Vero Warranty – Australia’s largest provider of builders’ warranty cover – has eased its eligibility rules. Builders with annual turnovers up to $2 million and projects less than $350,000 each no longer need to provide audited financial statements. About 80% of residential builders are in this category.

Vero has also agreed to give reasons for deeming a builder ineligible.

“Over the past year the home warranty insurance market insurance market has stabilised and we are starting to see some real changes and improvements,” Vero CEO Duncan West said.

There’s no doubt that the tough actions of Vero and other builders’ warranty insurers has succeeded in driving shonky operators out of the building market, but they are also now up against the combined might of politicians, consumer groups and builders, who still aren’t satisfied. They want the states to re-enter the builders’ warranty market, saying premiums have increased up to 1000% since the collapse of HIH Insurance.

But there’s a danger in the fact that state oppositions in Victoria, NSW, and WA are trying to win builders’ votes in the lead-up to elections by vowing to reintroduce statutory schemes.

Most state governments, except for Queensland and the Northern Territory, stopped offering builders’ warranty in the early 1990s, leaving the business to the private market. The HIH collapse in 2001 and the withdrawal of Dexta in 2002 meant even fewer players.

Phil Dwyer, President of national lobby group The Builders Collective, told Sunrise Exchange News Vero’s move will do nothing for builders or consumers. He says the changes have been in place for a long time – through Vero Construction and Engineering – as the Express Assess product and have just been rejigged.

“Few houses can be built for under $350,000 these days,” he said. “What’s more, under these policies consumers can’t go after their builders’ insurer – the builder has to – so there’s hardly any consumer protection.”

Mr Dwyer says builders want what their Queensland counterparts have. “It is a level playing field in Queensland. Builders can operate and there are no complaints from consumers.”

There have been two inquiries into the relationship between builders and insurers, including last year’s Productivity Commission report which said there are problems with the cost and availability of builders’ insurance.

A Vero spokesman said yesterday the stabilisation of builders’ warranty rates has allowed it to make some changes to eligibility. And the company says it hasn’t caved in to pressure, as the Australian Financial Review reported last week.

Tasmanian Attorney-General Judy Jackson has made a public commitment to review builders’ warranty insurance. Robert Kerr, Commissioner of the Victorian Competition and Efficiency Commission, has indicated the Government will tackle the issue in its inquiry into housing and construction regulation later this year.

Last year Vero said 99% of NSW builders applying for cover are successful.