdrawal of the lead reinsurer, French company Scor.