COMMERCE Minister Troy Buswell has assured the state’s housing industry and homebuyers that building activity in Western Australia will not stop when the nation’s largest builders’ warranty insurer withdraws from the market later this year.
Mr Buswell met with housing industry groups last week to explore the state government’s options post June 30, when Vero Insurance withdraws from the market.
Vero’s exit, which was prompted by the New South Wales state government’s decision to underwrite builders’ warranty insurance in its own right from July 1, would leave the builders’ warranty insurance market in WA with one major provider, QBE.
QBE currently holds a 30 per cent market share in WA, with Calliden holding a 5 per cent share.
Master Builders Association WA director of housing and economics Gavan Forster, who attended the meeting with Mr Buswell, told WA Business News the consequences of leaving QBE with a virtual monopoly would be harmful to the industry.
“Some people thought that the existing scheme should stay there, albeit with only one insurer of any note, which is QBE.
“That would be something that (the MBA) would not favour, because it creates a monopoly situation, or a virtual monopoly.
“Our view was that the government has to decide whether it’s in or out, there is no halfway, as the current situation is.
“What you’ve got at the moment is a law being administered by the private sector, and that’s just no good, it’s no good for the industry, because when the private insurers decide to leave as they did in 2000, and as they are doing now, it leaves the builder with nowhere to go.”
Prior to the meeting last week, Mr Buswell told a press conference the state government had two options to put in place a new housing indemnity insurance regime; either follow the Tasmanian model, where there is no compulsory builder’s warranty insurance regime; or follow the lead of New South Wales.
But Mr Forster said he doubted the government would step into the market, and the MBA would instead be pushing for a voluntary scheme.
“My reading of the meeting was that they weren’t favouring that sort of scheme, a highly intrusive role,” Mr Forster said.
“Our view was that it should be a voluntary scheme, and if anything, there should be protection for first homebuyers.
“But if there was going to be a state run fidelity fund, it would be run through the building commission, and to give builders the cover they would require periodic reporting of what their financial status was.”
