The Victorian Government has followed NSW in axing the privatised builders’ warranty insurance market and will take over the scheme.

Finance Minister Tim Holding says the withdrawal of three major providers – Vero, CGU and Lumley – prompted the Government’s decision, which he says will “ensure the provision of adequate and affordable insurance”.

“After consultation with industry groups and stakeholders it is the Government’s view that the continuation of the current private system would not provide enough certainty for the building industry and consumers,” he said.

The new scheme will be run by the Victorian Managed Insurance Authority.

Builders with recent insurance coverage will be automatically eligible for VMIA cover for at least 12 months on comparable terms and conditions, with cover available from this Wednesday.

The VMIA will utilise current brokers of the product to minimise disruption to the building industry.

Builders’ warranty insurance is a mandatory cover for all significant building works in all states of Australia except Tasmania.

In November, the NSW Government announced it will underwrite the cover from July through the Self Insurance Corporation.