The Victorian Managed Insurance Authority (VMIA) has reached agreement with insurer QBE to deliver builders’ warranty insurance to home builders in a bid to ease builders’ concern over availability.

The agreement, announced last week, comes in the wake of market departures by Vero, CGU and Lumley Insurance.

The Victorian Government announced in March that it would transition builders to a state-underwritten builders’ warranty scheme administered by the VMIA.

Last week the VMIA announced an arrangement with QBE to “transition underwriting of domestic building insurance to VMIA with cover issued by QBE from May 31 2010”.

“Consistent with the Government’s decision, the VMIA will manage any claims arising from these policies,” it announced last week.

VMIA has pledged to work with QBE to ensure availability of cover to current builders, owner-builders and new entrants to the market.

QBE says it will assist the VMIA to manage the transition to a new government-underwritten scheme, and says the agreement followed an “ongoing VMIA assessment of the resources and capability” required to run the scheme.

“The agreement combines QBE’s existing relationships, resources and expertise in this sector with the independence of a state-run facility,” the insurer said.

“QBE will continue distributing Victorian builders’ warranty insurance to brokers and authorised representatives, for both new and renewed business on behalf of the VMIA.”

Builders who have held domestic building insurance eligibility with an authorised insurer for work in Victoria at any time since January 1 2009 will automatically be eligible for cover from the VMIA on comparable underwriting terms and conditions for a period of at least 12 months, or until they are assessed.

Only QBE and Calliden remain as significant providers of builders’ warranty insurance to the Australian market following the departure of their three main rivals.

QBE intends to provide more detailed information to intermediaries during the next week. Calliden declined to comment on the issue when approached by insuranceNEWS.com.au this morning.