Growing crisis for Building Certification

30 May 2019

The ongoing cladding problem brought on by building fires around the world, particularly London’s Grenfell and in Australia, Melbourne’s Lacrosse has highlighted the risk to insurers in the professional indemnity (PI) policies they carry. As a result, building certifiers everywhere are facing challenges when it comes time to renew their policies.

Certifiers across Australia, working on all building types, are reporting, at best, significant price hikes when renewing. We’re talking about increases in the order of 400 per cent. Other certifiers are finding that they can’t renew their PI insurance without an exclusion for cladding. Under the current QBCC laws, certifiers cannot have any exclusion on their PI insurance. The price hikes and the exclusions are forcing some certifiers out of business and others to significantly increase their fees.

This is an urgent problem for our industry. Buildings that cannot be certified cannot be built. By the government’s own numbers, 304 of the total 489 certifiers will need to renew their policies by August 2019.

We can expect that builders will soon have problems in getting certification on their projects. The first certifiers are already having their license suspended and for one builder this has delayed final sign off and final payment.

Master Builders, along with other industry stakeholders, has highlighted the problem to government. Government is now considering allowing exclusions for certifiers on their insurance. This should allow those certifiers who don’t work on buildings with a fire safety component to continue to operate.

At best, builders need to be prepared for price increases for certification. At worst, builders need to be prepared to find a new certifier.

You need to check-in with your certifier now to see where they are tracking for their PI insurance renewal: especially for any projects that currently underway.