Response from one builder to the request for views about present industry insurance:
Dear Jason,
I think HBAG needs to do something with the Housing Indemnity Insurance issues that we are facing.
The biggest issue I see is that QBE are the only insurer willing to underwrite this type of insurance and the State Government is the guarantor for the Housing Indemnity Insurance scheme. The government was forced to become the guarantor after all other insurers pulled out of this market 15 to 20 years ago and QBE have been ruling the roost since then.
I think we really need to direct the request for another insurer to the governmnet and not to QBE as only the Government can introduce another insurer. There may also be an issue with introducing another insurer as QBE may pull out all together???
It feels like QBE are the ones dictating who gets insurance and who doesn’t and it feels like they are trying to push the small to medium builders out of the market so the Big Boys have less competition.
I am not sure if you are aware but there are 3 Levels. W – the least risk and the cheapest. X – medium risk, and Y – the highest risk and most expensive premiums. The vast majority of small to medium builders are now in category Y which is the highest risk and the most expensive, which is due to the losses within the Building Industry over the past 3 years.
As you will see for a $500k building contract you will pay the following amount as a Builder for each category. I have attached the statewide premiums for your info. (please do not distribute this info as it is for our info only.)
Category W – $2,798.27
Category X – $3,682.59
Category Y – $5,829.03
Please note that most of the large Builders are not on the same policy as all other builders and pay a significantly lower insurance amount than what all of the small to medium guys pay. I have heard that that ABN Group are somehow self insured and have a very low premium for their Housing Indemnity Insurance due to their assets and their size.
I think we really need to direct the request for another underwriter to the government and not QBE.
I think we need to be bringing to the governments attention that the small to medium building companies have borne the brunt of the financial losses caused by the Government Stimulus and the fixed price contracts and a recovery package must include consideration for this sector of the market. Also the fact that QBE are restricting these builders from recovering by restricting the new profitable contracts that they need to assist in their recovery.
Name and address supplied