Extraordinary Ministerial Construction Council Meeting 18 June 2019
18 June 2019, Brisbane
The Ministerial Construction Council met in Brisbane on 18 June 2019 to continue to discuss the challenge of professional indemnity (PI) insurance for building industry professionals.
The Minister welcomed to the meeting representatives from the Insurance Council of Australia, the Australian Institute of Building Surveyors and the Royal Institution of Chartered Surveyors.
The Council welcomed PricewaterhouseCoopers who presented their analysis and observations of the PI insurance market to date. The Council noted changes in the international PI insurance market particularly for the building and construction segment and the downstream impact this has on the Australian PI insurance market.
The Council acknowledged the reduction of providers of the PI Insurance market over the last decade, and the increases to insurance premiums.
The Council acknowledged that the issue extends beyond the border, with other jurisdictions advising of similar situations.
The Council noted years of under-pricing of the Australian PI market, particularly relevant to private certifiers, with the average insurer losing 16 cents for every dollar earned. Claims are increasing substantially higher than premiums earned and we’re presently seeing a rebalancing of the smaller Australian PI insurance market as part of a global shift.
The Council noted adequate certifiers are insured and can continue to provide certification services ongoing, and also acknowledged the responsibility of Local Government as a certifier of last resort.
The Council noted the progress of the Queensland Government’s Safer Buildings Audit Program, noting 22,000 building owners entered the process and there are currently 17 requiring some form of further action.
The Council agreed to the following principles to address current issues which focus on reducing risk, protecting the interest of consumers, industry and taxpayers and ensuring the safety of building occupiers:
- Government intervention in the insurance market should be avoided (and any measures should mitigate risk transfer to the taxpayer)
- Measures should have appropriate risk and cost profiles, and these should be proportionate with the public good outcomes they achieve
- Measures should not free the insurance industry of any existing obligations, or indemnify professionals for negligent advice or poor conduct
- Measures should support consumer protection, safety in the built environment and financial security for building owners
- Measures should bolster confidence in the building industry regulatory framework
- There is benefit in national consistency where there is a shared commitment to identify and progress actions.
The Council considered to the following proposed reforms and agreed that MCC members will provide formal advice from their organisation’s position by 20 June 2019:
- improve professional standards by vigorously pursuing establishment of a national body
- reduce the risk of certain types of construction by reviewing the use of performance solutions on certain types of buildings
- maintain consumer protection standards by requiring certifiers to hold exclusion free PI insurance
- promote awareness of the regulatory environment, including local government’s certifying role
- consider longer-term solutions to the systemic issues raised by investigating an insurance product modelled on the Queensland Home Warranty Scheme but modified for multi-storey developments.
The Council requested that the Queensland Government call on the Australian Government to immediately progress the permanent labelling of cladding products to ensure the safety of the Queensland community is protected.
The Council asked the Queensland Building and Construction Commission to continue its work, making use of Queensland’s non-conforming building product legislation, and work with the building product supply chain to ensure that product safety obligations are being met, that information to guide builders on the proper use of products is being made available, and no misrepresentations are being circulated in the market.
The Council noted Amendment One to NCC 2016 (effective March 2018) as well as NCC 2019 which clarified requirements relating to combustible cladding in the National Construction Code.
The Minister thanked members for their ongoing commitment to the Council and their contribution to delivering Queensland Building Plan reforms for a safer, fairer, more sustainable building and construction industry in Queensland.
- Last updated:
- 29 November 2019