The NSW Independent Pricing and Regulatory Tribunal (IPART) is seeking submissions as it considers changes to the state’s home building compensation scheme.

Among its considerations will be expanding the home building insurance market to private insurers. The scheme helps property owners recover money for faulty or unfinished work if their builder can’t be pursued.

Private insurers, who abandoned the market in the 2000s when it became unsustainable. It is now provided solely by the government-owned insurer, icare.

The effectiveness of introducing premiums that depend on the risk profile of a builder will also be examined.

IPART is seeking feedback to inform recommendations to be put to the state Government later this year. Submissions are open until June 1 and a draft report will be released in September, with final recommendations in November.

“The current economic circumstances make it more important than ever to protect homeowners from losses due to builder insolvencies, without resulting in unsustainable rises in premiums,” IPART Chairman Paul Paterson said.

“We will look at how well the fund achieves its intended outcomes and whether it is able to achieve those outcomes at a lower cost,” he said.

The scheme is regulated by the State Insurance Regulatory Authority, and was introduced following the exit of private insurance providers from the home building insurance market in the 2000s. It allows a court-provided money order in cases where a builder is insolvent, has died or disappeared or had their licence suspended for non-compliance.

The scheme applies to residential building work projects over $20,000 for buildings up to three storeys and compensates homeowners up to $340,00 when they are unable to obtain redress from the builder.

The latest review evaluates whether protection is sufficient and how any changes might affect the financial sustainability of the home building compensation insurance market.

IPART is evaluating whether it could further mitigate risks of builders becoming insolvent, and whether there are impediments to private sector participation. It is also investigating whether other products would provide more value.

More details are available here.