From 2010 to 2019, we reported on the performance of the Victorian Managed Insurance Authority's domestic building insurance scheme.
Domestic building insurance scheme performance reports
From 2010 to 2019, we reported on domestic building insurance provided by the Victorian Managed Insurance Authority and private insurers.
Domestic building insurance is taken out by builders on behalf of home owners. It covers 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, builders must obtain domestic building insurance in all domestic construction contracts over 16,000 in value.
View our 2018-19 performance report
This is our ninth annual report on the performance of Victoria’s domestic building insurance scheme.
It examines the Victorian Managed Insurance Authority and private insurers’ provision of domestic building insurance, covering:
- the number of eligible builders
- the number of project certificates and policies
- premium levels
- the number and amounts of claims.
Findings from our 2018-19 performance report
Insurers may have incurred some DBI losses
We use a simple loss ratio to measure the sufficiency of the DBI scheme.
In 2007, 2008, 2009 and 2010, simple loss ratios were over 100 per cent for certificates and policies issued in these years. This means the cost of claims for the certificates and policies issued in these years now exceeds the premium revenue collected.
On this basis, it would appear that collectively, insurers made a loss on domestic building insurance in each of these years. However, this may not necessarily be the case as the simple loss ratio does not account for any income insurers may have earned from investing premium revenue while they wait to pay out claims.
Project certificate numbers have increased
The total number of project certificates has increased by around six per cent each year since 2013. It reached 80,366 in 2018, with new dwellings accounting for the largest share.
Recent average premium decreases
The average premium per $1,000 of project value decreased in 2017 and 2018 and is currently around $3.50. The decrease coincided with two insurers entering the domestic building insurance market and the Victorian Managed Insurance Agency establishing a new system for selling this insurance.