The State Government, prior to the election asked us all to tell us “what you think about Home Building Protection”.  They prompted us with “some ideas you might be interested in discussing include”:

•    the current building indemnity insurance framework
•    the current regulatory framework
•    the current level of information available for consumers and builders
•    suggestions for improvements in the above areas.

The enquiry has been prompted by the withdrawal last year of the two remaining private insurers administering the Government’s building indemnity insurance scheme. Since 2010 when construction activity plummeted in South Australia one by one the insurers have left the industry. The insurance products offered became unsustainable in the wake of a significant increase in builder insolvencies on the back the downturn in building activity and an increase in consumer claims.

The Government of South Australia entered into short term reinsurance arrangements with these insurers to ensure continuity of cover fir builders and consumers while it developed a long term solution to the private market failure.

The Government recognised that the answer lies not just in how to provide protection for home owners engaging in building contracts. It recognised that front end home building protections, such as licensing, supervision, and dispute resolution, can have an effect on the number and size of insurance claims.

So a wide ranging review is underway conducted jointly by the South Australian Government Financing Authority (a division of the Department of Treasury & Finance) and Consumer & Business Services (a division of the Attorney General’s Department).

The Government is looking to develop a better and holistic building protection solution and is seeking input from interested parties. They have recognised that home building protection falls into two parts, the front end and the back end protections.

The back end protection will focus on alternative insurance models including:

ü  Mandatory first resort scheme,

ü  Mandatory last resort fidelity fund,

ü  Voluntary insurance,

ü  The split risk model

They will also consider government versus private market administered schemes.

 

I believe it is at the front end they can make most progress to facilitate a simpler easier to navigate process for Consumers. The front end provides not only this but well-constructed could reduce the incidence of claims against building indemnity.

This review will focus on:

ü  The licensing of builders and supervision of building work,

ü  The requirements of a building contract,

ü  The dispute resolution process.

As a building inspector who is exposed to some of the communication failings that occur in the industry I fully support the review. In particular I believe it is prudent for the building inspection industry to comment on the Government’s review.

I have found that when home owner engage a building inspector to oversee construction of their project disputes reduce dramatically and/or are more swiftly resolved. An independent inspector can oversee much more than a Council will in their mandatory inspections.

A building inspector will potentially pick up defects that both the builder (inadvertently or otherwise) and the client (through lack of knowledge). This helps to alleviate problems later in the project. The Inspector can also reassure the Home Owner when the Home Owner believes there may be a defect when none exists. And this assists the Builder against potential mistrust.

I would trust that the Government can and will recognise that independent building inspections are a valuable contributor to reducing claims by Home Owners against Builders. This could be either by way of mandated inspections or encouragement by the Government and the Building Industry of the benefits of using independent Inspectors.

You can participate by going to the website www.saplan.org.au/yoursay/home-building-protection

Check out the site and provide your thoughts.

This will help to inform and improve what we have for all, Consumers, Builders and Subcontractors alike.