From 2010 to 2018, we reported on the adequacy and validity of the Victorian Managed Insurance Authority domestic building insurance premiums.
Domestic building insurance premium validation reports
From 2010 to 2018, we reported on the adequacy and validity of the Victorian Managed Insurance Authority’s (VMIA) domestic building insurance premiums.
This insurance 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 domestic building insurance in all domestic construction contracts over $16,000 in value.
View our 2016-2018 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
Domestic building insurance 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 domestic building insurance to some builders that could be regarded as 'higher-risk', it manages the additional risk by placing conditions on their eligibility for the insurance. This is possible, given the VMIA's position as the main provider of domestic building insurance.