I seek leave to make an explanation before asking the Minister for Consumer Affairs a question about building indemnity insurance.
The Hon. J.M.A. LENSINK: It is critical that today is the last day of the financial year, in that Vero, which is the insurance brand of Suncorp, which I understand to be the sole insurer to have a deed of agreement with the South Australia government, has indicated that it wishes to withdraw from this market by today's date. I understand that insurers QBE and Caledon would both like to enter the South Australian market, and I understand they have approached the South Australia government to enter into a similar deed of agreement.
Honourable members may have seen a report recently on the Western Australian edition of Stateline, which highlights the difficulties some builders are going through in obtaining building indemnity insurance, which is having an impact on consumers and is stalling a huge number of developments in that state. It has been suggested by the Western Australian MBA branch that the government remove the compulsory nature of the insurance in that jurisdiction. My questions are:
1. Has the South Australian government reached an agreement with QBE and Caledon to enter the South Australian market before Vero exits? If not, who will provide that insurance in South Australia as of tomorrow?
2. Will the minister consider reviewing compulsory building indemnity insurance in light of this near crisis?
The Hon. G.E. GAGO (Minister for State/Local Government Relations, Minister for the Status of Women, Minister for Consumer Affairs, Minister for Government Enterprises, Minister for the City of Adelaide) (14:30): I thank the honourable member for her important questions. Indeed earlier this year Vero Insurance Limited advised that the government will be withdrawing from the builders warranty insurance market effective from 1 July 2010, leaving only two insurers—QBE and Calliden—remaining in the market from this point onwards.
There has been some concern from the industry that builders may not be insured when Vero exits the builders warranty insurance market, and the state government, I am pleased to say, has entered into a heads of agreement with both remaining insurers—QBE and Calliden—as to the basis on which they would take over Vero clients. A more formal agreement will be negotiated in the near future. The final terms of that agreement with QBE and Calliden are commercial in confidence, so I am not able to discuss those details here in this place.
I can say, however, that the terms are designed to ensure stability in the building industry and to allow the builders warranty insurance market some time to adjust to the significant insurers leaving the marketplace. As a result of the in-principle agreements, QBE and Calliden are now working on the transfer of Vero clients so as to minimise the impact of Vero leaving the marketplace and maximising insurance protection for builders and thereby protecting consumers whose building may not be completed and who may be left out of pocket. This will ensure that builders who were customers of Vero will continue to have cover after 30 June 2010.
I understand that New South Wales, Victoria and Western Australia have dealt with this issue and used different methods in each state, and South Australia believes that the agreements we have put in place will satisfy the industry needs, afford the protections required and provide the stability to the industry that is in the interests of everybody.
The Hon. J.M.A. LENSINK (14:32): By way of a supplementary question arising from the answer, the minister in particular indicated that clients would be transferred from Vero to other insurance providers. Will she advise whether new clients who may be seeking building indemnity insurance as of tomorrow will also be covered by that arrangement?
The Hon. G.E. GAGO (Minister for State/Local Government Relations, Minister for the Status of Women, Minister for Consumer Affairs, Minister for Government Enterprises, Minister for the City of Adelaide) (14:33): It may be best if I take that question on notice and bring back a response. I am not absolutely sure of the provisions for new people entering the marketplace. I believe there are provisions there, but rather than speculate I will double-check my facts and bring back a response.
Thursday 11 November 2010
In reply to the Hon. J.M.A. LENSINK (30 June 2010).
The Hon. G.E. GAGO (Minister for State/Local Government Relations, Minister for the Status of Women, Minister for Consumer Affairs, Minister for Government Enterprises, Minister for the City of Adelaide): I am advised that:
1. Whilst the Heads of Agreements are in place, and until more formal agreements are put in place, in certain circumstances, including meeting insurer eligibility criteria, a new builder can be covered.
2. As I previously indicated to Council, the details of the Heads of Agreements with QBE and Calliden are commercial in confidence. However, the Government's entry into these arrangements was to ensure stability whilst the market in South Australia adjusted.