The Australian Institute of Building Surveyors (AIBS) has hit out at governments over slow progress in tackling the professional indemnity (PI) insurance crisis affecting its industry.
The situation has worsened after Landmark Underwriting, then the last remaining provider of exclusion-free PI covers, pulled out in July to reduce its exposure to the problem-plagued building sector.
According to AIBS, insurers are starting to also review their risk appetite for practitioners involved with building projects of three storeys or higher as well as other major works.
“Since July, the PI insurance market has tightened even further,” the AIBS says in its latest update.“We have been advised… that insurers who remain prepared to underwrite building surveying risks have indicated they want to reduce their exposure and, in some cases, withdraw completely from this particular area.
“This now means that any building surveying firm that has, or has had, projects over three storeys or other large projects, are going to find it increasingly difficult or may even not be able to obtain PI insurance.
“A number of firms have already advised they have been unable to obtain insurance. This has resulted in drastic measures including searching offshore for insurance.”
In a recent example, a policy that previously cost $80,000 saw a sharp increase to $550,000.
“This is not sustainable,” AIBS says.
State and territory governments must step up their act, the group says, adding it has raised the urgency of the matter to the respective ministers in charge of the portfolio.
“Insurers are not going to come back into the market without better regulation by governments and higher quality of work by building professionals,” AIBS CEO Brett Mace told insuranceNEWS.com.au today.
“While industry professionals must work harder to ensure high quality of their work, governments must accept it is their own poor regulations and their failure to properly oversee the industry that have played a role too.”
On the cladding crisis, he says the “issue of responsibility between governments and the insurance industry for external combustible cladding rectification continues to remain unresolved”.
“AIBS has raised this with ministers and their advisers. The response has varied from jurisdiction to jurisdiction. Until all jurisdictions get on the same page, there won’t be any meaningful remedy.”
The Insurance Council of Australia says insurers are working closely with governments on the PI situation.