Business as usual for Home Indemnity Insurance
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A new transitional arrangement with current providers of home indemnity insurance in Western Australia will mean that it is business as usual.
The transitional arrangement gives the Government time to consider and consult on recommendations in the Economic Regulation Authority’s Inquiry into Western Australia’s Home Indemnity Insurance Arrangements, which was tabled in Parliament in September 2013.
QBE Insurance (Australia) Limited and Calliden Insurance Limited will continue to provide home indemnity insurance to the WA market after 1 November 2013 under a transitional arrangement that is based on a model already operating successfully in other states such as South Australia where the State bears the full insurance risk.
Following advice from the Economic Regulation Authority and insurers that the current premiums are unsustainable, premiums will need to rise by 40% in the new year to reflect the true cost of providing the cover to consumers.
While it is understood this premium increase will be of concern to home builders, this change will ensure that the scheme operates more sustainably.
Current insurance premiums in WA do not adequately reflect the actual costs of providing this form of insurance and this is why insurers have been reluctant to remain in the market.
It is in nobody’s long term interest to charge uneconomically low insurance premiums – this is what caused HIH Insurance to fail with disastrous consequences for the building industry.
This transitional arrangement will not change the way builders access cover and they can continue to deal with their insurer or broker as normal.
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