PI insurance: Time for a national approach
Throughout 2019, the VBA has been working closely with DELWP, industry member organisations, insurers and brokers to assess the status of the professional indemnity market.
Unfortunately, fewer insurers remain in the market, resulting in further tightening of availability.
In addition to increased premiums and excesses, insurers have been proposing policies with significant – and potentially unworkable – exclusions.
A Ministerial Order effective in August allowed policies covering building surveyors and inspectors to contain a provision excluding liability for external wall cladding.
It has become apparent that some insurers are now imposing cladding exclusions on other practitioners and this has been subject to recent review. In addition, some insurers are proposing policies with other exclusions, such as for swimming pools that do not meet currently legislated registration requirements. The pool exclusion is being applied by a single insurer in response to a previous claim and brokers have confirmed that this is typical nationwide and not in response to recent Victorian pool legislation changes.
The VBA recommends that practitioners engage with brokers well before PI insurance expiry to negotiate the best possible outcome. There also needs to be industry awareness of the significantly increased premium levels now applying to PI insurance in Australia and the likely impact this may have on practitioner fees in future. The VBA continues to work closely with DELWP and other jurisdictions and is aware of the pressures this issue creates for practitioners.
Mandating a consistent, nationwide requirement for professional indemnity cover was a recommendation from the 2018 Building Confidence report. It will take a nationwide approach for these issues to be fixed.