Insurers offering builders’ warranty insurance in NSW face new rules that could affect their dealings with policyholders.

Industrial Relations Minister John Della Bosca has foreshadowed mandatory market practices in a bid to make policies more transparent and accountable.

The news comes only weeks after the Victorian Government announced it would introduce a voluntary code of practice to monitor insurers.

Mr Della Bosca’s announcement has not been well received by the state’s builders. Led by the Builders Collective of Australia (BCA), almost 400 builders marched on Parliament House in Sydney last week. 

BCA National President Phil Dwyer says privatised builders’ warranty systems are “an absolute disgrace” and builders want a Government-run scheme like Queensland’s.

“Our biggest beef with the schemes is the fact that builders have to buy this product and force it onto clients with full knowledge that it doesn’t have any real benefits for consumers,” Mr Dwyer said.

The BCA says the limited number of insurers offering the cover – including Vero, Australian International Insurance, CGU and Lumley General Insurance – means that they are able to increase premiums without any justification.

The BCA has taken legal action against Vero, saying many builders have been adversely affected in dealings with the company and its agents. The case was initially thrown out but Mr Dwyer says another action will begin soon.

Vero has defended its role in the builders’ warranty market, saying it has worked closely with state governments to ensure that the home warranty market is stabilised and improved.  CEO Duncan West says the insurer is doing its job in protecting builders and ensuring they have the financial strength to avoid getting into trouble.

“Unfortunately, there will still be builders unable to gain eligibility for home warranty insurance because they continue to hold assets outside their business.”