The WA Government has budgeted to subsidise builders’ warranty insurance by $1.2 million this financial year as it works through proposals to change the scheme.

It is expected to respond this week to an Economic Regulation Authority inquiry into the cover.

QBE and Calliden provide the insurance in WA, with the former covering major builders.

But their agreement with the State Government expired on June 30 and QBE says it is reviewing its involvement in the market.

The insurers have agreed to extend current arrangements to October 1 and the Government has indemnified them for losses above $10 million on any one building failure.

The state Building Commission is negotiating with the insurers for coverage beyond October while MPs consider the inquiry’s findings, according to budget papers released last week.