NSW building businesses warned for lacking mandatory insurance
NSW building businesses warned for lacking mandatory insurance | Insurance Business Australia
Insurance News
NSW building businesses warned for lacking mandatory insurance
Regulator to audit more firms
Insurance News
By
Roxanne Libatique
The State Insurance Regulatory Authority (SIRA) has flagged concerns with nine construction enterprises involved in over a hundred home construction projects in New South Wales for their failure to secure mandatory home building compensation (HBC) insurance.
This lack of compliance places homeowners at a financial disadvantage, particularly at risk of deposit losses in the event of the firm’s financial collapse.
SIRA investigates building businesses’ HBC insurance
Discovered during a SIRA-led audit that kicked off in August 2023, the issue stems from a lack of proper insurance documentation for these construction projects. The audit leveraged a collaborative approach, combining resources and data from the Building Commission NSW and the icare Home Building Compensation Fund’s insurance records.
Dr Petrina Casey, serving as the acting chief executive of SIRA, highlighted the collaborative efforts as a critical measure for safeguarding NSW residents’ investments in home construction.
“By identifying building businesses who do not hold HBC insurance for every job, people who invest their hard-earned money into building their family home are protected,” she said. “Last year, there were 72,422 home building and renovation projects in NSW, relying on HBC insurance to protect homeowners.”
NSW mandates that construction companies obtain HBC insurance for any residential project valued above $20,000 (including GST), with specific exemptions in place. This regulation aims to protect homeowners before the start of construction work, particularly in relation to deposit payments. Despite these requirements, entering into a construction contract without HBC insurance remains permissible.
SIRA audits building businesses
As part of its regulatory oversight, SIRA plans to extend its audit to 100 construction firms, assessing adherence to HBC insurance obligations.
While the initial response to the nine firms under scrutiny was to issue warnings, SIRA has not dismissed the possibility of enforcing stricter penalties, including issuing fines, referring cases to the Building Commission NSW, or taking other regulatory actions as deemed necessary.
In a related move, the NSW Building Commissioner has consulted with the Housing Industry Association and the Master Builders Association, stressing the need for improved compliance with construction standards and HBC insurance requirements into 2024. This initiative aligns with the Building Commission NSW’s recent authority expansion in December 2023, allowing for more comprehensive audits of Class 1 buildings.
Meanwhile, SIRA recently released its regulatory framework, which outlines the regulatory strategies it employs to fulfill its responsibilities under the State Insurance and Care Governance Act of 2015.
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