Insurers won’t consider offering unrestricted products in the building industry professional indemnity market until confidence in the sector is restored, Insurance Council of Australia (ICA) says.

ICA told a NSW inquiry into building standards what needs to be done to regain trust, providing a list of measures including: restoring confidence in compliance regimes; removing uncertainty from liability; improving building documentation; improving building research; quantifying the compliance problem; and harmonising defect liability regimes.

“ICA submits that there is significant reform required across the nation in order to improve the built environment and how it is perceived by all stakeholders,” the submission says.

The council says it “is encouraged by the appointment of the NSW Building Commissioner and looks forward to engagement with this office to work towards re-establishing confidence in the sector”.

“Once this is achieved, and compliance failures can be seen to be reduced, [professional indemnity] providers will be able to consider a return to the market with unrestricted products.”

ICA says in its submission that insurers, like the community, “assumed that buildings are indeed constructed to meet or preferably exceed … minimum standards”. However, it says this assumption has now been proven false.

“A number of high-profile compliance failures in NSW, coinciding with use of non-conforming and potentially dangerous external cladding on modern and some refurbished buildings, has led to a crisis in confidence for insurers who provide professional indemnity coverage for building professionals, and increasingly for insurers who insure the physical buildings once construction has been completed.”

Submissions to the Public Accountability Committee inquiry into the regulation of building standards, building quality and building disputes have now closed.