Insurers are increasingly concerned by the issue of non-compliant cladding on high-rise buildings, Strata Community Australia (SCA) warns.

GM Victoria Rob Beck says a Victorian Building Authority (VBA) audit highlights the huge scale of the problem, with 51% out of 170 buildings examined featuring the cladding.

“Insurers are watching this issue very closely and are asking more underwriting questions around the use of cladding,” Mr Beck told insuranceNEWS.com.au.

“Depending on cladding used in construction, some insurers are refusing to offer terms while others are factoring into the risk base pricing and premium charged.

“Some strata schemes could face the possibility of not being able to obtain the compulsory insurance they are required to [have].”

The VBA audit was prompted by a devastating blaze at the Lacrosse apartments in Melbourne’s Docklands in November 2014.

A building ministers’ forum on the Gold Coast on February 19 recommended the Australian Building Codes Board (ABCB) investigate a range of possible changes to the National Construction Code.

They include reviewing suitability provisions in Clause A2.2 – which state a product must be fit for purpose in its intended use – with a view to considering mandatory accredited third-party certification of cladding materials.

An advisory note and education material could also be developed by the ABCB, and a change to require sprinkler protection over covered balconies will be considered.

Mr Beck says the steps, while necessary, are “likely not sufficient”.

Fire Protection Association Australia CEO Scott Williams agrees.

“The Commonwealth has essentially left it to the states and territories to monitor,” he told insuranceNEWS.com.au.

“They are not resourced to the level they need to be, and unless there is a significant investment at state/territory level, then there is no way this can be arrested.

“We are pleased the ABCB is investigating changes, but we would have liked to have seen something stronger.

“The ABCB can only set direction. There are plenty of people out there who will try to get away with what they can. At the end of the day there has got to be some checks and balances.”