BARTERCARD South managing director Rod Brown has entered into a joint venture deal with eastern states insurer Reward Insurance in an attempt to secure business left behind following the withdrawal of Dexta Corporation from the market.
Mr Brown has taken a 49 per cent interest in Reward Insurance’s expansion moves into WA, just days after Dexta sent shock waves through the building industry with the announcement it would no longer insure the housing industry.
Reward hopes to pick up at least a portion of the 45 per cent market share Dexta enjoyed following the collapse of HIH last year.
In return for the share in the business, Mr Brown has agreed to fund all costs until the business, branded as Reward Advantage WA, becomes profitable using the Rockingham Bartercard offices as its headquarters. However, Mr Brown said the Reward business initially would operate separately from Bartercard.
About $75,000 has been allocated for administration and marketing for the first six months.
“We have been working in setting up Reward insurance for the past two months. The collapse of Dexta has happened quicker than anyone imagined, so we have had to move in very quickly,” Mr Brown said.
“If we don’t move quickly the building industry is going to be hit very severely. We want to protect the livelihood of WA builders.”
Mr Brown also has had to act quickly to head off any move by the Government to get directly involved in the insurance business.
Reward Insurance proprietor and managing director Murray Nugent said that, with more than 20 years’ experience, its was unlikely that Reward would suffer the same fate as HIH and Dexta.
Home warranty insurance is mandatory for all residential work over $5,000 and covers against bad workmanship from builders and in the event of builders going bankrupt during construction.
The builder takes out the policy on behalf of the homeowner and is paid by the homeowner as part of the overall cost. Housing indemnity policies have gone up 10-fold in the past five years, and more than 500 per cent since the collapse of HIH.
The Master Builders Association of WA has repeated calls for the State Government to immediately step in to address the crisis in the housing industry.
MBA director Michael McLean said it was a “matter of utmost priority and urgency”.
He said the Government should immediately introduce a moratorium on indemnity insurance.
