The Insurance Council of Australia (ICA) says the NSW Government’s draft Design and Building Practitioners bill may not ease the insurance problem facing the construction industry.

A section of the bill states that a registered practitioner must be “adequately insured” and is “indemnified by insurance that complies with the regulations against any liability to which the design practitioner may become subject as a result of making the declaration or carrying out the work”.

ICA says further clarity would be welcomed as professional indemnity (PI) policies typically have exclusions relating to non-conforming products and practices, and certain other high-risk exposures.

“To the extent that the reference in [the bill] to ‘any liability’ precludes an insurer from offering policies that contain these exclusions, insurers will not be able to participate in the market,” the ICA submission says.

“The Insurance Council would welcome clarity in the drafting that this is not the intent of the legislation.”

ICA says its experience in other areas is that if the causes of the high risk of providing indemnity insurance for a particular profession are not addressed, “regulations requiring those professionals to hold insurance on terms which are not commercially realistic leads to the likelihood of the professionals becoming unauthorised”.

The draft bill was put up for public consultation this month as part of NSW’s efforts to reform the troubled building sector.