We report annually on the performance of the Victorian Managed Insurance Authority's domestic building insurance (DBI) scheme.
Domestic building insurance scheme performance reports
We report annually on the Victorian Managed Insurance Authority (VMIA) and private insurers’ provision of domestic building insurance (DBI).
Findings from our 2016-17 performance report
Insurers may have incurred some DBI losses
We use a simple loss ratio to measure the DBI scheme's sufficiency. In 2008, 2009 and 2010, simple loss ratios were over 100 per cent for certificates and policies issues in these years. This means that claims costs for the certificates and policies issued in these years now exceed the premium revenue collected. On this basis, it would appear that collectively, insurers made a loss on DBI 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
Following a peak at just over 62,414 in 2010, and falls in 2011 and 2012, the total number of DBI certificates has increased each year since (reaching 72,959 in 2016). Project certificates for new dwellings account for the largest share of total DBI certificates issued.
Premiums have increased
Between 2005 and 30 June 2017, the average premium for a project certificate increased 67 per cent. During this time, the annual rate of change has not been consistent. From 2005 to 2008, it decreased, reflecting competitive pressures. From 2009 to 2010, it was volatile as a result of all but one private insurer exiting the market. From 2011 until now, it has been increasing steadily, reflecting a stable market where the majority of the certificates are issued by the VMIA.