We report every two years on the adequacy and validity of the Victorian Managed Insurance Authority domestic building insurance (DBI) premiums.
Domestic building insurance premium validation reports
Overview
Every two years, we report on the adequacy and validity of the Victorian Managed Insurance Authority’s (VMIA) domestic building insurance (DBI) premiums.
DBI is taken out by builders on behalf of home owners. It is insurance to provide compensation to home owners for losses resulting from non-completion or defects in domestic building work where the builder cannot be pursued directly because they have died, disappeared, or become insolvent.
In Victoria, it is compulsory for builders to obtain DBI in all domestic construction contracts over $16,000 in value.
View the latest premium validation review summary report
This summary report outlines our main conclusions about the adequacy and validity of the Victorian Managed Insurance Authority’s (VMIA) domestic building insurance (DBI) premiums for the period 1 July 2016 to 30 June 2018.
Findings from our 2016-18 summary report
Domestic building insurance premiums are sufficient
DBI premiums are at sufficient levels to cover expenses, risks and long-term claim costs. While claim costs increased during our 1 July 2016 to 30 June 2018 review period, the costs associated with handling and administering claims (expenses) declined significantly.
The VMIA's premium coverage is not excessive
Domestic building insurance premiums are reasonable and not set above the level required to cover expenses, risks and long-term claims costs. The VMIA decreased its premiums by 22.5 per cent on 1 July 2017 due to expected large cost savings from its new multi-agent distribution model.
The VMIA’s underwriting standards conform to commercial standards
The VMIA’s underwriting standards conform to commercial standards. While the VMIA provides DBI to some builders that could be regarded as 'higher-risk', it manages the additional risk by placing conditions on their eligibility for DBI. This is possible, given the VMIA's position as the main provider of DBI.