This article is from the Australian Property Journal archive
Facing re-election in a few months, the Victorian Bracks government is running for cover as the growing scandal over builders warranty insurance continues to gather enough pace to become an explosive election issue.
With hundreds of warranty insurance matters presently before the Victorian courts and VCAT, the Bracks government has run for cover not knowing what to do about the disaster of builders warranty insurance that Choice magazine describes as “cover you can’t rely on”.
One senior Victorian government official who told Australian Property Journal yesterday that builders warranty insurance is an absolute farce and a disgrace at all levels of government.
“The fact is it is only harming several hundred families in Victoria, the government doesn’t consider that an election issue, so ignore the problem,” the government official said yesterday.
“People don’t understand what builders warranty insurance and that’s where the problem lies. It is not first resort insurance, it is last resort insurance, which means the builder has to die, disappear of become insolvent for the claim to be approved by an insurance company.
“It’s an absolute farce and the Victorian government does not want to know,” the senior public servant added.
Meanwhile, while hundreds of Victorian families battle international insurance companies in VCAT and the Supreme Court – legal experts believe consumers have no hope of winning – the Bracks government prepares for re-election.
Builders Collective National President Mr. Phil Dwyer told Australian Property Journal yesterday that the matter would become an election issue and the Bracks government has blood on its hands over warranty insurance.
“Mr Hulls, Mr. Thwaites, Mr Lenders and Mr. Bracks prefer to ignore this scandal rather than take action. It is a head in the sand approach that was adopted by this government back in 2003 when the HIA lobbied state government’s to implement builders warranty insurance,” Dwyer said. “It’s been proven builders warranty insurance is a scandal, but the Victorian government just chooses to disgracefully ignore the problem.”
“They are letting hundreds of Victorian families go broke battling insurance companies in the Courts,” Dwyer concluded.
Just recently, the HIA, which originally lobbied for builders warranty insurance and still gets commissions from insurance companies from the sale the worthless “last resort” policies, now believe the warranty system needs a complete overhaul.
Despite the HIA pocketing millions of dollars from commissions on the insurance policies, the “not for profit” organisation’s chief executive Dr. Ron Silberberg recently laid the current debacle of builders warranty insurance directly at the feet of State governments for introducing legislation that demands consumers buy virtually worthless building insurance warranties.
At the 2003 HIA press conference, Victorian Finance Minister John Lenders declared: “…the journey we’ve been on has been one where myself, Mary Delahunty, the Planning Minister, have walked with the HIA in trying to find solutions to what was a problem. So that is the first thing I would like to say here today, this has been a cooperative venture to get where we were. Now, we started that with the ten point plan to keep builders’ warranty going.”
Dr Silberberg stated: “…this is a very positive day for the Australian housing industry and importantly for new home buyers and home renovators. It marks a turning point for home warranty insurance following the collapse of HIH some two years ago and the subsequent withdrawal of the underwriting agency Dexta from the Australian home warranty insurance market.”
Pity neither the Bracks government or the HIA spin can return hundreds of consumers their money or their homes…
By Nelson Yap
