Victorian Government Proposes Insurance Monopoly for Construction Industry
The Victorian parliament is set to vote on legislation that could establish a government-run insurance scheme for low-rise residential buildings, effectively ending private insurer participation in the industry. The proposed Building Legislation Amendment (Buyer Protections) Bill 2025 aims to strengthen protections for homeowners against building defects and unscrupulous builders.
Industry stakeholders, including Assetinsure, the sole provider of domestic building insurance in Victoria and South Australia, have expressed concerns about the government’s plan. Mark Sinfield, head of construction warranty insurance at Assetinsure, argues that the proposed government monopoly on insurance will not reduce building defects and may even facilitate ‘dodgy operators’ while punishing reputable builders.
Under the current system, builders are required to purchase construction warranty insurance on behalf of homeowners. The proposed statutory insurance scheme (SIS) would replace this system with a government-administered model, eliminating private insurer involvement. Sinfield contends that this change could increase costs for taxpayers and fail to address the root causes of building defects.
Alternative Solutions Proposed
Sinfield suggests that Victoria could learn from other states’ approaches to addressing building defects. He points to New South Wales’ regulation of trades and Queensland’s licensing of site supervisors as potential models for improving building quality. Additionally, he advocates for increasing mandatory inspection stages during construction, as Victoria currently only requires four inspections – a practice he describes as ‘insane’ given the complexity of modern building projects.
The opposition and some industry stakeholders have been lobbying against the bill, with Assetinsure engaging in what Sinfield describes as ‘probably the most we’ve ever done in terms of lobbying and engaging with ministers.’ Some builders, like Carringvale Construction Management, have expressed concerns that the new regulations could drive them out of the Victorian residential market due to increased costs and red tape.
However, not all industry groups oppose the bill. The Australian Institute of Building Surveyors (AIBS) and the Association of Consulting Architects (ACA) support the legislation, arguing it will hold registered builders accountable for their work and lead to earlier resolution of building disputes.
As the Victorian parliament prepares to vote on the bill, the debate continues over the best approach to protecting homeowners and improving building quality in the state.
