This article is from the Australian Property Journal archive
Exclusive: Housing Industry Association chief Dr. Ron Silberberg has been caught out in a massive contradiction after yesterday blaming state governments for the builders warranty insurance scandal that continues to spread across Australia.
Back in July 2002, the HIA successfully lobbied State governments to restrict consumers’ ability to claim on warranties while at the same time endorsing a 200% rise in premiums by the implementation of what was known as the HIA’s ‘10 point plan’. Australian Property Journal was yesterday given a copy the original 10 point plan.
In September 2003, at a HIA joint media conference with insurers and government, Dr. Ron Silberberg hailed the government approval of last resort insurance stating: “It is also very important to mention the role of the state governments, whose reforms of home warranty have created a far more positive regulatory environment”.
However, yesterday in Australian Property Journal, Dr. Silberberg 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.
As pointed out in Australian Property Journal yesterday, the HIA has banked millions of dollars worth of “commissions” from insurance companies every year as a result of builders warranty insurance.
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.”
“Today’s announcement marks the beginning of the new home warranty environment that recognises the financial strength and management capacity and professionalism of the industry, as well as the need for cost effective protection of new home buyers.”
Dr. Silberberg said at the Melbourne media conference on 29 September 2003 that “despite the turbulence over the past two years, HIA, through its insurance partnerships Royal & SunAlliance and Aon, has been able to retain the availability of home warranty insurance in Australia.”
“The spectacular growth of residential building activity has been a credit to all who have worked so hard on providing solutions for home warranty. And naturally I am particularly proud of the staff in HIA who have worked assiduously with Royal & SunAlliance and Aon to provide those solutions for home warranty,” he said.
“It is also very important to mention the role of the state governments, whose reforms of home warranty have created a far more positive regulatory environment, not just for existing underwriters but for potential entrants to the home warranty market.
“The successful expansion of industry activity over the past couple of years with, notably, a significant reduction in the incidence of builder failure, combined with a supportive regulatory environment, has made possible the new deal for home warranty that we are announcing today,” Dr Silberberg stated.
The HIA chief claimed: “Now, in response to legitimate issues raised by HIA’s builder members, the association together with Royal & SunAlliance and Aon, began the path of creating a new business model for the future delivery of home warranty insurance to Australia’s housing industry. The guiding principles driving the new warranty package have been enhanced service delivery for builders; the financial viability of a private home warranty market; and the integrity of the essential consumer protection.”
How times have changed.
Yesterday, the HIA’s chief Dr. Silberberg was attempting to distance himself from builders warranty insurance and government legislation that now forces consumers to buy building warranties.
Unfortunately, hundreds of Australian families cannot do the same.
The HIA’s words of 2003 have turned into a legal nightmare for many Australians now going broke fighting insurance companies for payouts.
Australian Property Journal has confirmed builders warranty insurance will become a major problem for the Victorian Bracks government during the November election with major rallies expected against the Victorian government over what Choice Magazine describes as “cover you can’t rely on”.
State and Federal governments remain inactive over the warranty issue while an estimated 250,000 warranties continue to be written every year.
Meanwhile, several leading law firms are circling the mess of builders warranty insurance assessing the possibility of class or group actions.
By Nelson Yap
