Domestic building insurance premiums continue to fall
16 January 2020
Average insurance premiums covering homeowners for problems when a builder dies, disappears or goes out of business are at their lowest level since 2012.
The commission’s director of pricing, Marcus Crudden says average premiums fell by more than 15 per cent in two years.
“Average premiums peaked in 2016 at $1,089 before falling to a seven-year low of $835 in 2018”, he said.
This fall coincided with the establishment of a new sales platform by the Victorian Managed Insurance Authority and new providers coming in to offer this type of insurance.
The report also shows:
49 per cent of claims made to date relate to structural defects with the average cost of finalised claims around $36,823 per dwelling.
the number of claims has stayed low with less than 1.5 per cent of certificates to date resulting in a claim
insolvency is the most common reason for claims
the number of certificates issued for registered builders has increased steadily since the scheme started but the number of policies issued for owner builders has fallen
sixty-six per cent of certificates issued in 2018 were for new dwellings (52,681 certificates out of a total of 80,366)
the total value of insured projects exceeded $20 billion in 2018.
Domestic building insurance scheme performance
Total and average premiums for registered builders, January 2005 to June 2019
Calendar year
No. of project certificates
Premiums
($m)
Ave. premium of a project certificate
Value of project certificates
($m)
Ave. project value
($000)
Ave. premium per $1000 project value
2005
42,556
27.4
$644
6,839
161
$4.01
2006
47,337
28.3
$598
8,035
170
$3.52
2007
50,574
27.3
$540
8,779
174
$3.11
2008
49,946
25.2
$504
8,954
179
$2.81
2009
58,525
32.0
$546
10,718
183
$2.98
2010
62,414
39.7
$636
12,195
195
$3.25
2011
59,256
42.3
$714
12,059
204
$3.51
2012
55,918
44.9
$804
10,917
195
$4.12
2013
59,055
52.9
$896
11,609
197
$4.56
2014
64,917
65.9
$1,015
13,828
213
$4.76
2015
69,247
73.9
$1,067
15,750
227
$4.69
2016
72,959
79.5
$1,089
17,657
242
$4.50
2017
78,391
73.8
$941
19,731
252
$3.74
2018
80,366
67.1
$835
20,616
257
$3.26
2019
(Jan-Jun)
35,677
30.2
$848
9,312
261
$3.25
* Domestic building insurance claims data is not considered final for at least seven years as claims can be made for up to six years after building is completed. Therefore the number of claims from 2012 to now may still increase.
