Builders’ warranty insurance supplier Dexta will not be renewing cover to builders in NSW on December 31, leaving around 20,000 builders looking for new cover.

The announcement of the company’s decision to exit the builders’ warranty market move has displeased the Master Builders Association. Its CEO, Brian Seidler, said legislation which removed some of the risk for insurers was meant to open the insurance floodgates. “Privatisation of the scheme hasn’t worked and now it’s in a bigger mess,” he said. “It’s sick.”

The NSW Treasury is reviewing a study presented by the MBA which advocates an industry-based insurance scheme. It would subject builders to regular inspections.

The legislation introduced in NSW and Victoria earlier this year certainly hasn’t attracted the anticipated level of insurer interest. Dexta pulled out of Victoria, and now NSW, and there will now be only two insurers – Royal & Sun Alliance and Reward – remaining.

Reward Insurance – backed solely by a group of private investors– has been inundated with business as a result of Dexta’s withdrawal from the builders’ warranty market. MD Murray Nugent said the company has been equipped from day one to deal with this market. “Depending on how the business falls, we should pick up around 50%, and we have the capacity to deal with that,” he said. “We have the capacity to do it all.”