As many as one in five building certifiers and surveyors have either left the industry or have reduced the scope of their services on account of the crisis in professional indemnity insurance, a new survey has found.

Conducted by the Australian Institute of Building Surveyors (AIBS), the survey of building certifiers and surveyors received around 350 responses.

Findings were startling.

In particular, it revealed that:

• More than one in ten (11. 24%) building surveyors have ceased providing statutory building surveying services over the past 12 months due to problems with PI insurance. This figure consists of 5.04 percent who have left the profession, 4.26 percent who were unable to obtain insurance cover and 1.94 percent whose cover was not renewed.
• In addition to those who have left the industry, nearly one in ten (8.91%) have reduced the scope of services they offer due to restrictions on their PI insurance cover
• All up, the combined effect of the above two points means that more than one in five certification firms have either ceased to provide statutory building certification services of have curtailed the extent to which they do so.
• Exclusions incorporated into PI policies extend far beyond combustible cladding and include swimming pools, swimming pool fences, farm buildings and commercial installations such as wind farms.
• Even among surveyors who are able to obtain insurance, many say premiums and excesses are such that continuing in business over the medium term is not worthwhile.
• In some smaller projects, insurance premiums and excesses are such that certification costs now exceed the overall project value.

All this is having both an immediate impact and creating long-term uncertainty about the future of private building certification in Australia.

On the immediate impact, consequences are being felt by private homeowners and larger developers alike.

For private home-owners, there have been cases where they have not been able to obtain sign-off on newly built swimming pools.

For developers, many have had projects disrupted due to the loss of their surveyor part way through their development.

Where this happens, finding alternative surveyors is difficult as many are told they will not be insured for taking on projects which have been commenced by other surveyors.

Longer term, there are ongoing concerns about the viability of private certification.

According to the survey, some certifiers have chosen to accept their unworkable insurance whilst they hope for change.

Others say they are buying time whilst they develop an exit strategy.

Around Australia, the crisis in professional indemnity insurance for building certification has intensified over recent years as insurers have exited the market amid concerns over liability in the wake of the Lacrosse and Grenfell fires and the subsequent discovery of flammable cladding on thousands of buildings.

At the same time, there has been a loss of confidence surrounding the overall quality of Australia’s building regime and the level of non-compliance with the National Construction Code.

This has seen premiums and excesses skyrocket and insurers refuse to provide cover without exclusions.

As noted above, these exclusions are now extending beyond cladding and are covering residential swimming pools, commercial installations such as wind farms and farm buildings.

To address these issues, the Building Minsters Forum reached an agreement in July to establish a temporary implementation team within the Australian Building Codes Board to develop and report on a national framework to guide the consistent implementation of recommendations from the Building Confidence report prepared by Professor Peter Shergold and lawyer Bronwyn Weir.

The BMF also agreed to release an options paper for targeted consultation with insurers and the building industry which would set out a pathway for professional standards schemes and alternative insurance options.

A further meeting last week saw the BMF agree to meet with the Insurance Council of Australia in February to discuss options to improve the cost and availability of PI insurance.

That has fallen short of action demanded by the AIBS, which has called for a national and unified approach to address the rectification of flammable cladding on existing buildings.

As things stand, the Commonwealth has insisted that individual states are responsible existing building rectification.

That far, only Victoria has accepted financial responsibility for dealing with flammable cladding and has set up a fund to cover rectification costs.

In other states, owners are forced to cover costs themselves and to seek compensation from those holding insurance.