This article is from the Australian Property Journal archive
CONSUMER advocates have raised the question of whether the Housing Industry Association misled the Senate Inquiry into Home Warranty Insurance last week after issuing sets of diverging figures comparing its favoured insurance scheme with the Queensland model.
Confusion came last week following the HIA’s recent sudden appearance at the Senate Inquiry, which its chief executive at previously labelled a ‘Kangaroo Court’, and a media release issued by the HIA’s New South Wales boss Graham Wolfe.
The media release also attempted to compare the HIA-Vero insurance ‘last resort’ scheme with the Queensland ‘first resort’ model favoured by the majority of builders. Choice magazine has labelled the last resort scheme worthless.
The HIA in its submission No 60 to the Senate included a table on Home Owners Warranty Insurance as a percentage of a new home’s medium price.
“Firstly you cant compare ‘last resort’ against ‘first resort’, to do so is being deceptive and misleading as it is like comparing premium costs for comprehensive car insurance to compulsory third party – i.e. the comparison is completely irrelevant as the products are completely different, although the cover ostensibly overlaps on key areas. Premium cost becomes irrelevant if you can’t claim on it,” Builders Collective National President, Phil Dwyer told Australian Property Journal yesterday.
“Secondly, their figures showed the medium price of a home in the three major States and they applied the cost of warranty to that medium price which based on their figures demonstrated a dramatic fall in warranty premiums in NSW and Victoria while showing an increase in Queensland.
“The greater majority of builders from the outset (95%) have been rated in Category 3, therefore it is appropriate to apply that rate as the average rate for a medium home,” Dwyer said.
“The premium costs as presented by HIA do not exist on any rate card and even if you take the lowest rate (Cat 1) of all the categories it shows the premium cost for a $265,000 home at $ 1,738.00.” Dwyer added.
“HIA have all these rate cards readily available being the majority owner of HIA Insurance Services that operates out of their own offices in each State.”
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Medium Price As stated by HIA |
Premium cost as presented to the Senate by HIA |
QBSA First Resort Insurance Premium Table |
NSW Vero Last Resort Rate Card 2006 Cat3 |
NSW Vero Last Resort Rate card 2008 Cat3 |
Vic HIAS Vero Last Resort rate card 2006 Cat3 |
Vic HIAS Vero Last Resort rate card 2008 Cat3 |
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Sydney |
$265,433 |
$796 |
$2,101 |
$3,969 |
$4,024 |
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Melbourne |
$232,649 |
$661 |
$1,888 |
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$2,014 |
*$2,014 |
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Brisbane |
$236,365 |
$1,789 |
$1,914 |
$3,100 |
$4,024 |
$2,014 |
*$2,014 |
The table supplied by consumer advocates clearly shows the HIA medium price and premiums in green and the prices builders pay in each of the States based on the rate cards provided by Vero, and include all Industry Association, plus Loyalty Discounts and Taxes.
The HIA is a beneficiary of ‘kickbacks’ and licence fees from major home warranty insurance group Vero. It is believed a significant portion of the HIA’s yearly revenue comes from the current insurance scheme it is attempting to protect. The HIA also co-owns HIA Insurance Services, a private broker to the largest home builders warranty insurer in the country.
After issuing his media release last week, Wolf told the Sydney Morning Herald that: “there was no requirement on the association to disclose its financial interests in any of the media statements it released”.
Ironically, the Australian Labor Party, which controls the Inquiry into the warranty scheme, are the owners of several million Suncorp shares. Suncorp own Vero.
Australian Property Journal
