The 12,000 builders insured by Royal & SunAlliance breathed a sigh of relief after the group announced it would remove requirements for builders to provide personal deeds of indemnity supported by their own assets.

They will instead impose capital requirements on builders in order to protect from claims in the event of a builder’s insolvency or work defects. The new requirements are planned for July 1 this year.

General Manager Specialty Insurance at Royal & SunAlliance Nick Kirk said the company is confident that the market for home warranty is now in better shape than ever. “This is excellent news for consumers as it will provide a stable building industry and therefore better protection,” he said.

Mr Kirk added that while it is good news for successful, well-run building businesses the reforms will bring about a reduction in claims for the insurance industry.