The Government of NSW has set up a Ministerial Advisory Panel to advise on the planned introduction of a 10-year Liability Insurance (DLI) into the Australian market.
Minister for Better Regulation and Innovation Kevin Anderson said DLI is a special type of insurance taken out by the developer to provide up to a 10-year warranty against major defects.
“The NSW government has embarked on revolutionary reforms in the building and construction sector aimed at promoting a safer and stronger industry,” he said.
Anderson said the state government has been laying the groundwork for DLI, which is not currently available in Australia, over the past 18 months through reforms related to the Building Assurance Solution and the Risk Rating tool.
“Our leading-edge reforms will explore the potential for insurers and developers to provide a consumer insurance safety net that is currently lacking in the multi-unit high-rise sector,” he said.
What is the DLI for?
Mr Anderson said a DLI policy would cover potential serious defects that could potentially occur 10 years after a project is completed.
“This would give consumers confidence to buy a multi-unit housing development in NSW,” he said.
In addition, the introduction of this type of insurance would address the illegal practice of “phoenixing”, as only developers who demonstrate a commitment to a long-term presence in the market can obtain a policy.
“Insurers will assess developers’ rating scores, their corporate governance and balance sheets. While good quality work will be guaranteed, poor quality developers will find themselves drifting out of the market,” said Mr. Anderson.
“Establishing a market for DLI would mean weeding out untrustworthy developers, creating a stronger, more competitive market where consumers can buy with confidence.”
Setting up the advisory panel
The state government has contacted key stakeholders in the construction industry, insurers, strata agencies and government representatives to form the ministerial advisory panel.
The panel will be chaired by Insurance Council of Australia (ICA) president Gary Dransfield, who said DLI would improve consumer protection against major defects.
“I am delighted to be able to assist the NSW government and industry participants in developing an insurance proposal that will build on the reforms already implemented and further enhance protections for apartment buyers,” he said.
ICA CEO praised the NSW government’s efforts to form an advisory panel.
“The ICA supports the establishment of the Decennial Liability Ministerial Advisory Panel and congratulates the NSW Government on pursuing further industry-leading building reforms aimed at improving the quality of construction products produced in NSW,” he said.
Photo by Brandon Griggs on Unsplash.
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