Victorian builders are the latest to voice alarm at Vero’s decision to stop writing builders’ warranty insurance.

The Master Builders Association of Victoria (MBAV) forecasts a crisis in coverage. Builders’ warranty insurance is a legal requirement for all significant residential building works in all states except Queensland and Tasmania.

The association warns the decision carries “widespread ramifications” for the residential building industry after Australia’s largest provider departs the market from July 1.

“The withdrawal of Vero will have a significant effect on our industry,” MBAV Executive Director Brian Welch told insuranceNEWS.com.au.

The association says the presence of only two remaining insurance providers – QBE and Calliden – “will result in insufficient competition and product differentiation for a functioning market to exist, as history has proven”.

“Major reform of Victoria’s home warranty insurance market will be required.”

Vero currently controls at least 40% of each of its markets for builders’ warranty. Its decision this month to withdraw coverage compounds the effect of earlier market withdrawals by Lumley Insurance and CGU.

Victorian builders’ groups are currently working with the state government on a feasible solution for members.

“It is our view that healthy competition is essential to ensuring home warranty insurance products, premiums and customer service standards remain affordable,” the MBAV said.

QBE and Calliden told insuranceNEWS.com.au they remain committed to the builders’ warranty market.

“QBE will continue to provide builders’ warranty insurance to any applicant that meets QBE underwriting standards,” the company said on Friday.

Calliden Group Executive Marketing and Distribution Mike Hooton told insuranceNEWS.com.au that his company “will continue to work with building industry bodies and relevant state governments to minimise any dislocation resulting from the decision of other insurers to withdraw from the market”.

Also see ANALYSIS.