Insurance premiums for surveyors, engineers and architects have risen substantially in the wake of the discovery of serious defects at apartment buildings in NSW and Victoria related to flammable cladding problems.
Monday, Industry Minister Karen Andrews blasted insurers that had “pocketed premiums” in positive times but turned away from builders when the defect situation occurred.
The Insurance Council of Australia hit back Tuesday as state governments – which oversee responsibility for construction policy throughout Australia – told the sector that a resolution would be reached at a Thursday meeting.
A spokesman for the Insurance Council said that insurers reject accusations of inappropriate behaviour, citing the fact that insurers did not build nor certify the buildings. They say that reform is needed in the building and construction sector.
Engineers, architects and surveyors all complain about raised premiums, which the federal government believes threaten the economy as a whole.
Engineers Australia declared that certain members’ private indemnity insurance premiums were rising and that they’re being faced with more restrictions – especially fire engineers who work with cladding.
One fire engineering firm asserted that its insurance went up seven-fold to $470,000 this year, and its excess ballooned to $250,000.
These increases could lead to lowered staff salaries and higher prices and fees charged to clients.
Australian Institute of Architects national president Helen Lochhead also asserted that building companies could go out of business due to increased insurance fees—this circumstance being due to the government’s failure to address construction issues like flammable cladding.
The peak architect body said that insurance products like public liability insurance and insurance covering directors and officers of practices were also elevating in cost.
The Andrews government said on Tuesday that it would invest $600 million in the repair of private buildings across Victoria still coated with flammable cladding.
A request for the federal government to cover part of the cost was declined by Treasurer Josh Frydenberg, with the Coalition instead requesting that states and territories participate in a national taskforce that helps to expedite the reform process.
NSW Premier Gladys Berejiklian said that the state would support a national overhaul of the building industry, and promised soon to appoint a state building commissioner to deal with the residential unit crisis.
Peak construction bodies Monday asked for uniform laws across the nation to restore confidence in the building sector, which represents 7 per cent of Australia’s GDP.
Recent structural issues have included the abandonment of a Zetland apartment building due to water and fire safety defects, along with the forced evacuations of Sydney Olympic Park’s Opal Rower on Christmas Eve and the Mascot Towers on Burke Street last month.
According to court judgments, a minimum of $30 million has been paid in the last five years to owners of defective Sydney buildings.
The industry is also struggling with the cost of removing and repairing buildings laden with combustible cladding, in the wake of fires at Melbourne’s Lacrosse and Neo200 apartments.