Construction activity could grind to a halt and up to 30 percent of insurance renewals for private building certifiers and surveyors may not be renewed as early as July unless a solution to the insurance crisis facing building surveyors is found soon, building industry lobby groups warn.

In a statement following a meeting of construction industry leaders last week, Master Builders Australia chief executive officer Denita Warn says urgent action is needed to address a crisis within the market for building surveyor insurance which has seen insurers either refuse to provide insurance to building surveyors or offer insurance only with exclusions for items such as cladding.

Warn’s call comes amid reports that the last underwriter to offer insurance which covers cladding, Landmark Underwriting, will cease to do so from July 2nd.

“The leader of Master Builders Associations from around the country are gravely concerned,” Warn said.

“Up to 30 percent of insurance renewals for building certifiers and surveyors may not be renewed as early as July and construction activity will grind to a halt if a solution is not found urgently.”

“Insurers as a result of a number of fires around the world, including the Grenfell fire in the UK, have elevated risk ratings on cladding affected buildings.  They are declining to provide professional indemnity insurance, offering it with unacceptable exclusions or asking for unaffordable premium increases for building certifier professional indemnity renewals.  As a result, certifiers who are needed to sign-off new buildings are being forced to close up shop.”

“The problem is already causing delays to building projects across the country and will only get worse as more insurers withdraw from the market.”

As is well known, building surveyors – referred to as building certifiers in New South Wales – are responsible for signing off on building permits and occupancy permits.

In order to be registered, surveyors throughout Queensland, New South Wales and Victoria must hold professional indemnity insurance without conditions.

Following both the Greenfell and Lacrosse fires, however, insurers have either refused outright to provide cover or have offered insurance only with exclusions for items such as cladding – an exclusion which means that the insurance does not meet the requirements for registration.

Only one insurer, Landmark Underwriting, offers the unconditional cover needed for registration.

According to the ABC, however, Landmark will cease offering this from July 2nd.

This will mean surveyors across aforementioned states will not be able to obtain the insurance necessary for their registration.

Industry lobby groups have expressed alarm and frustration.

“AIBS is dismayed and frustrated that the situation has reached this point,” the Australian Institute of Building Surveyors wrote in a communique to its members last month.

“For several years, we have warned governments and regulators in all jurisdictions that without a joint industry and government intervention, this outcome was predictable.

“The issue intensified twelve months ago, and a crisis was only narrowly averted when new PI insurance providers were sourced to offer exclusion-free policies. But they too have now exited the market. Since last June, we have increased our efforts to alert authorities in all jurisdictions that this crisis was indeed now within plain sight and it is scandalous that to date no meaningful action has been taken.”

The AIBS says hundreds of its members will have their insurance come up for renewal in coming months.

Should the current situation remain unchanged, these surveyors will not be able to be registered and building projects on which they are engaged will draw to a standstill.

In response, industry lobby groups want action on several fronts.

The AIBS wants governments to investigate a funding model to alleviate pressure on insurers who are currently exposed for the cost of rectification by owners of buildings with external combustible cladding.

The AIBS would also like new legislation which affords private building certifiers similar protection of personal assets as that enjoyed by local government certifiers; a statutory engagement agreement between surveyors and applicants which ensures that surveyors can act in the best interests of the public; and promotion of the AIBS Code of Conduct, mandatory professional development and mandatory annual auditing of surveyors.

As well, surveyors want more accountability throughout the building supply chain.

Master Builders, meanwhile, wants a national pool of qualified engineers to sign off on high-risk components of buildings and a new working group to deliver options to fund rectification of existing buildings with combustible cladding.

Master Builders has also called on state governments to allow temporary licence exclusions for combustible cladding in cases of buildings which are clad with either aluminium composite panels of expanded polystyrene.