Private insurers’ involvement as underwriters in the builders’ warranty insurance (BWI) market is diminishing as insurers find the segment is no longer viable.

State governments are likely to pick up more of the liability and use insurers as their agents.

The SA Government has announced it will underwrite QBE to keep the insurer in the state for another year while alternative models are considered.

QBE is also in talks with the WA Government about its involvement in their BWI market.

The WA Economic Regulation Authority is taking submissions on a proposal for a model that separates construction risk and warranty risk.

A report by the authority says more private insurers would be interested in covering the construction phase of a building and building industry associations could cover the warranty period for six years after the work is completed.

But some building associations argue in favour of the Queensland system, where a statutory authority operates a not-for-profit builders’ warranty scheme.

Also see ANALYSIS